Mundra’s new coal power station – built with “green” subsidies

How do you get to a position when public money and international programmes devised to reduce carbon emissions is earmarked to build and continuously subsidise a 4000 megawatt power station that burns coal? The answer lies in the advice that you get.

If you go to someone for advice, they will advise what they know. A physician will advise you to take medicine, a surgeon to undergo surgery, a physiotherapist to exercise; a lawyer will advise you about a legal solution and an economist about an economic solution.

Advisers perceive that the only solution there is to any given problem is that which is within their own expertise. The solution that an expert proffers will be the best the expert knows about, but that does not mean that it is the best solution.

If you look to bankers economists and the like for a solution to the problem of reducing carbon emissions you will end up with what looks credible, seems workable but in practice proves not a solution to the problem of how to reduce carbon, but a way for the opportunistic to make money in a rapacious and unscrupulous market.

When the solution is adopted and enacted by politicians the solution becomes set in stone, no matter how much damage it does. Reputations are at stake, and this makes politicians and civil servants who have approved these failed programmes close their eyes to the environmental reality of them. Indeed genuine solutions are not allowed to stand in the way of their beloved trade and cap schemes.

The carbon cap and trade schemes are blindly supported by the European Union and the United Nations. We have been told by bankers such as Mr Nicholas Stern that these emission trading schemes are the way to reduce emissions. It is now apparent that these schemes are actually contributing to emissions throughout the world.

The case of what is happening in Mundra, in Gujarat in India is a case in point. The Tata company will build a coal fired power station there, which will be completed in 2011. It will use technology that will reduce emissions compared to a conventional coal powered power station by around 20%. Under the curious rules that have been devised following the Kyoto Protocol, this is classed as a source of clean energy, notwithstanding that the emissions will be double those from a similarly sized natural gas power station.

Being classified as a clean power project Tata will obtain $450 million in soft loans from the World Bank (the same World Bank that Mr Stern worked for) and it will be able to sell under the cap and trade scheme carbon credits to power stations elsewhere in the world for around $60 million a year, which is quite a comfortable income for a carbon credit that arises because a coal fired power station is being built.

If the project used technology that captured and sequestrated the carbon dioxide emissions then it should qualify for soft loans and should be allowed to trade its carbon credits. However, this project will not do that – it will create huge amounts of emissions, but everyone at the World Bank and in governments across the world are pretending that this is a carbon saving scheme.

India needs power. Genuinely green power is expensive because of an uneven playing field; those that burn coal do not pay the true cost of their emissions.

We cannot stop coal power stations being built in India but we do not need to facilitate them with soft loans and fictitious subsidies from failed emission trading schemes. The $460 loan would be better employed building wind farms, putting in microgeneration and solar power in the Gujarat region. The $60 million a year in carbon credits would be better used to install solar panels in Gujarat.

India will need, it is estimated, an additional160,000 megawatts of power to come on line in the next decade. That is another forty plants the size of that which will be built in Mundra each emitting at least 25 million tonnes of carbon each year with the aid of World Bank soft loans and additional income form selling fictitious carbon savings.

If we go to bankers and business people for advice about carbon emission reduction can we be surprised that the result is a subsidised coal fired power station built in India from which money will be made?

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