Chinese-backed coal plant jeopardises Kenya climate target

Local communities are fighting the 1,050MW Lamu coal-fired power station, but government says it is needed to meet energy demand

Fishing and tourism are key sectors for Lamu coastal communities (Pic: Flickr/Øystein Rød Tveito)


Kenya risks busting its climate target with a Chinese-backed coal power plant in the middle of a sensitive coastal ecosystem.

Local communities are set to lodge an appeal against the environmental permit on Monday, fearing its impact on fishing and tourism.

Yet the government says the US$2 billion, 1,050MW Lamu plant is needed to meet soaring electricity demand in an affordable way. It is aiming to add 5GW of capacity by 2030.

The largest privately led infrastructure development in East and Central Africa, Lamu is expected to supply 20% of the country’s power when it comes online in 2020. While that fits in with the energy plan, the numbers don’t add up when it comes to keeping carbon emissions in check.

It will pump 8.8 megatonnes of CO2 equivalent into the atmosphere each year, equivalent to nearly two million cars hitting the road.

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In its contribution to the Paris climate deal, Kenya promised to reduce its CO2 by 30% compared to business as usual by 2030. That gives a carbon budget of around 100Mt. With emissions already standing at 70Mt in 2012, booming transport use and smaller power plants mushrooming around the country, that could get eaten up fast.

“Approving a license for a new 1,050 MW coal-fired power plant that would emit nearly 9 MtCO2e per year would put in serious jeopardy Kenya’s ability to meet the 2030 emissions target it set out,” says Mark Chernaik, staff scientist with the Environmental Law Alliance Worldwide.

Chinese investment

The project is owned by Amu power, a merger of two Kenyan companies, Gulf Energy and Centrum. It will be designed, built and operated by the Chinese multinational Power China. China will also provide the bulk of the investment, with a $1.2bn loan from the state-owned Industrial and Commercial Bank of China, the world’s largest lender by assets.

In recent years, China has become a strategic business partner for Kenya, dominating the telecoms industry, building roads and helping ramp up the energy sector.

With the support of its state-owned banks, China is investing heavily across Africa. And despite showing off the climate champion badge for its US$3.1bn contribution to international climate finance, much of that investment is going into coal development.

After decades of struggles with the red tape of the aid industry, African governments are embracing Beijing’s no-strings-attached attitude.

For its part, China is burdened with domestic coal overcapacity, having given the go-ahead to more than 200 coal plants that will mostly remain idle due to lack of demand. Africa provides a market for coal technology and opportunities for Chinese workers, set to make up 40% of the labour force for Lamu.

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To make the project even more attractive, another major player boasting a green outlook is jumping on the coal bandwagon.

The African Development Bank (AfDB), accredited by the Green Climate Fund earlier this year to increase low-carbon and climate resilient development in Africa, has offered Lamu a partial risk guarantee. According to confidential documents obtained by Climate Home, the AfDB is easing the project’s risks on two fronts: the potential breach of contract on Kenya Power and Light Company will be covered with $150 million, and risks of delays for the transmission line will be eased with $90 million.

Although AfDB did not respond to an interview request for this story, its sympathy for coal burning as a means to boost Africa’s energy sector is no secret. Before stepping down as the bank’s president in May 2015, Donald Kaberuka said that poor African countries do not have the luxury of dropping fossil fuels altogether.

“It is hypocritical for western governments who have funded their industrialization using fossil fuels, providing their citizens with enough power, to say to African countries, ‘You cannot develop dams, you cannot develop coal, just rely on these very expensive renewables,’” he said in a press conference. “African countries will not listen.”

Kenya’s energy mix

African countries face the challenge of catering to their development needs while reducing emissions. Most navigate it through a mix of clean and dirty energy, and Kenya is no exception. In the government’s plan for the next 20 years, coal makes up 9% of the total energy supply, with geothermal and wind power playing a more prominent part.

“The country will continue to tenaciously explore opportunities for renewable energy but at the moment it’s a matter of taking a decision,” says David Ongare, director at National Environment Management Authority (NEMA), which back in September issued the licence for the Lamu coal-fired plant. “Right now in this country we can’t meet our energy needs through renewable energy alone, we need a mix.”

Affordability is a big concern, with Kenyan prices currently around four times the level of South Africa and three times that of China.

The proposed Lamu coal plant site (Source: Environmental Impact Assessment)

The proposed Lamu coal plant site in Manda Bay (Source: Environmental and Social Impact Assessment)

For all that coal is seen as a cheap way to bring power to the masses, it comes at a hefty environmental cost.

One way of quantifying this is to calculate a “social cost of carbon”, factoring in climate change impacts such as reduced farming yields and harm to human health.

“The estimated social cost of CO2e emissions is as high as $152 per ton in the year 2030,” says Chernaik. “Climate change damages associated with the project may be as high as $1.3 billion per year by 2030.”

Then there are the local impacts on the site in Manda Bay, home to mangroves, corals and a variety of fish.

The environmental and social impact assessment (ESIA) warns that “dredging activities during the construction phase are projected to cause significant and serious damage to the neighboring mangroves, sea grasses and coral reefs habitats.”

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Kenya doesn’t produce coal, and will need to ship it in from South Africa, Indonesia, Mozambique or Australia.

“In 2010, Kenya discovered coal reserves in the south east of the country, but the extractive capacity is not there yet” says Shalom Ndiku, a lawyer with the NGO Natural Justice. “The catch is that the coal may be out of the ground not sooner than 20, 25 years.

“In the meantime, imported fuel will be shipped to the Lamu port and brought to the plant through a conveyor belt. And environmental concerns related to this part of the project have not been addressed clearly.”

Then when the coal is burned, sea water will be used for cooling the system and pumped back into the sea warmer than before. Scientists warn that could disrupt the bay’s delicate ecosystem, which acts as a nursery for many fish and shellfish species that underpin the local economy.

Amu is offering fishing nets and solar lamps to local fisherman and installing solar powered streetlights in Lamu town to ease community relations.

Still, associations on the ground have released multiple statements lamenting a lack of inclusivity in the project design.

The Save Lamu coalition is finalising its appeal against NEMA’s decision, challenging the quality of the assessment report.

Coal-powered development is not inevitable, says Natural Justice’s Ndiku. “The country has chosen to invest in coal because it’s cheap, but improving efficiency would probably cost much less and deliver a similar result.”

Lou Del Bello’s series of reports on Africa and climate change is funded by CDKN

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