THE African Development Bank (AfDB) has announced that it will not fund a coal-fired power plant project in Kenya and has no plans to finance new coal plants in future. The Abidjan-based lender had earlier published an environmental and social impact assessment for the Lamu project, which was planned near a Unesco World Heritage Site but was halted by a local environmental tribunal.
The 1,050MW coal plant
The project, which was originally planned to start in 2015, was backed by Kenyan and Chinese investors. However, dozens of top banks, insurers and development finance institutions are restricting coal investments, as climate activists and investors voice growing concerns about the impact of burning fossil fuels, particularly coal.
The AfDB has been a major funder of coal projects in Africa. In the past decade, it has lent more than $1.6bn to South African utility Eskom for its Medupi coal plant and more than $55 million for the Sendou coal plant in Senegal.
AfDB president Akinwumi Adesina said that the bank took environmental concerns seriously and was focusing on renewable energy, adding that coal-fired power plant projects risked becoming ‘stranded assets’ on the AfDB’s balance sheet. Wale Shonibare, AfDB’s acting vice president for energy, added that the bank did not move forward with the Lamu Coal transaction and had no plans to do so in the future.
The AfDB president had told UN climate talks in September that the bank was ‘getting out of coal’ but he did not give a timeframe or specify whether the Lamu project would be affected. The AfDB’s retreat from coal will make it harder for the Lamu project to progress. However, it still plans to finance flue gas desulphurisation units at Medupi to mitigate sulphur emissions produced by burning coal.