This archive report was first published on 13 November 2019.
The African Development Bank (AfDB) has announced it will not fund a coal-fired power plant project in Kenya, a move that has significant implications for the country's energy sector.
According to senior AfDB officials, the decision was made due to environmental concerns and a focus on renewable energy. The bank had previously published an environmental and social impact assessment for the Lamu project in May, which was planned near a UNESCO World Heritage Site but was halted by a local environmental tribunal.
The project, which aimed to build a 1,050-megawatt plant in eastern Kenya, was backed by Kenyan and Chinese investors and was originally planned to start in 2015. However, with the AfDB's decision, the project's future is now uncertain.
Dozens of top banks, insurers, and development finance institutions are restricting coal investments, citing growing concerns about the impact of burning fossil fuels, particularly coal. AfDB President Akinwumi Adesina stated that the bank takes environmental concerns seriously and is focusing on renewable energy, adding that coal projects risk becoming 'stranded assets' on the AfDB's balance sheet.
Wale Shonibare, AfDB's acting vice president for energy, confirmed that the bank 'did not move forward with the Lamu Coal transaction and had no plans to do so in the future'. The AfDB's retreat from coal will make it harder for the Lamu project to progress.
The AfDB has been a major funder of coal projects in Africa, lending over 1.5 billion euros to South African utility Eskom for its Medupi coal plant and over 50 million euros for the Sendou coal plant in Senegal. However, the bank still plans to finance flue gas desulphurisation units at Medupi to mitigate sulphur emissions produced by burning coal.
