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just energy transition, the right to know

Egypt’s Proposed Logic-Defying Switch to Coal Is Corrupt

Egypt’s recently announced plans to switch to coal to “solve its energy crisis” leave a lot to be said about the soundness of our officials’ vision for an energy strategy. But they also reveal highly concerning persistence of an opaque decision-making process and corrupt profit-driven policy.

Egypt plans to source the coal from the international market, countries we will likely be importing from include South Africa and China. Costly upgrade of infrastructure is needed to prepare it for coal transport. For a viable return on investment in the infrastructure upgrade and expansion, this stands to commit Egypt to a long-term dependence on a highly polluting, foreign source of energy.

Coal is arguably the most polluting power source in world. It is the dominant source of carbon dioxide emissions, coal burning releases twice as much greenhouse gases as natural gas. In addition to being a major driver of climate change, coal burning also releases other toxic emissions and respirable suspended particulates. The resulting solid waste and sludge contains a number of heavy metals. The toxic pollutants resulting from coal burning affect air and water quality, reduce agricultural yield and cause land degradation, and work themselves up the food chain – all with serious impacts on public health. A report by GreenPeace estimates the cost of damages caused by coal-fired power plants in the world to be as high as £356 billion in 2007.

The high investment in infrastructure required for the switch, and cost of the impacts of coal on air, water, and land quality degradation and on public health would perhaps be justifiable as the “lesser evil”, an unavoidable tax to warding off an imperative energy crisis. But given Egypt’s abundance in and potential for solar and wind energy, this argument simply doesn’t hold.

And it definitely doesn’t hold when one examines the outlines of the proposed switch to coal as published by news outlets. Further reading of the posted articles beyond the misleading headlines reveals the more disturbing, logic-defying and corrupt aspects of the plan:

Coal will be initially used to power the cement factories, replacing the increasingly scarce natural gas these currently use. The cement sector in Egypt, at a whopping 40% profit margin, is ranked highest in Revealed Comparative Advantage. This makes the business quite attractive to foreign investment, whose share in the sector is about 60%. The high profitability of the cement sector is partly due to price-fixing and monopoly practices that have kept the prices rising despite increased production capacity over the last twenty years, and is mostly enabled by cheap labor, raw materials, and energy – the cement industry (along with steel, fertilizer,  aluminum, and petrochemicals industry) uses up to 65% of the industrial sector’s share of subsidized energy, that’s 65% of its subsidized electricity and 75% of its subsidized natural gas.

But what is framed as a strategic offset of a subsidized energy source away from the cement industry into the energy generation sector clearly, and misleadingly, fails to point out that we would still be subsidizing the cement sector and its investors, at a higher cost still – more directly in the form of government commissioned infrastructure works, and more heavily with the cost we will incur for irreparable environmental degradation and public health impacts. It also fails to point out that even at double the current energy prices, the profit margin of the cement sector in Egypt would still remain as high as 29%.

And that’s not all: the plan is actually to expand the energy-intensive (and polluting) cement sector. Egypt, which is suffering from a serious energy shortage, plans to build more cement factories – in an environmentally sensitive pristine area at that: the “Golden Triangle”, an Eastern Desert location delineated by the cities of Safaga and Quseir by the Red Sea and Qena by the Nile, is the site for a newly allocated industrial “development” zone. These planned new factories will be powered with coal “to solve the energy crisis”(!).

According to news, the announced switch is proposed by the Ministry of Industry and approved by the Upper House Industry and Energy Committee, totally bypassing the role of the Higher Council for Energy, whose responsibility is relegated to approving the coal import regulations currently being prepared by the Ministries of Petroleum, Industry, and Environment. The next phases of the proposed plan include switching to coal all energy-intensive industries, as well as three major power plants under construction (originally planned to run on natural gas).

The fallacy of having our energy policy shaped by the Ministry of Industry and the interests of the sector, which is dominated by profit-driven private investors, rather than by an independent policy-making body, seems somewhat upstaged by the blaring shortsightedness and blatant bias to corporate interest that these policies demonstrate; but is, however, still important to highlight.

On the face of it, the switch to coal is marketed as a solution to Egypt’s sharpening energy crisis, the brunt of which is carried by the citizens and home users, not to mention its effect on vital energy users such as hospitals. However, examination of published outlines of the plan clearly shows it serves to allow the cement companies, and industry sector in general on the longer term, to dodge impending energy subsidy reforms and keep their unreasonably high profit margin by opening the door to coal import.

Egypt’s proposed switch to coal is yet another string in a long chain of one-sided decisions and corrupt policies – policies that lack any effective public consultation, completely disregard sustainability aspects, and have long hampered a just and urgently needed transition to locally generated, clean renewable energy. It is another sad example of how government decisions continue to be solely affected by and biased to business interests and corporate profitability at the expense of our environment – our health and resources.

EIPR issued a joint press release with other rights organizations strongly warning against the Egyptian government’s plans to switch to coal.

[featured image source: Inhabitat]

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About Reem

Reem is a researcher at the Egyptian Initiative for Personal Rights (EIPR). She examines and works on driving forward environmental and climate justice issues in Egypt. Most of the content published here is part of her research with EIPR; views posted here are her own.

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