A UK energy company with ties to chancellor Philip Hammond and the Oxford Philharmonic has just signed an agreement to develop a highly polluting coal bed methane power plant in the east of Botswana.
London-based company Independent Power Corporation (IPC), which develops and operates power plants around the world, has signed an agreement with Australian-firm Tlou Energy to jointly develop a 100 megawatt power plant as part of the Lesedi coal bed methane project.
Coal bed methane (CBM) plants come with significant environmental risks, including contamination of soil and underground water as well as generating significant greenhouse gas emissions through methane leaks.
There are concerns the Botswana government does not have sufficient checks and balances in place to ensure companies such as IPC and Tlou Energy are subject to robust environmental regulations in a country ranked third for its level of inequality, according to the World Bank.
The government has previously been accused of ignoring issues around water pollution and scarcity in areas where CBM operations are due to take place.
The Deal
The Lesedi CBM project is part of the Botswana Government’s power production programme to tackle recurrent power shortages.
Located on the eastern side of the Kalahari desert in Botswana, the 8,500 kilometre square Lesedi CBM project is part of a large gas reserve, holding an estimated 3.9 billion cubic feet of methane gas.
Methane is trapped in coal deposits underground. Drilling into these deposits and pumping out the underground water releases the methane, which can be channelled through pipelines and used to produce electricity.
But methane is also 34 times stronger than carbon dioxide at trapping heat from the atmosphere over a 100-year-period, according to the Union of Concerned Scientists. Any methane leaks therefore significantly accelerate climate change.
That’s why CBM operations are considered a high risk development by the UK’s Environment Agency, where the technique is more advanced than shale gas.
“Independent experts note the potential consequences are high if the process is not regulated properly or industry best practice is not followed,” the agency said in a 2014 report.
Tlou Energy has operated in Botswana since 2007, and has the vast majority of its activities in the country.
It is reportedly the only private company in Botswana to own gas reserves and has a permit to exploit them. It is on track to become the dominant power provider in the country. Tlou Energy expects the country’s electricity demand to grow by nearly six per cent until 2025, and for prices to rise comparably.
Tlou Energy was initially given the go-ahead for the 100 megawatt power plant in June 2016. At the time, executive director Gabaake Gabaake, who previously headed Botswana’s ministry of minerals, energy and water resources until 2010, signed the deal acting on the behalf of Tlou Energy CEO Tony Gilby, who was absent through illness.
The close relationship between the Australian-based company and the Botswana government has been highlighted before.
In a documentary called High Cost of Cheap Gas, the Open Society Initiative for Southern Africa (Osisa) claimed Tlou Energy was one of the companies that was granted a CBM drilling license by the Botswana government “without any public debate about the industry, particularly the serious threats these large scale developments pose to the environment and communities”.
Environmental Impact Statement
In September 2016, Tlou Energy announced Botswana’s department of environmental affairs had approved the environmental impact statement for the Lesedi CBM project following a public review.
Tlou Energy said it had carried out public consultations prior to submitting the statement but neither the consultation responses nor the environmental impact statement have been published. The company’s press release is the only evidence DeSmog UK found of the existence of the statement.
Summarising the document, the company said it “addresses the social and environmental context of the area surrounding the planned wellfield development project at Lesedi and CBM exploration activities in Tlou’s Mamba and Lesedi areas”.
But there is no public record of the impact statement. DeSmog UK asked the Botswana Government and Tlou Energy for a copy of the environment impact statement but received no answer.
There is little public information about Tlou Energy’s environmental record. Only a few lines are provided under the sustainability and environment section of Tlou Energy’s website.
“Tlou Energy is engaged in the business of increasing the environmental sustainability of the coal bed methane industry. Tlou improves the sustainability of its customers by using technology to help them do more with less. Tlou also improves the sustainability of landowners by using world class drilling technologies. Tlou Energy adheres to its high environmental standards by using world class drilling technology and environmental management and protection techniques,” it states.
This evidently includes gas flaring, where excess gas is burned straight into the atmosphere. On the website’s home page, the company has a short video of a flare at the Lesedi project dating back from June 2015.
Tlou Energy did not respond to DeSmog UK’s request for comment.
UK Export Finance Funds
Speaking in a podcast for Vox Markets, Tlou Energy CEO Gilby said the new agreement with IPC could open the door to secure funds from the UK Export Finance, the Government’s credit agency that is financed by taxpayers money.
DeSmog UK previously revealed the government agency spent hundreds of millions supporting foreign fossil fuel extraction and petrochemical projects in 2015/16.
DeSmog UK contacted UK Export Finance but it said it could not comment on a deal for which it has not already provided support, or of which it is not aware.
By agreeing to develop the Lesedi CBM project, IPC could join Tlou Energy in becoming the first independent power producer in the country.
IPC chief executive Peter Earl told DeSmog UK that CBM in Botswana and in other emerging markets would help shift away from diesel while emitting a third of the carbon dioxide from a coal-fired power plant.
He said the projects were “essential” to develop renewable power projects in emerging markets and could provide a more sustainable backup generation, which can be turned on when renewable energy is not available at that particular time.
But in a report on unconventional fossil fuels, CorporateWatch said: “The gas industry is particularly reluctant to investigate how much gas escapes as fugitive methane emissions in the process of extracting and transporting natural gas.
“However various studies have found significant leakage and as methane is such a powerful greenhouse gas, even a small percentage of the gas extracted escaping to the atmosphere can have a serious impact on the climate.This means that rather than being part of the solution, the development of CBM is dramatically worsening the problem of climate change.”
With little guarantee of efficient government regulation, IPC will be expected to ensure the environmental safety of the project.
But the environmental statement published on the company’s website is minimal, simply pledging to “reduce our environmental impact and encourage sustainable development, to engage with local communities in a constructive manner and to ensure a safe working environment for our employees.”
Independent Power Corporation (IPC)
Founded in 1995, IPC claims to be one of the UK’s leading power developers and operators of power plants worldwide, with an aim to develop private energy markets in developing countries. It is based in London’s Millbank Tower.
It previously operated two coal-fired plants in Kazakhstan and now has gas plant projects under development in Russia, Egypt, Ghana, Kazakhstan, Peru and Bangladesh.
IPC was founded by two Oxford graduates. Earl, who has been a board member of several oil and gas companies, and Conservative peer Lord Colin Moynihan, a former rowing Olympic champion and energy minister between 1990 and 1992.
Lord Moynihan was part of the team responsible for privatising the UK electricity industry under Prime Minister Margaret Thatcher. He has entered a number of business ventures partnered with chancellor Philip Hammond.
According to the IPC’s website, the company is sponsoring the Oxford Philharmonic Orchestra. Earl is also the chairman of the orchestra trust. The orchestra and Earl declined to comment on the sponsorship.
IPC’s sponsorship page also states it used to sponsor Worcester College’s women’s and men’s rowing teams, which is now backed by BP.
Main image credit: Pixabay CC.0
