Sasan ultra mega power project (UMPP) India

The Sasan project - also known as The Sasan Ultra Mega Power Project (UMPP) - will be a 6x660 MW  coal-fired project. It is a Government of India initiative to develop a large power plant in India. The 3,960 MW coal-fired UMPP is to be located in Sasan, Madhya Pradesh, approximately 25 km from three coal mines.

UMPPs are coal based power plants that produce around 4,000 MW - compared to an average coal plant which produces 500 MW - making them some of the largest sources of greenhouse gas emissions in the world.

On February 10, 2006, Sasan Power Limited (SPL) was incorporated as a wholly owned subsidiary of Power Finance Corporation Limited. The intention was to build, own, operate and maintain the Sasan Ultra Megawatt Power Project at Sasan, Madhya Pradesh. It was transferred to Reliance Power under the provisions of a share purchase agreement dated August 7, 2007 and is now a fully owned subsidiary of Reliance Power.

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Reliance is applying for carbon credits through the United Nations Clean Development Mechanism (CDM) because it is "employing more efficient super critical coal technology." This represents a serious misuse of the CDM which is meant to stimulate investments in clean energy for sustainable development. The CDM Executive Board recently rejected a similar application from the first UMPP - the Tata Mundra in India - clearly demonstrating that these projects are not the investments in sustainable development that are so desperately needed.

The U.S. Export-Import Bank (Ex-Im Bank) - the official export credit agency of the U.S. Government - is the main institution financing this project. Ex-Im Bank initially declined to finance the Sasan project pursuant to the agency's carbon policy. However, Ex-Im Bank back-tracked on the decision following political pressure. The reversal came with a "compromise" between Reliance and Ex-Im in the form of a Memorandum of Understanding to potentially generate 250 MW of renewable energy on site to address low carbon policy concerns. The 250 MW of potential clean energy is, however, a small fraction of the 3,960 MW of power that the plant will generate and will do little to mitigate the overall CO2 emissions and local pollution generated by Sasan. Therefore, the US taxpayer dollars are now linked to a project surrounded by legal controversy involving the sale of excess coal from the captive mines supplying the plant.

In 2009 the US Exim Bank established and implemented a carbon policy that requires its board of directors to carefully consider the potentially adverse environmental impact of high-carbon intensity transactions. On June 24th, the Board of Directors of the Export-Import Bank of the United States (Ex-Im) voted not to proceed with further review of the application for the Sasan project, based on environmental concerns.

Noting that Reliance's Sasan plant is projected to emit close to 26,000-27,000 tonnes of carbon dioxide per year, the official said that the board, "after careful consideration, viewed "The board felt that the environmental impact of the facility is such that they could not support it," the Exim official said that the environmental impact of the project would be too adverse".

Exim, however, reversed its decision on July 1, after Reliance Power's commitment for developing renewable energy and cut emissions.  After 3 weeks this financing has been "reconsidered" ostensibly due to Reliance Power's 250 MW Renewable Energy Plant.

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Responding to green commitment from Reliance Anil Ambani group, the US Exim bank gave a preliminary approval for $600 million in loan guarantees to the supplier to Rs 20,000 crore power project at Sasan in Madhya Pradesh. The bank said the Board of Directors has approved a full financial, technical and environmental review of an application by Reliance Power for financing its coal-fired power plant. Reliance Power's application is, however, still subject to final review and approval, it said.

A day before the Board meeting, US environmentalist alleged that the US Export Import Bank succumbed to intense lobbying despite high emissions, a charge contested by Reliance Power whose officials said that emission from the project would be at 832 grams of COs/KWh, way below the Exim Bank norms.

Private banks should immediately drop out of this project.

There are many environmental, social, and economic impacts that go along with this project, which have been outlined in the ESIA. Such as:

• The ESIAs present that 1,000 households will be displaced. However about, 6,000 people will lose their land and homes once the project takes off. Issues surrounding displacement are critical due to the stark poverty of the area which has just one or two pakka (permanent) houses.

• The ESIAs also show a general lack of planning and preparation for the social and economic impacts that will accompany the boom in construction in the project area

• They also gloss over the potentially severe impacts of water pollution and water scarcity in the project area that is heavily dependent on rain-fed agriculture and has water supplies which the ESIA describes as only "generally potable."

Although this project has been officially registered with UNFCC's Clean Development Mechanism Executive Board, there are many environmental impacts attached to this project. Ex-Im's initial hesitancy was the first sign of the environmental concerns. As stated by one Exim official, "The board felt that the environmental impact of the facility is such that they could not support it." They went on to say, "We were just looking at the size and scale of this particular transaction and the board feels it is not in good faith to proceed -- given the projected adverse environmental impact it would have." There are a range of environmental concerns from its contribution to climate change through the green house gas emitted through its outdated technological, to the local pollution it will cause:

• Green house gas emissions: As stated before, UMPPs are coal based power plants that produce around 4,000 MW - compared to an average coal plant which produces 500 MW - making them some of the largest sources of greenhouse gas emissions in the world. In fact, annual emissions are between 26-27 million tonnes of carbon dioxide for both the mine and local refinery. The plant will emit 832 grams carbon dioxide per kilowatt hour.

• Local environmental impacts: the pollution from production is likely to affect local water supply which will also have severe impacts on local wildlife.