Company – On record
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Company – On record
This profile is no longer actively maintained, with the information now possibly out of dateWhy this profile?
Eskom is part of a group of 31 companies which are responsible for half the world's installed coal power capacity of 983,000 MW. Eskom's operations havehighly adverse on people and the environment amongst others related to pollution and water use. The greenhouse gases resulting from Eskom's existing coal power plants (with a total capacity of 39,456 MW) are completely at odds with the Paris Climate Agreement which calls for a maximum of 1.5C to global temperatures rises.
What must happen
Following the Global Coal Exit List, financial institutions should refrain from providing any financial services to Eskom, especially if funding would be allocated to maintenance, repairs or expansion of existing power plants. Banks should urge Eskom to decommission its coal power stations sooner than the 2050 goal set by the utility and direct their capital at energy efficiency and renewable energy financing opportunities.
Eskom is a South-African energy company, founded in 1923, and the world's eleventh-largest power utility in terms of generating capacity. In 2022, it had an installed generating capacity of 47,145 MW, of which 39,456 MW (83.7%) was from coal power plants and 1,854 MW from nuclear power. Eskom generates, transports and distributes approximately 90% of South Africa's electricity and approximately 40% of the electricity consumed in the whole African continent.
Impact on human rights and communities
Pollution and health impacts
Eskom is the world’s largest single emitter of toxic sulphur dioxide gas and has been called one of the world’s worst polluters. In many areas of South Africa, particularly those close to power plants, ambient levels of nitrogen oxide, sulphur dioxide, ozone, and particulate matter exceed maximum national standards.
These emissions standards were introduced in South Africa in 2010, giving power stations 10 years to comply with stringent limits for pollutants. Stations were required to install flue gas desulphurization (FGD) technology, which removes sulphur dioxide before it’s released into the environment. But as of 2022, only one coal-fired power station is in full compliance, with the remainder causing widespread air pollution. By its own count, Eskom exceeded its agreed limits more than 2000 times during the year 2021.
Eskom lost a landmark 2022 court case, in which courts found that rampant air pollution is a violation of citizens’ constitutional rights. Yet Eskom continues to fight for - and receive - exemptions which allow the company to keep polluting.
A 2017 summary report (based on M. Holland's 2017 report Health impacts of coal fired power plants in South Africa) lists the health impacts of Eskom's coal power plants. Each year they are responsible for causing at least 2,239 premature deaths, 2,781 cases of chronic bronchitis in adults, 9,533 cases of children bronchitis and several other negative health impacts. The total cost associated with these impacts exceeds USD 2.3 billion. Some researchers argue that air pollution from Eskom may be responsible for a far greater number of premature deaths, stretching into the tens of thousands.
Energy Crisis
Prices for electricity in South Africa have more than doubled over the last decade. At the same time, an energy crisis has taken control of the country. South Africa’s power plants cannot meet energy demand, forcing the government to institute rolling blackouts, called “loadshedding.” In 2022, these blackouts stretched across 3,775 hours over 205 days and cost the country’s economy up to R1 billion a day, according to the Energy Minister. The areas that experience the most intense blackouts are often in working-class, poor, and black communities.
For sick South Africans, power cuts can be the difference between life and death. Although hospitals usually have independent generators, these tools often aren’t built to withstand frequent blackouts, causing stress for patients and medical workers alike. Load shedding at water treatment plants may also worsen rates of illness.
Impact on climate
South Africa is currently ranked eighth in the world in terms of the total amount of coal used for electricity generation. 85 percent of the country’s electricity is produced in coal-fired power plants. Eskom is responsible for more than 200 million tons of CO2 equivalent each year, according to its 2022 integrated report. Because of this setup, South Africa’s electricity generation is one of the world’s most carbon-intensive energy systems.
Eskom’s greenhouse gas emissions have only dropped slightly over the last decade. Some evidence suggests the company pushed back against investing in renewable energy sources in the mid-2000s as the South African government began encouraging growth in the sector. Eskom’s dominance in sponsoring academic research also caused the bulk of research funding to go towards non-renewable energy sources.
Eskom received USD$8.5 million in 2021 to finance a just energy transition towards renewables. However, Eskom aims to direct almost half of that funding towards non-renewable energy sources, like methane gas-fired power plants. Moreover, former CEO Andre de Ritter claimed the South African government tried to “water down” safeguards against corruption, allowing the money to be claimed by private interests instead of investing it in renewables.
Although Eskom’s 2022 integrated report calls for the “repowering” of old coal-fired power facilities, the company has only retired one of its four earmarked stations. The rest will remain in operation at least until 2025.
Impact on nature and environment
Water scarcity
Eskom has rights to 360.3 million cubic metres of water each year. The company pays less for water per cubic metre than the average household and has been ramping up its consumption over the last several decades. Yet South Africa has one of the lowest levels of water availability in the world.
A 2015 study found that three of Eskom’s older, recommissioned plants consume up to four billion litres of water each year. Eskom intended to close the plants upon completion of the Medupi and Kusile power stations, yet the company has repeatedly pushed back closure dates and continues to guzzle surplus water. In Limpopo province, where the Medupi station operates, Eskom’s operations have reduced the flow of the Mokolo river.
Eskom claims it will need more water in the future, as it adapts plants to meet lower emissions requirements.
Pollution
Coal ash produced at Eskom’s power plants contributes to pollution through fugitive dust and water infiltration. This ash contains many contaminants, including mercury, which transforms into an even more toxic variant called methyl mercury in aquatic environments. Methyl mercury persists in fish and passes from parents to their offspring.
Moreover, the coal mines that feed Eskom’s facilities release sulphide minerals, which add dissolved salts to aquatic environments and change the water’s PH balance. Waterways near coal mines, including the Olifants, Klip, and Wilge Rivers, show evidence of harmful mine drainage, as algae species that thrive in the effluent water have begun to dominate the aquatic systems.
Other impacts
Odious debt
A growing movement accuses Eskom of taking on “odious debts.” The term refers to debts that arise from actions that are not in the public interest of the borrower state. For debt to be odious, the lender and borrower already know - or at the very least, should know - of the issue at the time of lending.
In Eskom’s case, the Medupi power plant offers a valuable example. In 2010, the bulk of a USD $3.75 billion World Bank loan to Eskom was directed towards the plant, despite the widely known negative climate and environmental impacts of coal. Against widespread protests, World Bank management decided the plant “support[ed] interventions to mitigate climate change,” - although the plant had high projected carbon emissions. Eskom continues to pay the Bank penalty fees on unpaid debts, hampering the energy company’s ability to move on towards cleaner power sources.
Likely conflict of interest behind coal contracts and projects in South Africa
The 355-page State of Capture report from South Africa’s Public Protector reveals details of favourable decisions by state utility Eskom to award huge coal supply contracts to Tegeta Exploration and Resources, a company co-owned by the son, Duduzane, of (former) South African President Jacob Zuma, and the Gupta family, close friends of Jacob Zuma. The revelations add new fuel to longstanding suspicion about the role of government leaders and relatives of former President Zuma with ties to the coal industry in paving the way for new coal mining and new coal-fired power plants in the face of serious water use, pollution and economic concerns. According to a Circle of Blue investigative report, “the ANC operates an investment arm, called Chancellor House, that owned an investment stake in Hitachi, which won the multi-billion dollar contracts to build the boilers for the two giant and unfinished Medupi and Kusile coal-fired power plants. Chancellor House also held a financial stake in the proposed 1,050-megawatt coal-fired Colenso power plant.
Incidents at Koeberg
Eskom's nuclear plant Koeberg has seen its share of incidents. In December 2005, a foreign object caused damage to one of the reactors' generators. It had been left inside by poorly trained and inadequately supervised workers. A similar incident happened in February 2006 when one of the reactors was forced to shut down causing blackouts on the Western Cape. The then Minister of Trade and Industry blamed an organisation called the Imam Haroon Brigade. The Brigade claimed responsibility for the sabotage. Both the minister and the Brigade were guilty of storytelling: there was no sabotage and the shutdown had been caused by human error.
JPMorgan Chase financed Eskom in 2018-2022 totalling USD 980.45 million.
In Februari 2018, Eskom signed a ZAR 20 billion (EUR 1.206 billion) credit facility involving seven banks (Eskom press release).
Between 2014 and 2017, 13 financial institutions have provided a total of USD 1.383 billion in loans and USD 1.251 billion in underwriting services to Eskom. The FIs involved are listed below.
Applicable norms and standards
The cost of Medupi
Video by Oxfam South Africa