Report

Coke Brothers

The new $50 billion BRICS bank will finance a wave of heavily polluting coal plants the West wouldn't touch. And that's not all bad.

The BRICS countries' announcement last week that they will create a new development bank comes as a frontal challenge to the Western-dominated international financial system. It could also boost financing for coal-fired power plants around the world, something most international economic institutions, such as the World Bank, and many Western countries spurn.

Unshackling fresh money for coal could help bring poor countries what they most sorely need -- energy -- and jumpstart serious investment in advanced clean-coal technology that the whole world needs.

The New Development Bank won't be fully formed until next year, its policy charters have yet to be written, and pundits have teed off on the bank's prospects for success. But many observers believe that despite teething pains, the new kid on the block will grow up to be a real alternative to the World Bank, IMF, and the like and bring Beijing's investment focus to poorer countries.

If nothing else, the bank's creation reflects middle-income countries' frustration with the West's refusal to recapitalize the World Bank, keeping their financial leverage limited. And it comes at a time when even France has joined Russia and China in calling for an alternative international currency to curb Washington's ability to use the dollar's ubiquity to further its policy agenda.

More importantly, the New Development Bank will take a page from the BRICS countries' own recent history with infrastructure-fueled investments, said Kevin Gallagher, an associate professor studying economic development at Boston University. He said the new bank would likely finance projects similar to those backed by the institutions it is modeled on, the Brazilian National Development Bank and the China Development Bank.

"They are going to put a premium on infrastructure and energy, which was the World Bank's model in the 1970s, which got them in trouble with local environmentalists," Gallagher said.

It's safe to assume that the $50 billion bank won't tar coal with the brush used by the World Bank, the U.S. Treasury, and the other pillars of developmental finance.

Most of the BRICS countries -- Brazil, Russia, India, China, and South Africa -- invest heavily in coal. China uses as much coal as the rest of the world combined, while India's economy is powered by coal. South Africa and Russia are big coal exporters.

"You can definitely see why poorer countries, and the BRICS nations especially, would be interested in having new institutions to fund these types of energy projects without the red tape that is increasingly coming" from Western governments and Western-dominated development banks, said Alex Trembath, an energy and climate analyst at the Breakthrough Institute. His technology-focused environmental think tank recently studied energy options for less-developed countries.

The World Bank, for example, has all but banned underwriting investments in coal-fired power plants, except in "rare circumstances." The U.S. last year echoed that stance, following a summertime pledge from President Barack Obama to keep public money out of dirty power overseas. The U.K., Nordic countries, and others soon followed.

"No doubt the BRICS will take a more flexible stance, certainly in their energy strategies, when it comes to fossil fuels," said Scott Morris, an expert on international financial institutions at the Center for Global Development.

And although that's exactly what people concerned about rising global emissions of greenhouse gases and temperatures don't want to see, it may not be the environmental cataclysm they envision.

Poor countries, such as those in sub-Saharan Africa, need energy to power development and growth; coal is a cheap, readily available source for plenty of places that literally can't keep the lights on. South Africa, for example, struggled mightily with the World Bank's environmental strictures that made it difficult to build a big new coal plant there; now rolling blackouts are a problem. And South Africa is the success story. The rest of Africa has a much bigger energy-access problem.

That highlights a paradox with the rich countries' decision to discourage financing coal plants on environmental grounds: Many of those nations are simultaneously trying to improve the energy prospects of the poorest countries.

The Obama administration, for example, launched the "Power Africa" initiative last summer but left one big source of power off the table while favoring clean, renewable energy instead. International financial support for wind power and solar power checks the green box but doesn't always light the fuse box.

"There's this notion in the environmental world that if we just stop funding coal out of the World Bank, then we're not going to have coal and everyone's going to have wind and solar," said Armond Cohen, the executive director of the Clean Air Task Force.

"The disconnect between the actual power requirements of the BRICS and other developing countries and what people in Washington think is doable is almost surreal," he added. "So this could be a very healthy wake-up call."

Even from the perspective of tackling climate change, the BRICS bank could ultimately end up fighting the good fight. For a decade, the United States, China, and other nations have sought the Holy Grail of clean energy: how to burn cheap and abundant mountains of coal without frying the planet. Technically, it's not difficult. New power plants can be constructed and existing ones retrofitted to trap carbon emissions. That carbon can then be pumped underground, rather than into the atmosphere. One new plant in Missouri does just that.

The problem is the price. Carbon capture and storage, or CCS, is very expensive. The plants devour even more coal because they are slightly less efficient. And storing the stuff requires pipelines, underground reservoirs, and other infrastructure all costlier than a smokestack.

In the absence of any real cost for emitting carbon -- such as a carbon tax or a trading scheme with teeth -- the economics of CCS simply don't work. Financing such programs is very problematic, as investment bank Société Générale has noted. Other than that plant in Missouri, there are only a handful of facilities worldwide even close to commercially ready.

That's where the billions of dollars in potential coal financing from the new bank could make a difference, by pushing CCS out of the experimental nest and into flight. One way to make clean coal cheaper is to build more plants using it, creating economies of scale and driving research into improved technology.

China desperately wants to make CCS a reality since about three-quarters of its electricity comes from coal, and capping emissions has become something of a national mission. Beijing's and Washington's CCS collaboration is a rare point of bilateral cooperation. China is even pouring money into a project in Texas.

"For CCS, that's a multilateral investment no-brainer, given the amount of coal we have today and the amount of coal that we're expected to deploy in the future," said Breakthrough's Trembath, noting that the New Development Bank has yet to outline its investment strategy.

The CATF's Cohen notes that Western finance bans on new coal plants have had only a limited impact on the deployment of dirty energy, so the self-imposed limitations don't always achieve their goals of a carbon-free developing world. China, Russia, Japan, and Germany have offered national financing for coal projects around the world. The prospect of multilateral development cash flowing into path-breaking coal plants is not unappealing.

"The hear-no-evil, see-no-evil attitude of the West with regards to fossil fuel is futile," said Cohen. He noted that China now has a fleet of coal-fired power plants triple the size of the American coal fleet; Africa, Latin America, and South Asia are also betting on coal when they can.

"Let's get on with it, but figure out how to do it right."

Jamila Trindle contributed to this article.

Nelson Almeida - AFP - Getty

Report

The Case Against Vladimir Putin

The White House's indictment for the MH17 shoot-down relies on secret satellite photos and intercepted phone calls -- but also on Twitter and YouTube.

In brief remarks at the White House Monday morning, President Barack Obama pressed his case that the government of Russian President Vladimir Putin armed and trained the pro-Russian separatists responsible for downing Malaysia Airlines Flight 17 and needed to force the rebels to provide access to the crash site in war-torn eastern Ukraine.

In laying out the administration's indictment against Moscow, Obama and key members of his national security team have been pulling from a trove of classified intelligence. Among the most incriminating evidence against the separatists are images taken by U.S. spy satellites showing a plume of smoke rising from the separatist-held area where the missile was fired, officials said. The missile also was detected by the Defense Support Program, a constellation of Air Force reconnaissance satellites that sense the infrared signature of ballistic missile launches and nuclear explosions, Reuters reported. The satellites were used during the 1990-1991 Gulf War to detect Scud missile launches from Iraq and to warn civilians in Israel and Saudi Arabia of incoming strikes.

But officials are also building their case against Putin with a mounting pile of evidence posted on social media, including posts by separatist leaders, tweets about the location of missile launchers, and YouTube videos documenting potentially incriminating conversations between the men who may have shot down the jetliner. Washington's willingness to use Twitter and the Russian equivalent of Facebook to bolster its case against Putin is a signal moment in the history of social media, which is now taking its place alongside classified intelligence as an important source of information for world leaders.

Appearing on ABC's This Week on Sunday, July 20, Secretary of State John Kerry cited a Twitter post by a rebel leader as one of the central pieces of evidence in making the case against the separatists and their patrons in Russia. "We know to a fact that the separatists bragged on the social media immediately afterwards about the shoot-down," he said, adding that the rebels quickly removed the posts when they realized it was a civilian airliner that had gone down.

Kerry was referring to Igor Strelkov, a separatist leader, who wrote on VKontakte, a Russian social media site, that his forces had downed a Ukrainian transport jet in the same area where MH17 crashed. After it emerged that a civilian jet had gone down, he deleted the post. No Ukrainian transport jets were reported shot down that day, July 17. Strelkov had offered the first compelling piece of evidence that separatists had unintentionally destroyed the civilian airliner, killing all 298 people aboard, and that they intended to cover up their involvement.

In the immediate aftermath of the shoot-down, social media became the go-to source for both government officials and members of the general public who were trying to piece together when and how Flight 17 was taken down. Hours after the crash, the SBU, Ukraine's main security service, posted on YouTube a series of telephone calls between what it described as pro-Russian separatists and their Russian handlers. The militants admitted to shooting down a civilian jet. "It's 100 percent a passenger aircraft," a militant identified as "Major" said, noting that there were no weapons at the crash site. "Absolutely nothing. Civilian items, medicinal stuff, towels, toilet paper."

The public case against the separatists began to rapidly expand. On Friday, a day after the crash, the SBU published on its YouTube channel another set of intercepted phone calls between separatists in the east. In these conversations, the militants discussed the arrival and movements of Buk anti-aircraft missiles in the country's east. The Buk missile system is an advanced, medium-range missile system capable of shooting down an aircraft traveling at 33,000 feet, the reported altitude of Flight MH17 before it crashed.

Other reports on social media from ordinary Ukrainians as well as journalists said that Buk missiles were present in the area where the plane was shot down. The Ukrainian government and U.S. officials seized on these too, noting in their public statements reports of the missiles' presence in eastern Ukraine. A video released by the Ukrainian Interior Ministry showed what appeared to be a Buk missile system transported by a truck toward the border with Russia. The missile system looked to be missing a missile, an indication that one had been fired.

The separatists maintain that they lack the capability to shoot down an aircraft at that altitude, but a few weeks before the crash, the official press account of the Donetsk People's Republic bragged in a now-deleted tweet about coming into possession of a Buk.

In the aftermath of the shoot-down, observers have flocked to the crash site and posted dozens of photos of the wreckage, which have been pored over by forensics experts and crash-scene investigators. Many of the bodies are scattered in fields of wildflowers that also contain macabre visual evidence that the plane was downed by a missile. In one photograph, a section of the plane's fuselage is riddled with shrapnel:

Other photographs from the crash site also show evidence of metallic tearing that appears consistent with shrapnel.

The body of evidence, which anyone with an Internet connection can review, points undeniably toward pro-Russian separatists and their backers in Moscow, according to U.S., Ukrainian, and other European leaders. Those officials all have access to classified sources of intelligence, which they've also been using to bolster the credibility of the tweets and YouTube videos.

U.S. intelligence agencies matched the voices of separatist leaders talking in the YouTube clip to prior "recordings of known separatists," according to an official U.S. statement posted Sunday by the embassy in Kiev. And analysts watched video on social media that showed an SA-11 missile launcher being moved out of Ukraine and back into Russia aboard a transporter, the statement said. "The video indicated the system was missing at least one missile, suggesting it had conducted a launch."

This wasn't the first time U.S. intelligence agencies spotted Russian military equipment in Ukraine. Following the shoot-down, the United States reported that it had been tracking a buildup in Russian weapons over the past month. And less than a week before the attack, "Russia sent a convoy of military equipment with up to 150 vehicles including tanks, armored personnel carriers, artillery, and multiple rocket launchers to the separatist [sic]," the statement said. "We also have information indicating that Russia is providing training to separatist fighters at a facility in southwest Russia, and this effort included training on air defense systems."

The statement didn't state the source of this intelligence. But following Russia's invasion of Crimea in February, the United States pointed more imagery satellites at eastern Ukraine, which helped track a buildup of Russian forces along the border. That intelligence prompted officials to warn in March that a Russian invasion of eastern Ukraine could occur at any moment. After Malaysia Airlines Flight 17 went down, officials provided even more evidence from these earlier satellite scans to bolster their case that Russia was ultimately responsible for the shoot-down.

But as impressive as spy photos and voice analysis may be, it's social media that has helped build the public case against Russia and that has rallied world leaders to call for a thorough investigation of the shoot-down and consider imposing new sanctions on Moscow. Given the volume and the specificity of this publicly available intelligence, it's likely that the case against Putin would be just as persuasive even if all the usual sources of state spycraft weren't on the table.

Photo by Brendan Hoffman/Getty Images