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Aid Dollars Should Fund Renewables, Not Dams

As you read this, a power outage is affecting much of Africa and South Asia. After hundreds of billions of aid dollars have been spent on energy projects, 1.4 billion people continue to live in a state of permanent blackout. Development finance has focused on big power plants that destroy the environment and bypass the rural poor. This week civil society groups are making a push for a new approach to the global energy crisis.

The Grand Inga Dam on the Congo River exemplifies the traditional top-down approach to the energy sector. With a capacity of 40,000 megawatts and a cost of 80 billion dollars, the project could provide electricity to 500 million African consumers through the world’s vastest transmission network. Its promoters say that it could end Africa’s power outage in one fell swoop towards the end of the next decade.

The World Bank has already expressed an interest in funding the Inga 3 Dam, the first stage of the Grand Inga scheme. It has identified Inga 3 as a model project for the energy sector in Africa and South Asia. The Bank is currently trying to raise billions of dollars in government contributions for its IDA fund, from which it plans to finance the Inga 3 Dam.

Before governments pledge their energy dollars to the World Bank’s IDA fund, they should think again.  If the Grand Inga scheme ever gets completed, it can provide 500 million consumers with 80 watts at a cost of 160 dollars each. High-quality solar lanterns combined with cell phone chargers currently sell for less than one third of this price – 15 years before Grand Inga turns on any lights.

Like wind and micro-hydropower projects, solar home systems don’t rely on expensive centralized grids to supply energy to rural communities. Millions of them are already being installed throughout Africa and South Asia. The price of such technologies would drop much further if the World Bank or any other sponsor ordered 500 million systems.

With power projects, it is not just the benefits to consumers that matter, but the impacts on society at large. The Grand Inga scheme would rely on imported technology, and would employ a few hundred technicians to operate its power plants. In addition, thousands of guards would be required to protect plants and 8,000 miles of transmission lines from terror attacks and pilferage. An order of 500 million solar home systems, in comparison, could create hundreds of thousands of productive jobs throughout the supply chain.

Social impacts don’t end with job creation. Transparency International, the anti-corruption watchdog, has identified large public works as the most bribery-prone economic sector – more corrupt in fact than oil or weapons trading. The Democratic Republic of Congo has a sorry history of grand corruption in infrastructure projects, and its existing Inga 1 and 2 dams are suffering from huge cost overruns. In comparison, decentralized energy solutions are at a scale that can be managed and controlled by the fledgling institutions of fragile states.

Why, then, are the World Bank and other financiers promoting the complex and expensive Inga project? From a self-interested perspective banks find it easier to finance billion-dollar projects with limited overhead than cheap and effective supply chains for poor consumers. Maybe more importantly, poor African farmers serve to justify the mega-dams, but they are not their intended beneficiaries.

The Inga 3 Dam, which the World Bank has designated as a model project, will supply electricity to the Congolese mining industry and South African cities, not the rural poor. Industrial consumers need centralized power stations, not decentralized renewable systems. Even the transmission lines of the Grand Inga scheme will carry electricity at such a high voltage that they cannot supply power to the regions they bisect at affordable rates.

Donor governments will meet in Moscow on December 16-17 to pledge their contributions for the International Development Association, the World Bank fund for the poorest countries. These negotiations offer an opportunity to change course. Governments should shift their support for energy projects from the World Bank to institutions such as the new Green Climate Fund and the Energizing Development consortium, which are better placed to promote clean local energy solutions that benefit the poor. They also need to establish strict guidelines and standards at the new climate fund.

As part of the Power 4 People campaign, civil society groups are calling for a change of course in global energy finance through a global petition and a protest in Moscow. Using the power of the purse strings has worked before.  In the 1990s the World Bank pulled out of mega-dams after governments threatened to cut their contributions over destructive projects in India and the Amazon. In the meantime, better alternatives have become readily available. You can sign the global petition here.

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