Government Audit Finds Hydropower Aid Doesn't Benefit the Poor

Government Audit Finds Hydropower Aid Doesn't Benefit the Poor
By Peter Bosshard
Huffington Post, July 8, 2014
www.huffingtonpost.com/peter-bosshard/government-audit-finds-hy_b_5564340.html

No other industrialized country relies on hydropower for its own power
generation as much as Norway. Norwegian companies build hydropower dams
around the world, including controversial projects like the Theun
Hinboun Dam in Laos. Norwegian development aid actively supports the
interests of the hydropower sector. Norway is also promoting hydropower
in international organizations and diplomatic initiatives.

Since the turn of the century, Norway has spent more than NOK 12 billion
(approximately $1.5 billion) on development assistance for the energy
sector. This aid consists of the following elements:

. Almost half of the assistance supported investments in mid-sized
hydropower projects in Chile, the Philippines and other countries
through SN Power, a state-owned investment company. The projects in
which SN Power has invested include Allain Duhangan in Northern India, a
dam that was bitterly opposed by the local population.

. Norwegian aid supports the planning and construction of transmission
lines, including a project that would export power from the
controversial dams in the rainforest of Sarawak to Indonesia.

. Norway is strengthening the capacity of Southern governments to build
hydropower projects, and funds feasibility studies for specific
projects. Norway has for example entered a hydropower partnership with
Ethiopia, and has funded studies for two large dams on the Blue Nile.
Only last month, the Norwegian government canceled this cooperation due
to the Ethiopian government's insistence on uneconomic mega-dams.

. A small portion of Norway's clean energy aid supports the development
of decentralized renewable wind and solar projects.

While the Norwegian Ministry of Foreign Affairs has failed to evaluate
its energy assistance, the government's Auditor General Office carried
out an in-depth assessment of the assistance and submitted the findings
to parliament on June 25.

The findings of the audit are highly critical. The Auditor General
states: "Norwegian assistance to clean energy has not led to a
noticeable increase in power generation and has contributed little to
improving living conditions for the poor in those countries that have
been prioritized for such support."

More specifically, the audit finds that Norwegian energy assistance is
"still primarily directed towards hydropower, although countries have
ample opportunities to utilize solar and wind energy resources." This
bias makes recipient countries "more vulnerable to failure in energy
supply" than a more balanced approach would have done. The support for
transmission lines has created energy access for over 100,000
households, although "primarily the wealthiest households" have
benefited from this. The various measures have not spurred private
investment in the recipient countries, and their economic viability is weak.

"A stunning 12.26 billion Norwegian kroners has had little effect on
electricity production, poverty alleviation and business creation in the
prioritized target countries," FIVAS, a Norwegian environmental
organization and long-time partner of International Rivers, commented on
the audit findings. "This confirms our view that too much Norwegian
support has been tied up in hydropower."

In his response to the audit, Norway's Foreign Minister agreed that the
rapid advancement of solar, wind and biomass power "will make it
possible to expand the breadth of investment in clean energy," and
accepted the recommendation "to strengthen efforts to improve energy
access in rural areas with small-scale renewable solutions." At the same
time, the Foreign Minister argued that among all technologies, Norway
was still best placed to extend aid for hydropower.

The strong and unambiguous findings of the independent audit offer the
government an opportunity to change course. A failure to do so in the
interest of the country's hydropower industry would dent the high
credibility of Norway's development assistance.

Norway is a leading voice in the global dams debate and is often
considered a model in development and energy finance. The new audit adds
to the growing evidence that large hydropower projects are not effective
at reducing poverty, and that better tools for achieving this goal
exist. The World Bank, the Green Climate Fund (which receives strong
support from Norway and will soon decide on its own energy priorities)
and other institutions should take note.

[An English translation of the audit report's main sections is available
at
www.internationalrivers.org/files/attached-files/norway_oag_report_translation_fivas_0714.pdf.]
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