Carbon Market Watch

For fair and effective climate protection.

Barro Blanco Hydropower Project in Panama violates CDM Rules (Newsletter #12)

15 Feb 2011

Guest article by

Osvaldo Jordan, Alianza para la Conservacion y el Desarrollo (ACD)
Oscar Sogandares, Asociacion Ambientalista de Chiriqui (ASAMCHI)
Miguel Arjona, April 10 Movement for the Defense of the Tabasará River (M-10)

The Barro Blanco project (3237) is a 28.84 MW hydroelectric power plant in the district of Tolé, within the province of Chiriquí, Panama. The project has faced wide resistance and criticism related to serious concerns about the additionality of the project as well as lack of adequate public consultation and human rights abuses involving the company GENISA against the lands of the Ngobe indigenous peoples. Comments outlining these concerns were officially submitted by numerous indigenous communities and environmental groups in Panama during the public commenting period of the project and even prompted an investigation by the European Investment Bank (EIB). The results of the investigation are currently pending.

However, although confirmation was sent from the UNFCCC secretariat that comments were received, the auditor (AENOR) neither made them public nor took them into account when validating the project. AENOR subsequently recommended registration of the project but several Board members have requested a review of the project based on concerns related to the additionality of the project.

For a more detailed report of the case, please see a blog at International Rivers. Major concerns raised by civil society groups include:

  • Validation Report Omissions: With regards to the CDM consultation, ACD submitted comments in the first consultation process conducted in 2008. These concerns were never addressed by the CDM validator. Instead, AENOR opened a second validation process, in which both ACD and ASAMCHI again submitted comments. The CDM website acknowledged receipt of the ASAMCHI comments through email, but the website failed to display the comments as received by AENOR. Once again, AENOR did not address the substantial issues raised by this organization.
  • Public Participation: The Bakama area is legally recognized by the Government of Panama as collective property of the Ngobe indigenous people. Yet, most of the consultation for CDM validation, including the site visit by AENOR, only considered the opinion of the non-indigenous population. In this regard, the validation process for Barro Blanco violated the international principle of free, prior and informed consent contained in ILO 169 and the UN Declaration on Indigenous Peoples.
  • Compensation of affected communities: Following the principle that was also utilized in the Chan 75 hydroelectric project, GENISA has proposed the use of CERs to compensate the affected communities, including the Ngobe indigenous peoples. In the Chan 75 case, this question is currently being examined by the Inter-American Human Rights Commission, which raises serious questions about the appropriateness of using CERs for the compensation of affected communities when human rights violations have not been considered.
  • Additionality: Hydroelectric investment in Panama has an extremely favorable net present value, which derives from the sale of electricity generated by hydroelectric plants at prices comparable to thermoelectric plants with higher operations costs. This situation occurs when non-contracted electricity is sold in the sport market, which happens regularly in Panama. For this reason, there are currently about 87 hydroelectric project scheduled for construction in Panama at this moment. Recently, the Government of Panama has complained about the exaggerated levels of profit raised by hydroelectric companies and has even started investigations to avoid this type of speculation.

Action to be taken by the Board:

Several organizations, including the April 10 Movement for the Defense of the Tabasara River (M-10), Alianza para la Conservacion y el Desarrollo (ACD), and the Asociacion Ambientalista de Chiriqui (ASAMCHI), International Rivers and CDM Watch are now calling on the CDM Executive Board to extend the review to the issued raised above and to subsequently reject the project. They also call on the Board to take the results of the European Investment Bank´s investigation into account when deciding upon the fate of the project.