Blog entry

Energy Security for whom? For what?

Energy is never far from the headlines these days. Conflicts of all kinds – political, economic, social, military – seem to be proliferating over oil, coal, gas, nuclear and biomass.

While some interests struggle to keep cheap fossil fuels circulating worldwide, a growing number of communities are resisting their extraction and use.

While an increasingly urbanised populace experiences fuel poverty and many people in rural areas have no access whatsoever to electricity, large commercial enterprises enjoy subsidised supplies.

As increasingly globalised manufacturing and transport systems spew out ever more carbon dioxide, environmentalists warn that the current era of profligate use of coal, oil and gas is a historical anomaly that has to come to an end as soon as possible, and that neither nuclear energy, agrofuels or renewables (even supposing they could be delivered in an environmentally sustainable and safe manner) will ever constitute effective substitutes for them.

For progressive activists, all this raises an unavoidable yet unresolved question: how to keep fossil fuels and uranium in the ground and agrofuels off the land in a way that does not inflict suffering on millions?

Mainstream policy responses to these issues are largely framed in terms of “energy security”, with a focus on “securing” new and continued supplies of oil, coal and gas, building nuclear plants, and translating renewables into a massive export system.

Far from making energy supplies more secure, however, such policies are triggering a cascade of new insecurities for millions of people — whether as a result of the everyday violence that frequently accompanies the development of frontier oil and gas reserves, or because the pursuit of “energy security” through market-based policies denies many people access to the energy produced.

Indeed, the more that the term “energy security” is invoked, the less clear it is just what is being “secured” as a range of different interest groups use it to signify many often contradictory goals. The multiple meanings of “energy security” are an obstacle to clear thinking and good policymaking. They are also an open invitation for deception and demagoguery, making it easy for politicians and their advisers to use fear to push regressive, militaristic social and environmental programmes.

Just as problematic, in fact, are the words “energy” and “security”, both of which have become detached and abstracted from their everyday meaning.

The report “Energy Security For Whom? For What?”, considers the pitfalls of “energy security”, both as policy and as rhetoric. Its four sections:

explore the abstract and historical concept of energy reflected in physics, which ignores the different types of political struggle connected with each energy source;
describe the wave of new energy enclosures justified by “energy security” that are creating new scarcities and insecurities as people are dispossessed of energy, food, water, land and other necessities of life;
outline how the neoliberal market-driven approach to energy and climate policy strengthens energy exclusions, while the financialisation of energy and climate creates energy shortages and delays effective climate action; and
summarise the violence that accompanies the everyday “normal” operation of fossil-fuelled industrialism that is entrenched within the “securitisation of everything”.

Energy Security For Whom? For What? was researched and written by Nicholas Hildyard, Larry Lohmann and Sarah Sexton (in alphabetical order).

Out of left field: A Kyrgyz inspiration for the EBRD

We’ve already discussed Kumtor more than once on this blog, but to quickly summarise what has happened so far:

The report of an interagency commission of state officials and NGOs found evidence that the gold exploitation by the Canadian Centerra Gold Corporation poses threats to the local environment – water quality and glaciers in particular. The report recommended among others to temporarily suspend operations at Kumtor.
The report’s annex included another report, written by Dr. Robert Moran (pdf) and published by Bankwatch, that describes how Centerra contaminated local waters and glaciers while hiding evidence from the public. (Dr. Moran had been part of the interagency commission, but eventually was forbidden to visit the mine. He didn’t let that change his conviction and embarked on his own, unofficial field visit, accompanied by me and a film-maker. Here’s a video account of it.)

Last week now, we could harvest some of the fruits of our work: Since the interagency commission had governmental status, its report and recommendations were discussed in both a government meeting and a parliamentary hearing.

During the government meeting, Deputy Prime Minister Aaly Karashev not only acknowledged the report’s findings, but ordered concrete measures (including deadlines for their implementation) to further examine and eventually remedy the negative impacts from Kumtor. (More detailed information on the Kyrgyz government’s website (Russian).)

The parliament decided to form another commission to examine other (including economic) aspects of Centerra’s activities that were not covered by the two reports.

All this is very good news and it is satisfying that our work over the last year hasn’t been in vein. Making sure that detailed, factual and well-grounded information on the Kumtor gold mine and its local impacts are available has been very difficult, especially with the mining company “[controlling] the mine like a private fiefdom, restricting access only to its close associates”.

Environmentalists and local people have complained for a long time. Now experts and finally the Kyrgyz government have spoken in a loud and clear voice. One element that is so far missing in the picture is the European Bank for Reconstruction and Development (EBRD), which has for a long time been too trustful in Centerra Gold and has approved another loan for Kumtor in 2010.

We hope the EBRD is keeping a close eye on these developments in Kyrgyzstan and acts accordingly. Putting aside the particularities of the Kumtor gold mine, the EBRD should take away some lessons from the case for its new Mining Operations Strategy. Bankwatch has offered a few suggestions already last year, among them establishing no-go zones for mining operations. Glaciers should be one of them.

Kumtor is one example where local water pollution has been caused by the mining operations. Furthermore, mining dust and the practice to store waste rock on glaciers has accelerated glacier melting (not predicted at this speed in Centerra’s and the EBRD’s impact assessments).

Ignoring risks like these will only increase the threats posed by climate change – in Kumtor and elsewhere. I urge the EBRD to opt for environmental precaution rather than business interests.

Read more on the Kumtor gold mine on our website.

Oil for nothing: European energy security endangers livelihoods in Nigeria

Europe’s actions in the Global South are, to say the least, ambiguous, and even more so when it comes to energy. On the one hand there is for example Commissioner for Development Andris Piebalgs promoting access to sustainable energy for “the poorest people on the planet” as part of the EU’s development cooperation. On the other hand there are European energy corporations extracting fuels with devastating impacts on the local population and environment.

Vivid proof for the latter gives a documentary filmed in the Niger Delta by film-maker Luca Tommasini: the 20-minute video exposes the devastating consequences that oil extraction by European energy corporations has on the lives of Nigerians and the environment. (The film has been produced by Bankwatch and three partner NGOs – Campagna per la Riforma della Banca Mondiale (Italy), Les Amis de la Terre (France) and urgewald (Germany).)

The documentary makes it clear that we Europeans are not innocent of the suffering of the people in the Niger Delta: Not only is it European corporations that extract Nigerian oil in a ruthless manner, disregarding Nigerian legislation and their own corporate rules of conduct. It is also the choices Europe makes to secure supply for our ever-increasing hunger for energy – no matter the costs for locals and nature.

One blatant example of the ruthlessness of oil companies depicted in the film is the continued use of gas flaring by Italian ENI in spite of the practice being made illegal in Nigeria because of the enormous health and environmental negative consequences. The company brazenly claims on its website (last accessed Feb 8, 2012) to have halted the practice in places where it hasn’t. (There are more details on ENI’s gas flaring in the Niger Delta in the report The reality behind EU “energy security” the case of Nigeria (pdf) that has been prepared following a fact finding mission to Nigeria last year.)

Tommasini’s documentary brings European audiences face to face with the consequences of their consumption practices and the rhetoric of their political representatives: with every unnecessary purchase, with every flight, with our constant quest for a more comfortable lifestyle we justify our governments to do anything in the quest for “European energy security”, including abetting our corporations to drill further for dirty oil, while destroying lives in Nigeria and elsewhere.

So what to learn from this?

Even if we all applied more considerate consumption patterns forthwith (which we should), it won’t suffice without seriously rethinking the European Union’s so-called „energy security strategy”. In spite of the imperative to shift away from fossil fuels as soon as possible to avoid dangerous climate change, the EU as the world’s largest energy importer plans to keep them in the energy mix for decades to come.

“The EU’s ‘energy security’ policy is not only killing Nigerians: in the long term, it is jeopardising everyone.”

Elena Gerebizza, from Campagna per la Riforma della Banca Mondiale and co-author of the menioned NGO report

Earth’s riches, people’s troubles. Mining in Central Asia

I’ve been all but dreaming of gold, copper and coal mines during the last few days when we prepared to launch the materials that my Bankwatch colleagues and others have gathered on fact-finding missions to mining operations in Kyrgyzstan and Mongolia.

The cases in question – the Oyu Tolgoi and Tavan Tolgoi mines in Mongolia and the Kumtor gold mine in Kyrgyzstan – are both important contributors to their country’s national income and both receive (or in case of Oyu Tolgoi may soon receive) support from the European Bank for Reconstruction and Development (EBRD). Both, however, pose risks to the local communities that can’t be compensated in monetary terms.

Here are some highlights from the published materials:

Mongolia’s mining boom

The report Spirited away – Mongolia’s mining boom and the people that development left behind (pdf) illustrates that the disruptions by the massive coal, gold and copper exploitations in the Gobi desert shouldn’t be expected to bring significant benefits to those who have lived there all their lives. Sukhgerel Dugersuren from Mongolian NGO OT Watch and co-author of the report puts it this way:

“Infrastructure building and pollution have put immense pressure on traditional nomadic lifestyles – already suffering from the impacts of extreme winters, with still very little in the way of jobs or social services offered in exchange to populations displaced to municipal centres. The greatest concern is the water scarcity and expected long-term shortages, yet affected people are left out of decision-making on this issue.”

This is where the bulk of the EBRD’s investments in Mongolia could be heading. The EBRD claims to add value to extractive industry projects like these by bringing higher environmental and social standards than otherwise would have been in place. But as the report shows, Mongolian authorities lack the capacity to adequately plan and control the rapid mining developments. The EBRD investments are then rather fuelling short-term commercial interests while disregarding long-term risks.

Having doubts? Then maybe listen to the displaced herders themselves:

Kumtor gold mine, Kyrgyzstan

In contrast to the Mongolian case, where negative local impacts are just beginning to take shape, the Kumtor gold mine has already generated a wealth of them – including toxic spills that have injured local people. (The mining company Centerra Gold plays it down and denies adequate compensation. Locals have gone to court.)

The report Kumtor gold facilities, Kyrgyzstan: Comments on water, environmental and related issues (pdf) by hydrogeologist and geochemist Robert Moran now adds yet another explosive layer to it. It shows that Centerra Gold has been contaminating local waters and glaciers while hiding evidence of such negative impacts from public oversight. (A shorter summary of the report’s findings can be found in our new briefing on Kumtor (pdf).)

Moran had been invited to conduct an independent technical audit of the Kumtor gold mine as part of a commission made up of Kyrgyz NGOs and state agencies’ representatives. Later however, Moran was forbidden to visit the mine, so he decided to make a field visit and take samples on his own account.

Moran was accompanied by a film team. The video is a great summary of what is happening at Kumtor and how people are struggling to have the mining company respect their rights.

(Seeing this, it gives me at least some sort of relief that my wedding ring is made of recycled gold that has been in family possession for a long time.)

Video: Spirited away – Mongolia’s mining boom and the people that development left behind

Earlier this week we published an overview of two Central Asian mining projects financed by the European Bank for Reconstruction and Development – the Kumtor gold mine in Kyrgyzstan and the Ukhaa Khudag coal mine in Mongolia’s south Gobi desert, which is part of the much larger – in fact the world’s largest – coal deposit at Tavan Tolgoi.

In their own way, both projects demonstrate the challenges inherent to using natural resources as the primary means to alleviate poverty and develop the social and economic infrastructure lacking in many Central Asian countries.

In advance of next week’s publication of two reports outlining in more detail these case studies from Kyrgyzstan and Mongolia, we’re publishing this video that illustrates the conflict between mining and those people who have traditionally relied on that same land for their survival.

Rushing into gold can leave people behind, EBRD

To say the mining sector policy of the European Bank for Reconstruction and Development decides over the fate of people in Central Asia and central and eastern Europe would probably be exaggerated and certainly too simplistic. But the bank has been encouraging numerous mining projects in the region over the past two decades and it is no secret that the exploitation of natural resources, especially in emerging and developing nations and especially by western companies, is a controversial topic.

The extractive industry can very well contribute to a country’s economic development and bring desired employment and revenues. At the same time mining is a highly disruptive activity with considerable negative impacts on the environment and the livelihoods of local communities. In countries with underdeveloped democratic structures, lack of institutional capacity or simply corruption, the damages can quickly overweigh. Benefits can then bypass the local level and end up enriching the involved companies and – not least – the technological progress and wealth in developed nations.

So a clear strategy for the EBRD’s engagement in the mining sector indeed bears no small meaning if they decide over whether or not to support investments that may end up hurting people and their livelihoods, damaging local environments and/or adding to climate change.

To the shame of the bank, it hasn’t updated its guidelines for metals mining since 1999! [1]

In the meantime the EBRD and Bankwatch have disagreed over the benefits of several mining projects, with the bank favouring the interests of its clients over the concerns of NGOs and local communities.

Gladly, the EBRD is finally working on a new Mining Operations Policy. But reflecting on EBRD projects from Kyrgyzstan and Mongolia, I can’t help but think the bank needs to consider very carefully and very fundamentally the role it wants to play in that sector. Surely, the bank has made mistakes in the past and, looking ahead, the stumbling blocks for mining projects that contribute to a development beyond GDP growth won’t just disappear.

Bankwatch will publish two reports next week, which will offer in-depth examinations of the impacts of EBRD-supported mining developments in these two countries. (Subscribe to our blog to stay updated.)

Kumtor gold mine – EBRD mining past and present

The Kumtor gold mine is an enormous – and enormously profitable – mine in the Kyrgyz Tian-Shan mountain range, an environmentally extremely fragile area with two glaciers, nearby national parks and a transboundary river. (I’ve uploaded some images from my visit there on flickr.)

Being supported by the EBRD since 1995, the operator of the mine Centerra Gold has neglected worrying environmental impacts, among others on the glaciers. It has also not been taking full responsibility for the damages that several accidents at the mine have done to the local population. Moreover, revenues for local authorities have been avoided [2], leaving only limited opportunity for jobs for people in the communities nearby.

In its communication with civil society, Centerra Gold has been nontransparent and unresponsive and the EBRD has not done enough to improve that. On the contrary, the bank has more than once been too uncritical about persisting problems and too trusting in Centerra’s “self-monitoring”.

And the story goes on: Centerra Gold managed to have another loan approved by the EBRD in November 2010 (a revolving debt facility from which the company hasn’t drawn funds yet).

Our report on Kumtor (to be published January 31) will take another close look at the project, its local impacts and at information which the company has been trying to keep away from public scrutiny.

Mongolia – the future of EBRD mining?

Unexploited natural resources in Mongolia (coal, copper, gold, and more) are so plenty that the country’s economy is estimated to grow at fantastic rates in the near future (14 percent on average between 2012 and 2016 and one quarter in 2013 alone).

Whether the promised revenues will help Mongolia to develop badly needed welfare services and build an economy that can sustain the depletion of its resources or sudden changes in commodity prices is an open question however. The dominance of the mining sector has already raised fears of a “dutch disease” or “resource curse”.

In terms of local impacts, water scarcity is the biggest issue: Mining companies like to point out that aquifers are abundant and unrelated to shallow water sources. The fact is, though, that there is just no clear evidence whatsoever – neither for nor against a danger of impacts on water sources. The current practice of first come-first served may well result in an unpleasant awakening in a few years (for the local population more so than for the mining companies).

Now coming to the EBRD, the bank finances the Ukhaa Khudag coal mine that’s within the Tavan Tolgoi coal deposit and examines a potential investment in the Oyu Tolgoi gold and copper mine project. Both are located in the South Gobi region and near the Mongolian-Chinese border. Additionally, in December the Bank approved a USD 350 million loan for the Tsagaan Suvarga copper mine and is about to decide next week on a 55 million loan and equity investment in the Tayan Nuur iron ore mine.

Leaving the issue of financing coal production aside (we’ll come to that in a later blog post), the EBRD should be very careful not to contribute to Mongolia’s potential overdependence on commodity exports. To illustrate the bias towards natural resources: Total EBRD investments in Mongolia were EUR 338 million by the end of 2010. The loan to Tsagaan Suvarga from 2011 alone will double that figure. With an equally sized investment in Oyu Tolgoi (pdf) in the 2012 project pipeline it will be hard to strike a balance in the EBRD portfolio with minimal investments in other sectors of the Mongolian economy.

Rather than following the trend that’s anyway happening, the EBRD could help Mongolia diversify by diversifying its own portfolio in the country. There are lots of other important areas that need investments in Mongolia and that don’t profit from an international business hype: agriculture, infrastructure, municipal and environmental services.

Our report on Oyu Tolgoi and Tavan Tolgoi will come out January 30 and will take a detailed look at the risks connected to both projects and the lack of sound information on local impacts available to date.

Notes

1. Since the EBRD’s Energy Policy of 2006 replaced the Natural Resources Operations Policy of 1999, mining of metals and health and safety issues were in need of separate policy guidelines. Following a recommendation from its evaluation department, the bank now develops a new policy to cover all forms of non-energy related extraction of natural resources.

2. “[T]he companies are exempted from paying any present or future Taxes or any present or future rents payable to any local or national governmental authority related to the use or occupation of land in the Expanded Concession Area. This is a very expansive concession for a government to make to a company. There is neither provision for it to increase, nor any provision for a local authority to tax the land. Further, all direct financial benefits are rendered unavailable to local governmental authorities and agencies.” (Analysis of the Agreement between Centerra Gold and Kyrgyzstan done by the Center for Science in Public Participation)

This post has been updated on January 27, 2012 to correct a citation source.

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