After a decade of declining to finance giant hydroelectric dams, the World Financial institution is getting again into the enterprise in a giant means.
All through the final half of the 20th century, the financial institution was the world’s main supporter of massive hydro. However over the past twenty years, it adopted a zigzag sample as dam supporters and critics contained in the establishment took turns figuring out hydro coverage. Over the last 10 years, the critics — disturbed by large dams’ enormous social and environmental prices and their lengthy building timelines — appeared to dominate, and the financial institution supported just one new large hydro undertaking.
However earlier this week the financial institution’s board of administrators accredited a scheme to make the financial institution the lead financier in a $6.3 billion undertaking to complete building of the Rogun Dam in Tajikistan. The regularly stalled undertaking, launched in 1976, is now about 30 % full. If absolutely constructed, it will turn into each the world’s tallest dam, at 1,100 toes, and with its complete price ticket of $11 billion, one of many world’s most costly.
“The World Financial institution is revisiting initiatives it as soon as dropped due to apparent dangers, however these dangers didn’t go away.”
The World Financial institution and Democratic Republic of Congo officers even have been negotiating the phrases of a deal that would come with financing Inga 3, the third of eight proposed dams in a megaproject referred to as Grand Inga. Jaw-dropping in scale, Grand Inga is a $100-billion enterprise that may be the world’s largest dam scheme, almost doubling the ability output of China’s Three Gorges, presently the world’s largest hydroelectric dam, and probably bringing electrical energy to a large chunk of the African continent. It could additionally reconfigure the hydrology of the world’s second-most-powerful river, the Congo, in what opponents take into account environmentally dangerous methods.
As well as, final April the financial institution “agreed in precept” to guide a consortium of worldwide and regional banks financing a $1.1 billion dam, certainly one of Nepal’s largest, on the Arun River. Known as the Higher Arun, the dam is backed by Indian corporations, and its electrical energy is meant for export to India. However Nepal is already sated with hydroelectricity, and as My Republica, a Kathmandu newspaper, reported in October, it has for a number of years been losing large quantities of produced electrical energy due to the inadequacy of its transmission traces. The Higher Arun dam can also be being inbuilt a area that’s extremely weak to earthquakes and to floods brought on by the bursting of ice dams on glacial lakes.
Web site of the deliberate Higher Arun dam on the Arun River in Nepal.
Higher Arun Hydro-Electrical Restricted
The financial institution’s function in these initiatives marks a pointy shift in its strategy in the direction of hydroelectric dams. “Rogun and Inga are the most important dams on the earth, on a scale we haven’t seen in a long time,” mentioned Josh Klemm, co-executive director of Worldwide Rivers, an Oakland, California-based river safety NGO. From 2014 to this yr, the financial institution supported just one new main hydropower undertaking, Nachtigal in Cameroon. But between this week and mid-2025, the financial institution’s board of administrators is more likely to approve financing for 5 main dams, together with Rogun and Inga 3.
“We’re witnessing an enormous transfer [by the World Bank] to contemplate financing a spread of huge initiatives anticipated to have enormous impacts on river basins, or which have already provoked enormous, historic controversies,” mentioned Eugene Simonov, coordinator of the Rivers With out Boundaries Worldwide Coalition and a researcher on the College of New South Wales, Canberra, in an interview. “The World Financial institution is revisiting initiatives it as soon as dropped due to apparent challenges and dangers, however these dangers didn’t go away.”
In response to questions, World Financial institution officers mentioned in an announcement, “There was no coverage change on financing hydropower.” The assertion continued, “Nonetheless, it has turn into more and more clear that hydropower is a vital element of selling clear vitality investments,” citing hydropower’s potential to complement photo voltaic and wind vitality.
Proponents argue dams can generate enormous portions of renewable vitality in nations the place most individuals lack electrical energy.
The World Financial institution’s assist for large hydro has been intermittent because the late Nineties, when social and environmental controversies sparked by its dam-building efforts spurred it to convene an investigative physique — known as the World Fee on Dams — of 12 impartial consultants to make suggestions for correct planning, design, and building procedures for large dams. However the financial institution discovered the Fee’s suggestions, issued in 2000, so restrictive that it dismissed them. As a substitute, it adopted a coverage of “Excessive Threat/Excessive Reward” that wholeheartedly embraced large hydro. However the financial institution backed off when its dams as soon as once more triggered controversy. In 2013, the financial institution tried once more to again large hydro, then backed off till 2018, when it softened its social and environmental requirements for such initiatives.
“We consider the financial institution’s rediscovered fondness for large hydro displays a need by Ajay Banga, the financial institution’s president since June 2023, to kick off his tenure with a splash, even when that includes overlooking environmental and social points that beforehand would have dominated the initiatives out,” mentioned Klemm.
But financial institution officers appear to be taking part in down hydropower’s renewed prominence of their plans, consultants say, noting that they might not need to draw consideration to the excessive prices of constructing dams at a time when President-elect Donald Trump could also be contemplating ending U.S. assist for the financial institution. Mission 2025, the compendium of controversial nationalist insurance policies devised by advisors near Trump, says the brand new administration “ought to withdraw from each the World Financial institution and the Worldwide Financial Fund and terminate its monetary contribution to each establishments.” The U.S. is the financial institution’s largest contributor.
The Inga 1 and Inga 2 hydroelectric dams on the Congo River within the Democratic Republic of the Congo. A large third dam, Inga 3, is deliberate for close by.
Marc Jourdier/ AFP by way of Getty Pictures
Regardless of what number of of those initiatives lead to accomplished dams, consultants consider the financial institution’s involvement is not going to alter the worldwide dam-building business’s present downward trajectory, for a lot of more and more apparent causes. These embody dams’ huge upfront prices adopted by waits of so long as a decade or extra earlier than electrical energy revenues start flowing; their destruction of fisheries and riverine ecosystems; their displacement of a conservatively estimated 80 million folks world wide and their harm to the livelihoods of a half-billion extra; their substantial emissions of methane from some reservoirs; their steep reductions in vitality manufacturing when drought — which is more and more widespread as a consequence of local weather change — empties reservoirs, as is presently taking place in southern Africa and elsewhere; and the seeming coup de grace, their declining competitiveness with more and more more cost effective wind and photo voltaic installations.
Regardless of all this, hydro advocates argue for the know-how’s capability to generate enormous portions of renewable vitality in nations the place most individuals don’t have any electrical energy in any respect. Whereas dam business officers as soon as promoted their initiatives as essential to the financial growth of nations or areas, they now speak up hydro’s potential to enhance photo voltaic and wind.
River safety NGOs corresponding to Worldwide Rivers argue that the financial institution’s imprimatur lends an unjustified sheen to the business, encouraging different regional and worldwide banks to assist nonetheless extra dam initiatives. “We’re writing to specific our collective alarm on the notable surge in proposed and up to date World Financial institution assist for in depth hydropower growth,” started a nine-page, October 23 letter to financial institution leaders signed by greater than 100 environmental NGOs world wide. The letter known as on the financial institution to cease investing in just about all hydropower initiatives. The financial institution answered promptly however cursorily, reaffirming its “partnership” with the NGOs, but it surely didn’t tackle the letter’s factors.
Water impounded by the Rogun Dam will now not attain farmers who rely on it downstream, says an advocate.
Rogun and Grand Inga have been magnets for controversy for many years. Tajikistan is a locus of competitors in Central Asia, with Western, Arab, Russian, and Chinese language pursuits all competing for political and financial leverage; a method for Europe and the U.S. to achieve affect with Tajikistan’s leaders is to assist them construct the world’s tallest dam there. Supporting Rogun could also be a very potent tactic because the undertaking is very fashionable in Tajikistan and, in line with Simonov, the nation’s leaders are “obsessed” with the dam. One in all Rogun’s liabilities is that it’s going to displace between 50,000 and 60,000 folks, in line with a World Financial institution doc. Simonov mentioned engineering corporations proposed alternate plans to construct a dam that may be at the very least 115 toes decrease and displace as much as 30,000 fewer folks. Officers rejected these plans, in line with Simonov, as a result of their main curiosity was within the status they believed would include constructing the world’s tallest dam.
Between 2033, when Rogun is projected to be accomplished, and 2039, when its reservoir is slated to be full, the dam will start producing electrical energy and, in line with an appraisal ready for the financial institution’s board of administrators, “will convey important home and regional welfare advantages, contribute to the decarbonization of regional energy grids in Central Asia, and probably rework the Tajik financial system.” Of extra fast curiosity to Tajiks, the dam’s output ought to eradicate the electrical energy blackouts that disrupt heating in the course of the nation’s chilly winters. The catch is that the water that can flip the Rogun energy plant’s generators within the winter can be impounded from the Vakhsh River in the course of the summer time, which implies it should now not attain farmers and others who rely on it downstream in Afghanistan, Turkmenistan, and Uzbekistan, in line with Simonov. Rogun can even severely threaten Tajikistan’s Tigrovaya Balka Nature Reserve, a UNESCO World Heritage web site, by completely eliminating floods essential for sustaining floodplain forests, environmentalists say. And by the point the dam is completed, in line with the October 23 letter from NGOs to the World Financial institution, different renewable electrical energy choices are projected to be far cheaper.
The World Financial institution appraisal of Rogun categorized the undertaking’s total danger as “excessive.” Among the many dangers it enumerated had been the restricted expertise of Tajik officers, which has resulted in each design and building delays and “technical and dam questions of safety”; the undertaking’s affect on nationwide debt; the poor efficiency of Tajikistan’s electrical energy sector, which might restrict revenues from electrical energy gross sales; and the undertaking’s location in an lively seismic zone.
Like Rogun, Grand Inga, within the Democratic Republic of the Congo, has a convoluted historical past. Lengthy after the development of Inga 1 and Inga 2, in 1972 and 1982 respectively, the poorly maintained dams present electrical energy to just one in 5 Congolese, a situation that the proposed Inga 3, at a price of greater than $14 billion, is not going to change. Of Inga 3’s huge projected output of as much as 11,000 megawatts, 5,000 could be exported to South Africa (after the development of transmission traces costing one other $4 billion); 3,000 could be routed to mining corporations within the DRC’s Katanga province 1,700 miles away; and the remainder could be used to enhance electrical energy reliability in Kinshasa, the nation’s capital. Rural residents would proceed to do with out.
A examine evaluating greener vitality alternate options to Inga 3, printed in Environmental Analysis Letters in 2018, means that the dam isn’t financially prudent. It concludes that in most eventualities, “a mixture of wind, photo voltaic photovoltaics, and a few pure fuel is more cost effective than Inga 3.” Because the examine appeared, the prices of photo voltaic and wind have solely declined.
Correction, December 20, 2024: An earlier model of this text incorrectly acknowledged that the Rogun Dam would flood Tigrovaya Balka Nature Reserve. The dam would deprive the reserve of wanted floodwaters.