Hydropower for Me but Not for Thee--with Two Postscripts

Summary: Senator Leahy (D, VT) represents a state which depends heavily on clean, cheap hydropower. His use of the budget bill to deny poor countries an opportunity to develop their hydropower resources leads to further erosion of global leadership by the United States and reinforces the need for BRICs Bank.

One of the great divides between the rich and poor worlds is the access to electricity. As Todd Moss has noted, consumption of electricity by a standard single-family American refrigerator is ten times the consumption of electricity by the average Ethiopian. An equally great divide is the use of hydropower. In most rich countries over 80% of economically-viable hydropower potential is tapped; in Africa, the comparable figure is under 5%. Many African countries are, accordingly, giving high priority to developing hydropower as a source of cheap, clean energy. But to tap this energy, they need assistance from external private and public partners. Historically the World Bank and other international finance institutions have played a major role. President Obama’s major initiative with Africa “Power Africa”, envisages a major role for hydropower. 

Into this picture steps Senator Patrick Leahy of Vermont, the ranking Democrat on the Appropriations Committee. The Consolidated Appropriations Act of 2014 contains a legislative provision authored by Senator Leahy seeking to prohibit the construction of hydroelectric dams in poor countries: “Section 7060(c)(7)(D). The Secretary of the Treasury shall instruct the United States executive director of each international financial institution that it is the policy of the United States to oppose any loan, grant, strategy or policy of such institution to support the construction of any large hydroelectric dam.”

I come from South Africa, have lived in Mozambique, Bangladesh, India and Brazil and worked for forty years on development. Time and time again I have seen NGOs and politicians in rich countries advocate that the poor follow a path that they, the rich, never have followed, nor are willing to follow. And so I took a look at the reality of hydropower in Senator Leahy’s home state of Vermont. On his website Senator Leahy states: “Vermont has 84 operating hydroelectric plants, with a total generating capacity of 190 megawatts, and also draws a large portion of its energy portfolio from hydropower facilities operated by Hydro Quebec…Senator Leahy believes hydropower is one component of the alternative energy solution.” At least 28 of Vermont’s dams meet the “large dams” definition used in the Leahy prohibition, as do all of the Quebec dams which supply electricity to Vermont. “Hydro-Québec’s clean, sustainable hydroelectric projects and relative price stability provide exactly the kind of power Vermonters have told us they would like,” says the CEO of Central Vermont’s Public Service.

As the Senior Water Advisor in the World Bank a decade ago, I had worked hard to bring some balance and common sense to this debate, and to incorporate these into the water policy of the Bank. It is clear to me how developing countries will see the stance of Senator Leahy. They will not see many of the inside-the-Beltway subtleties – that this is only a one-year provision; that it expresses the views of one senator and his staff, and not necessarily the administration; that it might be designed to start a conversation, not to end one. My experience suggests that developing countries will see this as follows. First, as with similar efforts in the past, this will be seen as breathtaking hypocrisy. If Senator Leahy is so adamantly against hydropower, let him show his commitment by first turning out the lights of Vermont. Second, it reinforces a prevalent view that US policy towards the developing world is driven by politicians who are driven by extreme single-issue groups at home, and give little attention to the proven instruments – including infrastructure – which lead to growth and poverty reduction. Third, Africans and others are turning and will turn, with great appreciation, to the governments and companies of China and Brazil and potentially to a BRICs Bank, who understand that electricity is one of the keys to a better life, and who will help Africans build the infrastructure they need for economic growth and poverty reduction.

Postscript:  

This story is not yet over.   As a recent Devex story on the Inga Dam reported: 

…the rest of Congress is hardly lined up behind Leahy, and the mandate the senator inserted in the omnibus bill will expire at the end of the fiscal year... Last month, the House Foreign Affairs Committee approved the Electrify Africa Act after inserting language that counters the Senate mandate. [On May 8 the bill passed the House.]

While the bill doesn’t mention any other form of energy specifically, it goes out of its way to say that “it is the policy of the United States ... to encourage private sector and international support for construction of hydroelectric dams in sub-Saharan Africa”…

Scott Morris, a former treasury official who oversaw U.S. relations with the World Bank and other  international financial institutions for the Obama administration [and now a senior associate at CGD], sees the lack of a clear policy on these issues as hugely detrimental to U.S. development interests.

“These are highly complex projects, and that’s the very reason you need the multilateral development banks involved,” Morris said, adding that backroom maneuvering like Leahy’s had become increasingly frustrating.

“There’s no reason that the mandate in the omnibus couldn’t have been more carefully crafted instead of creating a political straight-jacket for the U.S.,” he said. “And where are the hearings on these issues where we have a real airing of both sides?”

Another Postscript, July 8, 2014

Another act in this plot played out recently at the World Bank. On June 10th IDA funding for the 4000 mw Dasu project on the Indus River in Pakistan was approved unanimously by the Board of Executive Directors. This included the United States, which voted for the project and issued a statement which was a strong endorsement of the project.