Hundreds of Liberians have filed a complaint accusing a U.S. government agency of failure to carry out due diligence or ensure that safeguards were followed for investments made to a failed biomass project in Liberia.

From 2009 to 2011, the U.S. Overseas Private Investment Corporation (OPIC) made three loans to a Dutch-registered company, Buchanan Renewables, that aimed to replant a mature rubber plantation in Liberia and use the old trees to run a new biomass-fired power plant, which the company also wanted to build. The OPIC loans, totalling around 217 million dollars, constituted 70 percent of the project’s total costs.“This so-called development project destroyed livelihoods and drove communities deeper into extreme poverty.” -- Francis Colee

The scheme, which has since failed, was initially described as a climate-friendly, pro-poor attempt to resuscitate Liberia’s rubber industry while powering its economy. Yet according to the new complaint, filed Wednesday, the project was rife with abuses.

Further, the complainants say the company’s sudden withdrawal has resulted in hundreds of local community members being unable to support themselves or their families. OPIC investigations, they say, should have flagged these and other potential problems, and they are now calling on the agency to offer reparations.

“Because of OPIC’s role in this project, people in Liberia are actively suffering from hunger and environmental damage that has been catastrophic to their livelihoods,” Natalie Bridgeman Fields, the executive director of Accountability Counsel, a watchdog group representing some of the Liberians party to the complaint, told IPS.

According to the complaint, OPIC oversight should have realised that the Buchanan Renewables plan would prevent local farmers and charcoal producers from making an independent living once the project got underway. While locals did sign contracts to tend to the new rubber trees and do related work, this set-up also made them entirely dependent on the company.

“OPIC, in violation of its social and environmental rules, failed to require an appropriate level of due diligence regarding [Buchanan Renewables’] operations in Liberia,” the complaint, addressed to OPIC President Elizabeth Littlefield, states, “and did not take adequate action to stop or remedy the harm experienced” as a result of the company’s activities.

OPIC has adopted a series of social and environmental safeguards, created by the International Finance Corporation (IFC), the World Bank’s private-sector arm, that should protect against such situations. Yet rights groups say the system appears to have broken down.

“This so-called development project destroyed livelihoods and drove communities deeper into extreme poverty,” Francis Colee, of Green Advocates International, a Liberian group representing those party to the new complaint, said Wednesday. Another Green Advocates representative, Alfred Brownell, noted the project “left behind a legacy of abuse”.

No contingency

The Buchanan Renewables biomass project in Liberia revolved around an old rubber plantation previously owned by Firestone, the global tire manufacturer. While the plantation’s trees were considered past their prime, locals continued to tap the trees or convert them into charcoal, a critical energy source for the country.

The Buchanan plan, which also had some backing from the Swedish government and investors, entailed cutting down and replanting these trees, with the old wood made into chips to be burned and converted to electricity. However, the company moved to cut down the trees before the Liberian government decided whether to permit the construction of the new power plant.

Eventually the government decided not to allow the permit and, faced with a collapsed business plan, by the beginning of 2013 Buchanan Renewables suddenly pulled out completely (a full report was released in March 2013 by the Dutch watchdog group SOMO). The company, previously owned by the Geneva-based McCall MacBain Foundation, was subsequently dissolved.

In retrospect, there appears to have been no contingency planning by the company in case the power plant construction wasn’t allowed. And evidently, OPIC didn’t enforce such a requirement, either.

“We see it as OPIC’s job now to fix this situation,” Accountability Counsel’s Fields says. “But we’ve been talking to the agency for a year and they’ve only delayed, showing very little interest in what they’ve done wrong.”

In an accompanying report released Wednesday, Accountability Counsel says that OPIC did express some interest in exploring some form of reparations in November. But the groups said it decided to go forward with the complaint after “numerous attempts to engage” since November “did not result in a commitment from OPIC to engage in a process for discussing remedy”.

The complaint outlines two types of problems, those that took place during the Buchanan project and the ongoing impacts of the company’s sudden withdrawal. The complainants outline flagrant labour violations, including allegations of systemic sexual abuse against female workers.

“We were forced to work under terrible conditions without safe drinking water or proper safety equipment, leading to illness and serious injuries,” Sam Yeadieh, a representative for the former workers, said in a statement. “We were not paid what we had earned, and women were abused on the job.”

Since the company’s departure, rights groups say the young rubber trees have died, the woodchips have poisoned local water supplies, and livelihoods have been ruined. The charcoal producers, meanwhile, have been forced to start cutting into the surrounding forests for fresh product – a process that both negates the project’s intended climate impacts and may have led to a significant national price spike in charcoal prices.

Limited liability

OPIC says that is aware of the “unconfirmed allegations” around the Buchanan Renewables project and is currently working to determine what “additional steps it may take”.

“One of OPIC’s driving principles is positive development impact, and we regularly monitor OPIC-supported projects to ensure that all appropriate protections are in place to support this principle,” Charles Stadtlander, a press representative for OPIC, told IPS.

“While Liberia is a post-conflict country with a challenging social and economic operating environment, the Buchanan project was subject to these same protections. OPIC’s support of this project ended in January 2013 after its loan was repaid and the contract concluded.”

Accountability Counsel’s Fields says that OPIC’s accountability rules are limited, with the agency seeing the repayment of loans as essentially ending its liability. Yet she also notes that OPIC’s role is set to increase significantly around a spate of new U.S.-led electrification projects in Africa, and that the Liberia experience thus offers important lessons.

“This really calls into question whether OPIC can be trusted at all for investments on development and positive climate impacts,” she says. “Faced with a project that should have been an obvious alert, they dropped the ball. There’s no reason they should now be trusted with any project without additional oversight.”

Advocates say that public opinion, both domestically and internationally, is already in the midst of broad changes regarding dirtier forms of energy production. Credit: Bigstock

By Carey L. Biron
WASHINGTON, Jan 14 2014 (IPS)

Environmentalists and some lawmakers are decrying a surprise move by conservative members of Congress to roll back landmark “clean energy” policies guiding U.S. investments in overseas power projects.

Two federal agencies have new guidance in place largely barring government investment in power-generation projects that fail to adequately cut carbon emissions. The rules, by the Export-Import Bank and the Overseas Private Investment Corporation (OPIC), which facilitate U.S. private investments into foreign projects, would essentially discontinue U.S. funding for overseas coal-fired power generation."Industry and the politicians that represent them are panicking." -- Janet Redman

Yet a surprise addendum to a massive U.S. government spending bill would disallow the Export-Import Bank from implementing its new rule, which was unveiled in December. The provision, made public Monday evening, also guts a court-ordered greenhouse gas cap put in place in 2009 to force OPIC to set limits on the carbon emissions of its investments.

“In our view, this is a direct attack on one of the key achievements of the president’s Climate Action Plan,” Justin Guay, a Washington representative for the Sierra Club, a conservation and advocacy group, told IPS.

“This was the coal industry striking back symbolically at what it saw as a very serious set of political headwinds, as the overseas markets represent their lone opportunity to remain a relevant industry.”

According to media reports, the new provision was offered by Hal Rogers, the top Republican lawmaker in charge of crafting the massive appropriations bill, which allocates funding for nearly all parts of the federal government. On Tuesday, Rogers touted the passage of “A provision to prohibit the Export-Import Bank and OPIC from blocking coal and other power-generation projects, which will increase exports of U.S. goods or services.”

Rogers is a representative from the state of Kentucky, where the coal industry has traditionally been particularly strong.

An OPIC spokesperson told IPS that, for fiscal year 2014, the new legislation “permits OPIC to consider power projects in poor countries that would otherwise be subject to its [greenhouse gas] portfolio reduction goals, while preserving other pre-existing environmental, labour, human rights and credit criteria.”

Ex-Im model

The second half of last year saw a flurry of high-level activity on environment issues here, following a major climate-related speech given by President Barack Obama. One element of this was the administration’s move to severely curtail U.S. funding streams, both public and private, for coal projects abroad.

Following on new regulatory proposals for future power plants here, the Export-Import Bank in December announced that it would only finance overseas power projects if they put in place “carbon capture and sequestration” technologies, to store emissions underground.

“The Export-Import Bank was the world’s first export credit agency to have announced restrictions of this type,” Guay says.

“They really went out on a limb to put these guidelines in place, but then also worked with governments around the world to replicate those policies. The subsequent successes we’ve seen are almost entirely due to the leadership and pressure from the Obama administration.”

Seven countries and four international financial institutions have now passed some form of the Export-Import Bank’s guidelines on energy-related funding. Guay says this is seen as an important success for the Obama administration – and an indication that the president is taking on stronger international leadership on the issue.

For now, however, this victory appears to have been snatched away. While U.S. legislative proposals are typically open to debate and changes, the new appropriations bill will likely not see such a process.

The bill not only covers a huge swath of issues, but is also seen as an important – and uncommon – result of negotiations between the two political parties. On Tuesday, the White House indicated that it supported passage of the bill in its current form.

Yet nearly all lawmakers over the past day have noted that there is much to dislike in the proposal, with some specifically highlighting the new OPIC and Export-Import provisions.

“There are also some things I wish were not in here, particularly a House provision that would weaken limits on carbon emissions from projects financed by the Export-Import Bank and Overseas Private Investment Corporation,” Senator Patrick Leahy said on the Senate floor on Tuesday. “We should be using public funds to support exports of clean, renewable technology, not to fund power projects that worsen global warming.”

Altruistic appearances

Still, advocates say that public opinion, both domestically and internationally, is already in the midst of broad changes regarding dirtier forms of energy production. This is particularly the case with coal, which many analysts see as a dying industry in the United States.

“In a sense, industry and the politicians that represent them are panicking,” Janet Redman, director of the Climate Policy Programme at the Institute for Policy Studies, a Washington think tank, told IPS. “Because of this, we’ve seen an overall attack on the ongoing shift away from fossil fuel. Part of this is industry players pushing new ideas like ‘clean coal’ or natural gas as a ‘bridge’ fuel.”

Redman draws a link between these new, ostensibly more progressive, campaigns and a tactic she says is part of the push against the OPIC and Export-Import guidelines.

“We’re seeing some folks say that the idea here is about development goals and reducing poverty,” Redman says. “But I’m concerned that fossil fuels interests are hiding behind what looks like an altruistic motive as a way to build up the industry.”

In mid-December, two Republican lawmakers, including another representative from Kentucky, decried the restrictive new U.S. policies on overseas energy investment.

“The actions raise questions … [about] the practical impact of U.S. international humanitarian goals, trade policies, and foreign commerce,” the lawmakers, Fred Upton and Ed Whitfield, stated in a letter to U.S. Treasury Secretary Jacob Lew.

“Requiring [carbon capture and sequestration] would constitute a de facto ban on construction of state-of-the-art new coal-fired power plants – projects that some of the countries in greatest need of reliable and affordable electricity seek today.”

Such warnings notwithstanding, the Sierra Club’s Guay says the new provisions appear to have caught by surprise many proponents of cleaner overseas energy investments.

“We weren’t expecting such a problematic set of language around these provisions – it seems to have been kind of snuck in during the dead of the night,” he says.

“The [Obama] administration is not going to be happy. But one silver lining could be that this attack will have woken up both the administration and the activist community to how important this [provision] was and how much defence it will require going forward.”

Relatively cleaner-burning natural gas continues to be seen as an important “bridge” fuel for the foreseeable future. Credit: Bigstock

By Carey L. Biron
WASHINGTON, Sep 13 2013 (IPS)

A debate is heating up here over the extent to which U.S. government-facilitated private-sector development investments should be required to take into account how those ventures impact on climate change.

The discussions focus on a small and relatively little-known federal agency, the Overseas Private Investment Corporation (OPIC), the government office in charge of mobilising private capital in pursuit of international development priorities. While OPIC generally receives high marks, in recent years some groups have been particularly impressed by the agency’s focus on investments in small-scale, de-centralised renewable energy projects."The world has completely changed, and we already have cheap, nimble, profitable micro-grids specifically serving poor populations." -- Justin Guay of the Sierra Club

“Outside of USAID” – the government’s main foreign aid arm – “OPIC is investing pretty much the only U.S. [government] money specifically for off-grid clean energy that directly supports clean energy access for the poor,” Justin Guay, a Washington representative for the Sierra Club, a conservation and advocacy group, told IPS.

“Any energy investment today by most agencies is about ‘energy access’, but this is disingenuous because that energy goes into the grid and the vast majority is then consumed by the rich and by large companies. Without associated infrastructure to rural areas or to make energy affordable for the poor, most of these investments are just increasing the general supply.”

OPIC’s mandate is set to run out soon, and Congress is currently tasked with figuring out the details of its re-authorisation. The Sierra Club and some other groups are warning that new legislation could undermine the agency’s unique coupling of climate-related and anti-poverty aims.

Capping the cap

Since its establishment in the early 1970s, OPIC has mobilised and insured some 400 billion dollars in investments in more than 4,000 projects in 150 countries. The agency says its renewable portfolio today stands at around one billion dollars.

Last week, OPIC and 14 other development institutions agreed for the first time to “substantially scale up” their green investments in developing countries, with the aim of collecting 100 billion dollars a year for the effort by 2020.

“The challenges of transitioning to a green economy are far outweighed by benefits of job creation, innovation and poverty alleviation,” Elizabeth Littlefield, OPIC’s president, said following the meeting.

In addition to Littlefield’s reported personal commitment to these issues, OPIC’s focus on investment in green energy was motivated by a 2009 court decision that forced the agency to pay attention to the carbon emissions of its investments. The result was a binding policy to reduce the greenhouse gas emissions of its projects by 30 percent by 2018 and by 50 percent by 2023.

It is this emissions “cap” that is now the focus of debate in the U.S. Congress. While some are demanding that the regulation be maintained or even extended to other agencies, others are urging that it be tweaked or done away with entirely.

Some among this latter group represent oil-and-gas interests with a clear business stake in weakening the emissions cap. Yet a more nuanced view is also being offered by development scholars and advocacy groups worried about an imbalance between long-term international aims and immediate human development issues.

“There’s broad recognition that to really have a transformative impact and to reach billions of people there’s going to need to be a mix of renewables and non-renewables, but for some countries natural gas is a more viable model to provide access to citizens and unleash private business activity,” Ben Leo, a senior fellow at the Centre for Global Development, a Washington think tank, told IPS.

“My sincere hope is that a compromise can be found amongst environmental and development groups. One could imagine, for instance, a very limited exception to the OPIC greenhouse gas cap for a small subset of countries – those that are very poor and very low emitters of carbon dioxide. Niger, for instance, has basically zero emissions.”

Access vs resilience

Much of the impetus for the current discussion around the greenhouse gas cap is centred on energy access in Africa. In part this is due to President Barack Obama’s new Power Africa initiative, proposed during his trip to the continent in June, which aims to double energy access in sub-Saharan countries through a mix of public and private investment.

As part of the proposal, OPIC would commit around 1.5 billion dollars in energy project funding and insurance, which recent experience would suggest would be largely earmarked for renewable and decentralised projects.

As part of a related bill currently pending in the House of Representatives, however, Congress would require that OPIC issue new guidance that could weaken the emissions cap. Similar talks are now taking place in the Senate. (OPIC was unable to offer comment on these legislative proposals by deadline.)

“We’re concerned that there are some folks who think we need to loosen the cap in order to make room for natural gas and fossil fuels, because those energy sources are cheap,” Janet Redman, director of the Climate Policy Programme at the Institute for Policy Studies, a Washington think tank, told IPS.

“But the role of development finance institutions is to take into account both pieces of the formula – we can’t look at energy decisions without looking at their impacts. Similarly, it’s worth examining who would really benefit from lifting this cap – local communities or the companies that would be investing in massive natural gas infrastructure?”

Multilateral funders have increasingly run up against the tension between energy access and climate concerns. The past year has seen increasing movement away from certain very dirty forms of energy – both the World Bank and the United States, for instance, largely banned the overseas funding of new coal-fired power plants.

Nonetheless, relatively cleaner-burning natural gas continues to be seen as an important “bridge” fuel for the foreseeable future, in part because U.S. supplies have made it both plentiful and cheap.

Those now advocating for OPIC’s greenhouse gas cap note that other foreign aid funders – including within the U.S. government – will continue to focus on non-renewable energy investments. But they also view the resilience of green, decentralised energy production to be an important anti-poverty goal in and of itself.

“To a great extent our stance is not really based on climate concerns – this is just the right tool for the job,” Sierra Club’s Guay says.

“The debate is centred on an outmoded debate on clean energy, that it’s expensive. But the world has completely changed, and we already have cheap, nimble, profitable micro-grids specifically serving poor populations. It would be a tragedy if this debate gets focused through a prism that’s decades old.”