ANNUAL REPORT 2001

18 July 2005

TNI

The commodification of the energy sector is a worldwide trend. People in both the Global South and the North are experiencing the effects of such radical corporate- driven transformations. What used to be an exclusive and strategic responsibility of national governments has been turned into an arena for market competition. The power industry is being deregulated, while national borders are opened to transnational capital. Governments are privatising the exploitation of domestic oil and gas reserves. Under the new rules of the liberalised economy, foreign investors are taking over the production and distribution chains of energy on a global scale. Pushed by increased competition, a few American and European corporations are restructuring the energy market, laying off workers and paying scant regard to the social and environmental impacts of their actions. While the labour movement and progressive NGOs argue that access to secure and clean energy is a basic right, corporations have already redefined the meaning of energy as a commodity that must be produced and traded for maximum profit.

International financial institutions and multilateral development banks are playing a central role in this process. With complete disregard for specific economic, political and social contexts, these institutions have designed, sponsored and pressured for the implementation of a one-size-fits-all model of energy reforms throughout the world.

Liberalisation or deregulation and privatisation of the energy sector are common components of structural adjustment packages imposed by the World Bank and regional development banks on Southern countries. They also constitute a condition established by regional trade agreements such as NAFTA and those between the EU and governments of the South. The themes echo again in the General Agreement on Trade in Services (GATS), for which a time-table to prepare for negotiations with a view to further liberalisation was set for June 2002 at the Fourth World Trade Organisation Ministerial in Doha, Qatar.

This is not an irreversible process, however. During 2001, the world experienced several concrete examples of the failure of market-led energy reforms. Soon after the disastrous Californian power crisis, the collapse of the Brazilian energy grid hit the headlines, and towards the end of the year there was the scandalous financial collapse of the ENRON Corporation, followed by exposes of its political connections in the USA and unethical conduct in countries where it was operating, notably India. These events among many others reaffirm the need for a critical review of market-led energy reforms at a global level, with a view to developing sustainable policy strategies. This is an important dimension of the TNI Energy Projects work, which is well placed to make a meaningful contribution being a truly global research, advocacy and capacity-building network.

In 2001, the project undertook collaborative research work on power sector regulatory reform in Asia; regional energy integration in Latin America; and transparency in multilateral development banks as regards energy policy. A Latin American regional platform of concerned organisations is being built, while similar efforts are also being made at the Asian level. In Central Eastern Europe, CEE Bankwatch already plays a leading role in such a regional network. The project as a whole is assisting in the stimulation of similar efforts in Africa. A major focus for Global Village Cameroon is the role of the African Development Bank in energy restructuring on that continent.

Power Sector Regulatory Reforms in Asia

A growing number of NGOs and movements from across the world are standing up to market-led reforms, particularly after the eruption of exemplary disasters in the energy sector in 2001, such as the ENRON collapse and the Californian and Brazilian crises.

The Energy Projects partner in India, Prayas, has been working rigorously and extensively in this area undertaking a number of studies in India. The results of these were presented at a seminar, focused on regional struggles for the democratisation of the power sector, which Prayas organised at the end of 2000. In 2001, this led TNI, Focus on the Global South and Pelangi, the Energy project partner in Indonesia, to co-operate in extending the research and networking programme to the Asian region more broadly.

The time is ripe for such collaborative regional analysis as controversy rages in Asia about the mixed results of liberalisation in the power sector. In some Indian states, for example, privatisation has gone awfully wrong, with the result that the population is suffering tariff hikes many cannot afford. Nevertheless, other states continue to court similar schemes regardless of such alarm bells. It is anticipated that the projects analysis will be very useful for NGOs and movements in countries where privatisation is still in its early stages.

The Energy Project contributed significant new data and analysis to the international debate on the Enron controversy. Over the past three years, Prayas has been monitoring the activities of Enron Corporations subsidiary in India (Dabhol Power Company or DPC) and the state utility in the state of Maharashtra (Maharashtra State Electricity Board or MSEB). Prayas subsequently published two booklets giving details of the different aspects of Enrons involvement in power restructuring in India.

The Latin American Power Platform

In June 2001, the Colombian partner, CENSAT Agua Viva, hosted an international seminar on Energy for Sustainable Societies. Participants included Energy Project partners from Uruguay, Cameroon, Indonesia as well as representatives of other environmental and social organisations from Colombia, Ecuador, Paraguay and Nigeria. The seminar was dedicated to the memory of the leader of the Emberá Katío nation, Kimy Pernía Domicó, who had been desaparecido shortly before the meeting. This activist had been involved in a long struggle for the rights of the indigenous peoples, and especially against the negative impacts of the hydroelectric Urra Project. The proceedings of the seminar were collected for a book to be published by the Energy Project in early 2002, in English and Spanish, as Energy for Sustainable Societies.

At the seminar, the Cameroonian partner GVC discussed the energy aspects of the current global negotiations on climate change, while the Indonesian partner Pelangi made a presentation on energy sector privatisation in its country. The Uruguayan partner CEUTA, meanwhile, presented an analysis of power restructuring and alternatives for sustainable energy in the MERCOSUR region.

The CEUTA presentation was based on research undertaken in the course of 2001 into the social and environmental impacts of regional power integration. The study is to be published in early 2002 by the Energy Project as Energía, Ambiente y Desarrollo en el Mercosur (Energy, Environment and Development in the Mercosur). The issue of regional integration was also the focus of a region-wide Energy Project initiative aiming to map mega energy sector- projects across South America.

Such research will help to strengthen the regional power platform (Plataforma Energética Latinoamericana para Sociedades Sustentables), which CENSAT Agua Viva is developing for Latin American. During 2001, the Colombian partner deepened co-operation with a broad range of organisations and movements (environmental groups, trade unions, peasants organisations and urban communities) across the region. The principles of the platform are environmental sovereignty; democratic national, regional and global policies; accountable rules and legislation; and sustainable energy consumption patterns.

Meanwhile, CENSAT Agua Viva and CEUTA prepared for a joint workshop onenergy for sustainable societies to take place at the 2nd World Social Forum in Brazil next year.

Public Participation Standards in Regional Development Banks

In 2001, the Energy Project conducted a comparative study of public participation standards and information disclosure across a range of lenders, starting with the regional development banks and including the World Bank. The Energy Projects Central Eastern European partner, CEE Bankwatch, took the lead in this initiative, providing support for case studies across the Global South. Throughout 2001, the Energy Project promoted transnational co-operation for monitoring and campaigning in relation to the policies and projects of the African Development Bank, the Inter-American Development Bank and the Asian Development Bank.

The study was aimed at generating background information useful for NGOs and movements wanting to more effectively pressure regional banks to adopt more accountable policies for the implementation of publicly-funded projects. In the view of the Energy Project partners, the current lack of transparency and participation enables socially and environmentally destructive projects to pass uncontested for development- related spending. Social pressure is having some effect in that most multilateral development banks (MDBs) have begun to review their information policy. It is hoped that this heralds the opening of space for more meaningful inputs towards greater public accountability.

The results of the survey highlighted deficient policies within and between the regional banks and the World Bank. The final results will serve as a basis for three skillshare workshops to be held in Cameroon, Colombia and Thailand in the course of 2002. The survey is expected to be especially useful for the work planned around the African Development Bank, which ranks quite poorly on information disclosure and public participation indicators.

Sustainable Energy and Economy Network

Meanwhile, the Sustainable Energy and Economy Network, the joint TNI-Institute for Policy Studies (I PS) project directed by fellow Daphne Wysham based at IPS in Washington, complemented the work of the TNI Energy Project in 2001.

The Sustainable Energy and Economy Network (SEEN) is a joint project of TNI and the Institute for Policy Studies (IPS) in Washington DC, co-ordinated by fellow Daphne Wysham. SEEN undertakes research and advocacy in partnership with citizens groups in the USA and globally on environment, human rights and development issues with a particular focus on energy, climate change, environmental justice, gender equity, and economic issues, particularly as these play out in North/South relations.

SEEN views these issues as inextricably linked to global security. Throughout this century, wars have been fought over fossil fuels. The reliance of rich countries on fossil fuels fosters a climate of insecurity, and a rationale for large military budgets in the North. In the South, it often fosters or nurtures autocratic or dictatorial regimes and corruption, while exacerbating poverty and destroying subsistence cultures and sustainable livelihoods. A continued rapid consumption of fossil fuels also ensures catastrophic environmental consequences. Climate change is a serious, emerging threat to the stability of the planets ecosystems, and a particular hazard to the worlds poorest people. The threat of climate change also brings more urgency to the need to reorient energy- related investments, using them to provide abundant, clean, safe energy for human needs and sustainable livelihoods.

SEEN views energy not as an issue examined in isolation, but rather as a vital resource embedded in a development strategy that must simultaneously address other fundamentals such as education, health care, public participation in decision-making, and economic opportunities for the poorest. To this end, SEEN works to steer the financial investments of wealthy countries away from support for fossil fuels and towards more socially responsible and environmentally friendly alternatives, while ensuring that the fundamental building blocks of human development are not stripped away. Support for energy efficiency and renewable energy is a key element, together with creating the conditions to meet the needs of the poorest, North and South, in an equitable and democratic manner.

In January 2001, Wysham convened an international seminar onHuman Rights and International Financial Institutions in Ranchi in the state of Orissa, India, attended by representatives of 60 organisations internationally. This event served as an opportunity for the two projects to meet.

SEENs work in 2001 included the launch in October of a very useful data base of all fossil fuel projects financed or approved by the World Bank Group since 1992, available online at www.seen.org.

Throughout the year, the project continued to monitor and expose the role of the World Bank in promoting fossil fuel projects, including the financing of a massive coal mine in China, and a new deal with Shell in Nigeria which takes no account of community concerns. SEEN also participated in the Earth Day events taking to task the new Bush Administrations torpedoing of the Kyoto Protocol and the lack of apparent commitment in current US policy to reducing global warming.

Research on the role of export credit agencies (ECAs) in sustainable energy, undertaken jointly with the World Wildlife Fund (WWF) in Switzerland, was concluded with the publication of a report by Kate Hampton entitled Credit Where its Due: The Role of Export Credit Agencies in Promoting Sustainable Energy. Taking a climate change perspective, the report noted that ECAs have pumped billions of dollars into the development of long life carbon intensive capital stock, particularly in developing countries. Most of these financing deals were struck in secrecy with little or no environmental safeguards, yet underwritten by public funds. ECAs have long argued that such issues have no relevance for their activities because their mandate is to promote commerce and exports. SEEN and WWF, however, respond with the argument that as long as ECAs are publicly funded, they must be held publicly accountable where they abrogate the ethical and environmental policies of governments. Furthermore, the SEEN/WWF report challenged whether the ECAs are even fulfilling their purely commercial mandate properly, given that their lending portfolios do not reflect the growing shift in the market towards cutting edge clean technologies and the burgeoning alternative energy industry. The report makes a series of short and medium term recommendations that would enable ECAs to better support sustainable energy policies.

Meanwhile, work on a report on aluminium smeltering worldwide continued, due to be completed in 2002.