Sri Lanka: A “Clean Energy” Project that was not So Clean

Extracted from the research of Cynthia Caron

Today’s smart business money is going into buying carbon credits from projects that seem particularly meaningless when it comes to addressing climate change: projects to destroy industrial gases or landfill methane and the like. These are the cheapest credits and they can be obtained with the least trouble.

But there do exist, after all, carbon projects that promote energy efficiency or renewable energy technologies. The Kyoto Protocol’s Clean Development Mechanism has dozens of such schemes in its pipeline, although they generate only a miniscule proportion of total credits. Some of these projects are even small and community-based.

So far, however, such projects are merely a bit of expensive window-dressing for the big industrial projects generating cheaper credits. In a competitive market, they appear to have little future.

But are such projects always desirable even on their own terms? For example, are all renewable energy projects good just because they can be described with the word “renewable”?

-- Q. I don’t understand. What could possibly be wrong with promoting renewable energy?

It’s not that renewable energy technologies are inherently good or bad. It all depends on how they are used.

Let’s take, for example, one of the world’s very first attempts to “compensate for” or “offset” industrial carbon-dioxide emissions — a rural solar electrification programme in Sri Lanka.

The story, as told by Cynthia Caron, begins in 1997, when the legislature of the US state of Oregon created a task force that later legally required all new power plants in the state to offset all of their carbon dioxide emissions. When companies put in bids for the contract to build a new 500-megawatt, natural-gas fired power station in Klamath Falls, they therefore also had to present plans for “compensating” for its CO2 emissions. The winner of the contract, PacificCorp Power Marketing, proposed a diversified US$4.3 million dollar carbon-offset portfolio allocating $3.1 million to finance off-site carbon mitigation projects. In particular, the firm put US$500,000 into a revolving fund to buy photovoltaic (solar-home) systems and install them in “remote households without electricity in India, China and Sri Lanka”. In 1999, PacificCorp Power and the City of Klamath Falls signed the necessary finance agreement with a US solar-energy company called the Solar Electric Light Company, or SELCO.

In all, SELCO agreed to install 182,000 solar-home systems in these three Asian countries, 120,000 in Sri Lanka alone. The idea was that the solar systems would reduce the carbon dioxide emissions given off by the kerosene lamps commonly used in households that are “off-grid”, or without grid-connected electricity. On average, SELCO calculated, each such household generates 0.3 tons of carbon dioxide per year. SELCO argued that the installation of a 20 or 35-watt solar-home system would displace three smoky kerosene lamps and a 50-watt system would displace four. Over the next thirty years, it claimed that these systems would prevent the release of 1.34 million tons of carbon into the atmosphere, entitling the Klamath Falls power plant to emit the same amount.

-- Q. So what’s the problem? It sounds like a win-win situation. The Klamath Falls plant makes itself “carbon-neutral”, while deprived Asian households get a new, clean, green, small-scale source of energy for lighting!

Not quite. Aside from the fact that such projects can’t, in fact, verify that they make fossil fuel burning “carbon-neutral” (see "Global Warming and the Ghost of Frank Knight", previous post), the benefits to the South that carbon offsetting promises don’t necessarily materialize, either.

-- Q. Why not?

The first thing to remember is that just as industries in the North have historically relied on the environmental subsidy that cheap mineral extraction in the South has provided, in this project a Northern industry used decentralized solar technology to reorder off-grid spaces in the South into spaces of economic opportunity that subsidize their costs of production through carbon dioxide offsetting. Essentially, once again, the South is subsidizing production in the North – but this time not through a process of extraction, but through a process of sequestration.

-- Q. You’ll have to explain that to me.

Traditionally, fossil fuel extraction has resulted in the overuse of a good which cannot be seen – the global carbon sink. And the inequality in the use of that sink between North and South has been invisible. Now, however, that inequality is becoming more visible within certain landscapes in the form of physical and social changes like those associated with the PacificCorp/SELCO project.

The solar component of the Klamath Falls plant, in essence, proposed to “mine” carbon credits from off-grid areas in Sri Lanka. However, the existence of these off-grid areas is partially due to social inequalities within Sri Lanka. In this case, the project was taking advantage of one particularly marginalized community of Sri Lankan workers in order to support its own disproportionate use of fossil fuels.

-- Q. Well, maybe. But so what? PacificCorp didn’t create the inequalities in resource use that it was going to benefit from. Why should it be up to PacificCorp to solve social problems in Sri Lanka? Besides, aren’t we in danger of making the best the enemy of the good here? PacificCorp may have wanted to use this project to go on using a lot of fossil fuels, but at least the Sri Lankan workers got a little something out of the deal to improve their lifestyles.

Well, as a matter of fact, that really wasn’t the case, either. In practice, the PacificCorp/SELCO arrangement in Sri Lanka wound up supporting what one Sri Lankan scholar-activist, Paul Casperz, calls a feudal system of “semi-slavery” on plantations.

-- Q. Semi-slavery? Aw, come on! Aren’t you being a bit inflammatory? How could decentralized, sustainable solar power possibly have anything to do with that?

Solar power didn’t create the problem, of course. But interventions like like this one in the estate sector often have a way of helping perpetuate them (just as in Los Angeles in recent times, pollution trading has entrenched existing environmental injustices). The trick, as so often in the world of development and environment, is to understand that a bit of technology is never “just” a neutral lump of metal or a piece of machinery benignly guided into place by the intentions of its providers, but winds up becoming different things in different places.

In Sri Lanka, the kerosene-lamp users that PacificCorp/SELCO ended up targeting earned their living in what is known as the “estate” or tea plantation sector. This is a sector in which nearly 90 per cent of the people are without grid-connected electricity, compared to 60 per cent of the non-estate rural sector and only five per cent of urban dwellers being off-grid. (In all, at the time of the project 48 percent of Sri Lanka’s population of 18.5 million was off-the-grid.)

A large proportion of this off-grid population was – and is – from the minority Estate Tamil community,7 which lives and works in conditions of debt dependence on tea and rubber plantations established by the British during the colonial period. Unfair labor practices in the sector have continued to keep estate society separate from and unequal to the rest of Sri Lankan society. Daily wages average US$1.58 and the literacy rate is approximately 66 per cent, compared to 92 per cent for the country as a whole. The estate population is underserved when it comes to infrastructure. A sample survey of fifty estates found that 62 per cent of of estate residents lacked individual latrines and 46 per cent did not have a water source within 100 meters of their residence.

Due partly to its cost, electrification, unlike health care, water supply, and sanitation, has never been one of the core social issues that social-service organizations working among the estate population get involved in.

-- Q. That would seem to make the estate sector the perfect choice for a solar technology project. I still don’t see the problem.

There’s no question that electrification could do a lot of good for workers and their families. By displacing smoky kerosene lamps, it would provide a smoke-free environment that reduces respiratory aliments, as well as quality lighting that reduces eyestrain and creates a better study environment for the school-going generation who are eager to secure employment outside the plantation economy. Researchers have found clear connections between off-grid technology and educational achievement.

As tea estates are regulated and highly structured enclave economies, SELCO could not approach workers without the cooperation and approval of estate management. The CEO of one plantation corporation, Neeyamakola Plantations, was willing to allow SELCO access to “the market” that his off-grid workers represented. He himself liked the idea of solar electrification, but for an entirely different set of reasons.

-- Q. How’s that?

Sri Lanka’s 474 plantation estates recently were privatized. Facing fierce competition from other tea-producing countries, they need to lower production costs and increase worker productivity in order to compensate for low tea prices on the global market andwage increases mandated by the Sri Lankan Government. Neeyamakola had already introduced some productivity-related incentives and thought that solar-home systems could provide another. After all, with a regular electricity supply, workers could watch more television. Seeing how other people in the country lived, they’d want to raise their standards of living too. For that, they’d need money. To earn more money, they’d work harder or longer, or both.

So, in 2000, Neeyamakola was only too happy to sign an agreement with SELCO for a pilot project on its Vijaya rubber and tea estate in Sri Lanka’s Sabaragamuwa Province, where over 200 families lived.

-- Q. Well, it sounds to me like the perfect match. If Neeyamakola focused on the bottom line, what’s so bad about that? It’s a matter of unleashing the profit motive for the incremental improvement of society and the environment.

No one expected Neeyamakola, SELCO or PacificCorp to operate as charities. The point is to understand whether such a business partnership was ever capable of doing the things it was advertised to do, what effects the partnership had on the affected societies, and who might be held responsible for the results.

-- Q. So what happened?

At first, the pilot project was to be limited to workers living in one of the four administrative divisions into which the Vijaya estate was divided, Lower Division, and in nearby villages. Some four-fifths of these workers were Estate Tamils living in estate-provided “line housing”. The other fifth were Sinhalese who lived within walking distance.

In the first three months, only 29 families decided to participate in the solar electrification project: 22 of Lower Division’s 63 families and seven Sinhala workers who lived in adjacent villages. In the end, the project installed only 35 systems before it was cancelled in 2001.

-- Q. What went wrong?

Two things. The first thing that happened was that, in the historical and corporate context of the estate sector, the SELCO project wound up being structured in a way that strengthened the already oppressive hold of the plantation company over its workers.

-- Q. But how could that happen? Solar energy is supposed to make people more independent, not less so.

This gets back to the nature of Neeyamakola as a private firm. From the perspective of plantation management, the electrification project had nothing to do with carbon mitigation and everything to do with profitability and labor regulation.

Neeyamakola’s concern was to increase productivity. Its idea was to use access to loans for solar-home systems to entice estate laborers into working additional days. The Neeyamakola accounting department would deduct a Rs.500 loan repayment every month and send it to SELCO.

In order to qualify for a loan, workers had to be registered employees who worked at least five days a month on the estate. The loan added another layer of worker indebtedness to management. In this case, the indebtedness would last the five years that it would take the worker to repay the loan taken from the corporation.

From workers’ point of view, the system only added to the company’s control over their lives. Historically, after all, the only way that estate workers have been able to get financing to improve their living conditions has been through loans that keep them tied to the unfair labor practices and dismal living conditions of estate life. To upgrade their housing, for instance, workers have to take out loans from the Plantation Housing and Social Welfare Trust (PHSWT). One condition of these loans is that “at least one family member of each family will be required to work on the plantation during the 15-year lease period”, during which estate management takes monthly deductions from wages. Hampered by low pay and perpetual indebtedness, workers find it difficult move on and out of the estate economy.

-- Q. I see. And what’s the second problem?

Inequality and social conflict of many different kinds. First, as Neeyamakola offered solar primarily to estate workers, most of whom are members of the Tamil ethnic minority, the nearby off-grid villagers of the Sinhalese majority felt discriminated against and marginalized. Disgruntled youth from adjacent villages as well as from estate families who weren’t buying solar systems threw rocks at the solar panels and otherwise tried to vandalize them.

Second, local politicians and union leaders saw solar electricity as a threat to their power, since both groups use the promise of getting the local area connected to the conventional electricity grid as a way of securing votes. So they started issuing threats to discourage prospective buyers.

Third, the village communities living around the Vijaya Estate feared that if too many people on the estate purchased solar, the Ceylon Electricity Board would have a reason for not extending the grid into their area. And without the grid, they felt, that small-scale industry and other entrepreneurial activities, that would generate economic development and increased family income, would remain out of reach, making their social and economic disadvantages permanent. (Any delay in the extension of the grid to the area occasioned by the PacificCorp/SELCO Neeyamakola project, of course, would have its own effects on the use of carbon, and would have to be factored into PacificCorp/SELCO’s carbon accounts. There is no indication that this was done.)

Added to all of this was inequality within the community of estate workers themselves. One consequence of Neeyamakola’s focus on getting more out of its workers was that many estate residents whose work is productive for society in a wider sense were ineligible for the systems. One example is what happened to the primary school teacher in the Tamil-medium government school that served the estate population. The daughter of retired estate workers, the teacher received a reliable monthly salary, could have met a monthly payment schedule, and was willing to pay, but was ineligible for a system because her labor was not seen as contributing directly to the estate’s economic productivity and profit margin. Retired estate workers and their families were excluded for the same reason. SELCO, a firm new to Sri Lanka, was unable to ensure community-wide benefits or equity within the community as a pre-requisite in the design of the pilot project.

On the Vijaya Estate, in short, the decentralized nature of solar power – in other contexts a selling point for the technology – had quite another impact and meaning in the context of Sri Lanka’s estate sector. It provided the company that was controlling the “technology transfer” with a new technique to exert control over its labor force and ensure competitive advantage, while exacerbating underlying conflicts over equity.

It’s interesting to note, incidentally, that solar projects in Sri Lanka often fall short even at the household level, where many families end up reducing their consumption of kerosene by only 50 per cent. There are many reasons for this. Kerosene use is necessary to make up for faulty management while household members become acquainted with the energy-storage patterns of the battery and system operation. Households also face problems managing stored energy, with children often using it all up watching afternoon television. And local weather patterns and topography likewise take their toll. In some hilly areas with multiple monsoons, solar can supplement kerosene systems at best for a six- to nine-month period depending on the timing and duration of the monsoon.

-- Q. Did PacificCorp’s electricity customers – or the Oregon legislature – know about all this?

Given the geographical and cultural distances involved, it would have been difficult for them to find out. On the other hand, it seems unlikely that Northern consumers of electricity – if they are informed of such details – will accept carbon-offset projects that involve not only dubious carbon accounting, but also blatantly exploitative conditions and the reversal of poverty alleviation efforts.

This is another reason why, while undertakings like PacificCorp/SELCO’s have from the beginning been more about “preserving the economic status quo” and promoting cost efficiency in developed countries than about bringing equity to developing countries, it is unclear how long they will be able to work even in maintaining that status quo.

-- Q. OK, I can see there were some problems. But surely social and environmental impact assessments could have identified some of these problems in advance. With proper regulation, they could then have been prevented.

Some of them might have been. For example, the solar technology could have been reconfigured so that an entire line of families could have pooled resources and benefited, rather than just individual houses.

But setting up an apparatus to assess, modify, monitor and oversee such a project isn’t by itself the answer. Such an apparatus, after all, would have brought with it a fresh set of questions. Who would have carried out the social impact assessment and would they have been sensitive to local social realities? Would its recommendations have been politically acceptable to Neeyamakola? Would its cost have been acceptable to PacificCorp? What kind of further oversight would have been necessary to prevent it from merely adding legitimacy to a project whose underlying problems were left untouched?

Just as a technology is never “just” a neutral piece of machinery which can be smoothly slotted into place to solve the same problem in any social circumstance, so the success of a social or environmental impact assessment is dependent on how it will be used and carried out in a local context.

-- Q. But if success is so dependent on political context, how will it ever be possible for new renewable technologies to make headway anywhere? If it isn’t possible, then we might as well give in and keep using fossil fuel technologies! We might as well go along with ExxonMobil when they claim that we have to go on drilling oil since anything else would be to betray the poor!

The alternative is not to accept the dominance of fossil fuel technologies. Their continued dominance also does nothing to improve the position of disadvantaged groups such as Sri Lanka’s Estate Tamils. Nor is the alternative simply to accept the system of global and local inequality exemplified in Sri Lanka’s estate plantation sector.

The alternative, rather, is to act using our understanding that what keeps marginal communities like that of Sri Lanka’s Estate Tamils in the dark, so to speak, is not just bad machines, or just a lack of good ones, but also a deeper pattern of local and global politics. Cutting fossil fuel use means understanding this deeper pattern.

Up to now, climate activists and policymakers have often told each other that “the essential question is not so much what will happen on the ground, but what will happen in the atmosphere”.22 The example of the PacificCorp/SELCO/Neeyamakola rural solar electrification project helps show why this is a false dichotomy. What happens on the ground in communities affected by carbon projects is important not only because of the displacement of the social burdens of climate change mitigation from the North onto already marginalized groups in the South, but also because what happens on the ground influences what happens in the atmosphere.

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This section is based on the research of Dr Cynthia Caron. After completing her Ph. D. at Cornell University, USA, on electricity sector restructuring in Sri Lanka, Dr Caron moved to Sri Lanka. She has been awarded a grant from the Macarthur Foundation and has been researching forced migration, resettlement and Muslim nationalism and its relation with Sri Lanka's ethnic conflict, as well as working on development and health projects.