Power Struggle: Chileans Face Off on Hydroelectric Dams

April 10, 2008

A startlingly cold storm pushed its way across central Chile last February, blanketing the Andes in snow and reminding Santiago’s more than 5 million residents that autumn was on its way. The nation’s media, as they have for three years now, marked the change in seasons with alarming reports about the so-called Argentine natural-gas crisis.

In early 2004, Argentina began restricting the flow of natural gas it sends to Chile. The cuts have tended to be most severe during the cold winter months, when Argentina’s domestic demand is highest and gas suppliers, therefore, have less to export. So it’s no coincidence that on the morning of the strange summer storm, the top business story in El Mercurio, Chile’s largest daily newspaper, announced, “Chile in 2007 Suffers the Worst Gas Cuts Since the Crisis Began.”

But the issue goes beyond household winter heating. Chile’s energy companies produce about 43% of the country’s electricity by burning fossil fuels, mostly natural gas, according to the U.S. Energy Information Administration. A natural-gas shortage thus threatens the power supply in a country where, according to Endesa—the Spanish electricity giant that is Chile’s biggest utility company—demand is growing by more than 6% annually. And because a 1995 treaty with Argentina stipulates an Argentine monopoly on the Chilean natural-gas market, Chile lacks an alternative supplier.

Conservation rarely enters the discussion. The government and the media instead ask, How will Chile meet its growing demand for electricity?

According to the country’s leading energy companies, the answer lies in expanding the country’s network of hydroelectric dams, which already meets about 53% of demand. This, they argue, is the only way for Chile to truly free itself from its dependence on Argentine natural gas.

That’s where the so-called Aysén Project comes in. Developed as a joint venture by Endesa and Colbún, a Chilean entity, the Aysén Project is a $2.5 billion plan to build hydroelectric dams in Chile’s Region XI, an isolated and sparsely populated zone also known as Aysén. The project calls specifically for damming both of Aysén’s two biggest rivers, the Baker and the Pascua.

Together these dams would generate an estimated 2,400 megawatts, or about 30% of the electricity now available in central Chile, going a long way toward meeting Chile’s growing demand.

The largest hydroelectric venture in the nation’s history, the Aysén Project would also create an estimated 4,000 jobs, at least during the construction phase, which HidroAysén—the joint-venture company specially created to carry out the project—expects to launch in 2009.

The first of the project’s dams, a 680-megawatt plant known as Baker I, could be ready as early as 2012, and the even larger Pascua I plant, at 940 megawatts, is scheduled for completion in 2014. Two smaller plants would be ready by 2016 and 2018, respectively.

Once in place, HidroAysén says, these dams would not only help alleviate the country’s energy woes but would also operate with a clean, renewable energy source. The company’s massive investment, it says, will help to further develop the region and reduce local electricity costs.

Chile’s National Environmental Commission has yet to approve the Aysén Project. In fact, HidroAysén has not even submitted the requisite environmental-impact studies, though it says it will do so by the end of the year. Nevertheless, the companies behind the massive venture are confident their mega-project will proceed on schedule.


Sticking to the plan, however, may prove easier said than done for the Endesa-Colbún conglomerate, which now finds itself on the defensive. That’s because despite the Aysén Project’s apparent benefits, it has attracted many opponents—including local activists, a well-known Santiago-based ecologist, an unabashedly conservative senator with ties to the Augusto Pinochet government, a salmon magnate, and U.S. environmental attorney Robert Kennedy Jr., among others.

Calling itself the Citizen Coalition for Aysén Life Reserve, the opposition group is based primarily in the Region XI towns of Cochrane and Coyhaique and comprises about a dozen smaller organizations.

First and foremost, the coalition objects to the HidroAysén venture on environmental grounds. It says the project is simply too big and will, if approved, devastate the region’s unique landscape and ecosystems.

“These projects are immense, on a scale that’s unmanageable for this region,” says Peter Hartmann, an architect who heads the Committee for the Defense of Flora and Fauna, one of the coalition’s member organizations. “They’re unmanageable because this region is very fragile, ecologically, geologically, and culturally.”

The area is indeed magnificent, both in its beauty and its natural rarity. Chile—cut off from the rest of the continent by its northern desert, the Andes to the east, and the Pacific Ocean to the west—is something of an island. As a result, Patagonia, home to the only temperate rainforest in the southern hemisphere, has a one-of-a-kind ecosystem. The glacier-fed, turquoise Baker and Pascua rivers cut through a region of pristine mountains, where huemuls, an endangered species of Andean deer, and other unique plants and animals live.

“The geography of the zone—very tall peaks, with very powerful rivers, rain that falls intensely in short periods of time to produce these powerful rivers—all of this is unusual,” says economist Rodrigo Pizarro, head of a Santiago-based environmental policy group called Fundación Terram. “In other parts of the world, these types of rivers have already been dammed.”

The Aysén Project calls for flooding about 93 square kilometers of the wilderness area, dramatically altering the landscape and affecting animals, plants, and adjoining towns.

Juan Pablo Orrego, a Santiago-based ecologist with a long history of fighting Endesa, says roads bulldozed to deliver the dam’s turbines and generators would mar the region forever. “Then there are the camps, the heavy machinery, the smoke, dust, and spillage,” he adds.

Another major concern is the plan to build a 2,000-kilometer, $1.5 billion transmission line—the world’s longest—that would cut through both protected and unprotected wilderness, transporting electricity mainly to Santiago and to Chile’s massive mines, where consumption is highest.

Once in place, furthermore, the Aysén Project will likely encourage other hydroelectric ventures to the region, opponents say. Xstrata (formerly Falconbridge), a Swiss mining company, is looking to dam the nearby Cuervo River. “One has to look at the whole picture,” Orrego says. “And, in terms of this Patagonian basin, which is so valuable environmentally and culturally, it’s this whole picture that we consider simply unacceptable.”


Seasoned environmental activists Orrego and Hartmann are by no means alone in opposing the project. Though still very much a local movement, the anti-dam coalition has also attracted a fare share of high-profile, and in some cases unlikely, allies.

Although environmentalists often malign Chile’s $2 billion-a-year salmon-farming industry, which is beginning to expand into Aysén, the anti-dam coalition finds itself working with one of the salmon industry’s major players: Victor Hugo Puchi, president of a company called AquaChile.

Born and raised in the area, Puchi says he opposes the dams on “personal” grounds. “There would be a huge change to the landscape and in the area’s future as a well-preserved, pristine wilderness,” he says. “The area’s going to be invaded by an external culture. And for me, that’s painful.”

More candidly, the AquaChile president also says he fears the dams will affect water quality and thereby hurt salmon farmers operating in areas where rivers like the Baker, Chile’s most voluminous, deposit into the sea. Puchi’s company operates salmon farms in the Archipelago de Los Chonos, directly offshore from Aysén.

Another strange bedfellow in the fight against Endesa-Colbún is Senator Antonio Horvath of the center-right National Renovation Party. Horvath, a political conservative and onetime collaborator of the Pinochet government, strongly promotes and defends the salmon industry. He has also faced off on numerous occasions with resident enviro-philanthropist Douglas Tompkins of the United States over a plan to extend Chile’s Southern Highway (Carretera Austral) through Pumalín Park. A multimillionaire who made his fortune in the designer clothing industry, Tompkins owns a vast amount of territory in southern Chile, including the 700,000-acre Pumalín, declared a nature sanctuary in 2005. But on the issue of the Aysén dams, Horvath and Tompkins are for once seeing eye to eye.

Horvath has come out in favor of alternatives to the Aysén plan, such as building small-scale hydroelectric dams and using ocean tides, wind, the sun, and underground volcanic heat as energy sources. This puts Horvath on the same page as Jacob Scherr, the international program director for the U.S.-based Natural Resources Defense Council (NRDC).

For several months now the 1.2 million-member NRDC—due in no small measure to the personal involvement of its famous senior environmental attorney, Robert Kennedy Jr.—has been internationally publicizing the issue. Last December the group designated Chilean Patagonia a so-called BioGem, featuring the area prominently on its Web site and focusing particularly on the threat posed by hydroelectric dams. The organization now plans to send a fact-finding team to Chile, giving NRDC representatives an opportunity to make face-to-face connections with ground-level opponents.

“Unless the government of Chile steps up and pardons Patagonia, the area will be electrocuted, it will be destroyed,” Scherr says. Before signing off on the Aysén deal, the NRDC official adds, Chilean authorities should take a hard, technically based look at all the alternatives.

That, according to Juan Pablo Orrego, is exactly what Chilean policy makers have failed to do for years. Instead, he says, by focusing exclusively on hydroelectric and thermoelectric projects, Chile has simply followed a policy imposed by the country’s private energy companies, particularly Endesa and Colbún.

“This has blocked the development of energy sources that are friendlier and more respectful to both the environment and the people,” Orrego says. “Right now they say these [alternatives] are prohibitively expensive. But what’s happening is that the cost-benefit equations currently being used don’t take into account environmental impact, and environmental, social and cultural costs.”

Another all too often ignored option, critics say, is conservation. From this point of view, the question of how Chile will meet its electricity demand, so fretted about in the Chilean media, becomes in large part a question of how to reduce that demand. In this respect, Orrego says, Chile would do well to follow the example set 30 years ago by California.

In the late 1960s and early 1970s, with the California economy rapidly growing, electricity demand, just as in Chile, held pace, averaging between 6% and 7% annually. To reduce demand and to lessen the state’s dependence on foreign oil, California established the Energy Commission (EC), which explored alternative energy sources and implemented strict conservation measures.

The result, explains John Wilson, a councilor for the EC was that the annual demand growth rate went down to 2%. And that, he says, could be the case in Chile if it implements similar policies. If, on the other hand, growth rates remain at their current levels, Chile’s electricity use per person will exceed that of California by 2017, Wilson says.


But the biggest problem with Chile’s energy policy, say Orrego and other opponents of the Aysén Project, is that it reinforces the country’s age-old development model based on exporting raw materials.

Chile’s rising energy needs are not being driven up by individual households, Orrego says, but rather by industry, particularly mining, which is the country’s primary source of revenue. These extraction-based industries, which also include fishmeal and wood pulp production, not only suck up vast quantities of electricity, but they’re also major polluters.

“Chile is stuck in a primary productive stage. It really has been since the Spanish first came here,” Orrego says. “We see this as a dead-end alley, with phenomenal social, cultural, and environmental costs.”

Unfortunately, says economist Rodrigo Pizarro, the roots of Chile’s energy “crisis” are simply not being discussed, at least not within official circles. Instead, controversial mega-projects like Aysén are treated on a case-by-base basis, framed as black-and-white issues: Do people agree with the project? Yes or no. Will the project impact the area environmentally? Yes or no.

“It’s just taken for granted that these types of projects are necessary,” Pizarro says.

And if no debate takes place?

“These pristine zones will eventually be taken over,” Pizarrro says. “There’s going to be a [continued] territorial centralization and concentration. And there’s going to be an enormous environmental loss in a place that has so much value.”

Benjamin Witte is a Santiago-based freelance journalist. He is a former editor of The Santiago Times and a former reporter for The Tico Times.

Tags: Chile, enviornment, hydroelectric dams, water, protest

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