EQUIPOISE

(WHY TECHNOLOGY WONT SAVE THE ENVIRONMENT-PART 2)

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In the enthusiastic thrust toward ‘green energy’ some basic human traits have largely been ignored. Namely the very common human proclivities for greed and corruption. Failure to account for these unfortunate tendencies of human nature could seriously undermine progress toward the energy transition. Accounting for this reality provides yet another reason to doubt that technological approaches alone will adequately address climate change. Meanwhile the obvious approach of population reduction is largely ignored. 

A major reason why the transition to green energy is susceptible to corruption is its enormous scale. As discussed in a previous post, an investment of several trillion dollar per year is required to prevent global warming from exceeding 2⁰C.  Further, the transition needs to happen quickly thus creating the “urgency paradox” that gives priority to speed rather than integrity (1).

Fortunately, work from academics and from civic organizations (2,3) has begun to probe the impact of corruption on green energy development and to suggest possible ways to ameliorate the problem.  

Key aspects of corruption and greed affecting the energy transition include:

• Lack of transparency in the ownership, governmental connections, and oversight of projects.
• Numerous forms of corruption including outright bribery, mis-allocation of project funds, diversion of project contracts to firms controlled by powerful officials or business interests, and simple thievery.
• Illegal or irregular procedures for obtaining land for projects, especially at the expense of indigenous groups and the poor.
• While not necessarily actual corruption, opportunism on the part of private corporations can result in inefficient use of resources.

Corruption in the field of green energy occurs at many levels from multi-billion dollar projects involving governments and major corporations, to small scale local grids, to illicit mining operations for green energy materials. For example, fraud and bribery on a massive scale have been revealed in major solar and wind projects in diverse locales including Italy, Argentina and India. 

A fascinating Italian tale involves Suntech, a Chinese company that once was the leading supplier of solar panels, an Italian entrepreneur with the nickname “Lord of the Wind’’ and having links to the Cosa Nostra, and a $460 million tranche of non-existent German government bonds (4). Prosecutors have termed the process “the biggest solar energy fraud in Italian history” resulting in the illegal acquisition of millions of euros of public funding for Suntech’s solar fields, but later leading to the company’s demise as it failed to make a $541 million payment on its U.S. bonds. 

Another instance involves the family of Mauricio Macri, the former President of Argentina (5). Companies set up by the Macri family were involved in the buying and selling of six wind farms in southern Argentina. Somehow their initial investment of only $25 million resulted in a quick profit of $70 million funneled through a company in Luxembourg. This took place shortly after Macri became President. While as yet there have been no convictions, Argentine investigators are looking into the situation.

In India an entity called the Solar Energy Corporation of India (SECI) acts as a sort of middleman for solar energy producers and consumers.  Recently, the U.S. Justice Department has alleged that “more than $250 million in bribes were paid to Indian officials to secure state-level agreements for the project “(6). This was a 2019 SECI project worth several billion dollars and included an award to the Adani Green energy company. The allegations involve Gautam and Sagar Adani, members of what is probably the richest family in India, who are accused of trying to bribe state officials to sign power agreements.

Some of the most egregious instances of corruption involve depriving poor or indigenous people of their land in order to pursue green energy projects.  For example, the Wayuu people of northern Columbia have been impacted by large scale wind projects on their traditional territory. A complex picture emerges that includes usurping land rights, failure to pay compensation and seeding of divisions among the indigenous group (7).

Corruption also occurs in the rush to provide raw materials for the energy transition. The Clean Energy Council has issued a report describing abusive labor practices (i.e. “modern slavery”) in several aspects of green energy development (8). Notably, production of lithium and cobalt in several African countries has been accompanied by uncompensated land expropriation, child labor, and other abusive labor practices (9).

These are but a few examples of the numerous instances of corruption in green energy that are easily found by browsing the web. Many more likely go unreported. The net result is the diversion of tens or hundreds of billions of dollars away from productive investments and into the pockets of corrupt politicians and businessmen. It’s an old, old disease and the new field of green energy is not immune to it. In addition to the mis-deployment of financial resources, the miasma of corruption undercuts public enthusiasm for green energy. That ultimately is reflected in a reduction of political support for the energy transition.

Please leave a comment or contact Epitteto at Epittetoepitteto@Yahoo.com

References

1. https://www.linkedin.com/pulse/hidden-threat-just-energy-transition-grand-corruption-jamie-tarawa-2bjlf
2. De Vibe and Robinson. Working Paper 53. Basel Institute on Governance (2024)
3. Williams and Lemaitre. Greening energy: An anti-corruption primer. Chr. Michelsen Institute (2022)
4. https://www.icij.org/investigations/offshore/offshore-web-nets-chinese-giant-italian-solar-scandal/
5. https://www.occrp.org/en/project/openlux/gone-with-the-wind-argentinas-former-first-family-used-luxembourg-companies-to-reap-70-million
6. https://economictimes.indiatimes.com/industry/renewables/solar-energy-corp-the-rise-of-seci-in-india-and-adani-bribery-bombshell/articleshow/115555686.cms?from=mdr
7. https://dialogue.earth/en/energy/368855-wind-farms-divide-indigenous-communities-in-colombia/
8. https://assets.cleanenergycouncil.org.au/documents/resources/reports/Addressing-Modern-Slavery-in-the-Clean-Energy-Sector.pdf 
9. https://insideclimatenews.org/news/15112023/lithium-mining-africa-human-rights-violations-corruption/