Comments on Changuinola 1 (Chan 75) Large Hydro Project (Panama)

Comments on Changuinola 1 (Chan 75)

Large Hydro Project (Panama)

August 11, 2008

Comments on the CDM Project Design Document (PDD) for the AES Changuinola I (a.k.a. Chan 75) Large Hydroelectric Dam Project: A Case of “Greenwash Additionality”

Submitted by International Rivers to the project validator TÜV SÜD
August 8, 2008

Project Overview:

  • Location: Changuinola River, La Amistad UNESCO Biosphere Reserve Buffer Zone and Mesoamerican Biological Corridor, Panama
  • Type: 222 MW; 99m concrete dam; 1394 ha reservoir.
  • Project Promoter: AES Corporation
  • Social impacts: Include forced displacement of more than 1000 Ngobe indigenous people and harm to livelihoods of 4000 more. Because of the dam the Ngobe have suffered beatings, arbitrary detention, public humiliation, threats and illegal destruction of crops and homes at the hands of the police and AES.
  • Environmental impacts: Destruction of riverine and forest ecosystems in one of the world’s biodiversity hotspots. The dam is expected to have severely negative impacts on fish and shrimp biodiversity by blocking migrations between the San San Wetlands Ramsar site and the UNESCO World Heritage Site La Amistad International Park (shared with Costa Rica).
  • Status: Under construction. Land clearing started 2005. Subject to numerous ongoing court cases, repression of local communities, and criticism from United Nations Special Rapporteur on human rights and indigenous people.
  • Additionality Status: Non-additional in terms of how CDM “additionality” is normally understood (i.e. that the prospect of CDM registration was necessary for the project to go forward). However the project could be considered as a case of a new form of additionality: “greenwash additionality.” Validation by TÜV-SUD and registration by the CDM could harm local community and environmentalist efforts to stop the project and protect local communities by providing apparent UN support for the project.
  • Quality of PDD: PDD contains numerous fraudulent claims, in particularon project additionality and the strong opposition from local indigenous communities. No mention is made of the intimidation and other repressive tactics used against local communities, the legal irregularities in the project approval process, or the numerous legal challenges against the project.
  • Impact of validating the project: Vindication of repression against local communities and fraud in CDM documents. Could set back legal and political campaigns to stop the project.
  • Estimated generation: 1047 GWh/yr
  • Claimed “emission reductions”: 669,000 tCO2/year (4,683,000 tCO2 over 7 years)

Further comments on project additionality

“Investment Barrier”
AES announced that they would build the dam on the basis of a 10-year power purchase agreement with utility, Union Fenosa, at a meeting with Panama’s President Martin Torrijos on January 26, 2006. Full-scale construction started in 2007. Andres Gluski, president of AES Latin America, told President Torrijos that the dam would “provide a . . . low cost source of electricity for Panama.»

It is inconceivable that AES would have entered a legal contract to supply electricity and committed a $320 million investment if this would only be economically viable if at some point in the future the dam would be issued credits by the CDM. This is especially true given AES experience of its application to the CDM for the Bayano Hydro Expansion Project in Panama. This application was first made in 2001 and is still waiting for validation. (The Bayano Expansion has long since been completed regardless of its not receiving CER income). AES also unsuccessfully tried to get CDM registration for its Bujagali dam in Uganda in 2002. (Although AES is no longer involved the dam is now under construction despite not receiving CER income).

The PDD claims that the Minutes from an AES Board of Directors meeting in October 2006 “demonstrates that the incentive to develop the project activity as a CDM [sic] was considered and played an important role in the decision to go ahead with the project.” This is irrelevant in terms of proving additionality. To be additional the CDM must essential to the decision to develop the project, not just an “important” factor which was “considered.” Given that AES is well aware of CDM rules, and stands to gain revenues of around $70m (@$15/CER) overseven years if they get CDM registration, it would indeed be surprising if their board did not consider how much they would like to get CDM registration. It would even be somewhat surprising if the $70m was not a sufficient inducement for the board to say that the CDM was essential for the project to go ahead regardless of the reality. The CDM process is predicated upon independent evaluation of developer claims, not just taking developers at their word. In any case confidential minutes should not be eligible to be used in CDM validation processes which must be open to public scrutiny.

“Prevailing Practice Barrier”
AES makes the absurd claim that “under a business as usual scenario hydroelectric technology would not be implemented in Panama.” In reality, hydropower has long supplied the majority of Panama’s electricity. In 2004 hydropower contributed 56% of the country’s installed capacity. The list of “recent hydropower projects in Panama” given in the PDD includes only one hydropower plant commissioned since 1984 and conveniently fails to list AES’s Bayano expansion project, or numerous other hydro projects that are under construction or recently completed. It omits the two other dams for which AES has received concessions on the Changuinola River, the highly controversial Bonyic hydro project, and the 87 hydro projects that have been approved by, or are seeking approval from, Panama’s DNA (CDM authority).

“Barrier due to Project’s Sensitive Location”
This is the one area where the project may indeed be additional. The project is being built in a supposedly protected area and on the lands of an indigenous community which is strongly opposed to the project. This opposition has been manifested in numerous political actions such as the blockading of the road to the construction site in December 2007 and January 2008, as well as a number of domestic and international legal actions (the struggle against the dam is referred to in the PDD only as a “significant discussion”).

One of the more shockingly deceitful claims made by AES in the PDD is that “95% of the population in the region approves the project.” The only evidence given for this claim is a newspaper clipping quoting the leader of an “astroturf” (false grassroots) organization set up and funded by AES to promote their dams and discredit genuine environmental and community organizations. This is typical of the dirty tricks used by AES to promote the dam.

It may be the case that if the Changuinola I dam is registered by the CDM this will give the appearance of UN approval for the project’s “clean” credentials. This could assist AES and the Panamanian government (majority shareholders in AES Panama) to defeat the political and legal challenges to the dam and ensure its completion. This is the only form of additionality – let us call it “greenwash additionality” – for the project which is at all credible.

This “greenwash additionality” is totally unacceptable and contrary to the spirit of the CDM. The CDM is not supposed to help unscrupulous and dishonest developers to steamroller environmentally and socially destructive projects against the wishes of local people or to interfere in ongoing legal processes and petitions. If TÜV-SUD validates this project it will be colluding in the human rights abuses and environmental destruction being caused by Changuinola 1 and the dishonest practices of AES.

The AES PDD claims that the dam “follows the recommendations” of the World Commission on Dams. This is a risible claim. The dam is in breach of numerous essential aspects of the WCD, most importantly perhaps the requirement to gain the “free, prior informed consent” of indigenous people. Clearly AES have paid lip service to the WCD in the hope that this will help ensure that CERs from Changuinola I will be eligible to be used in the European Trading System (which requires WCD compliance).

Proper Consultation and Research

To be legitimate, TÜV-SUD’s validation process must include interviews with stakeholders other than AES and allied groups and the Panamanian government. These stakeholders should include at a minimum Ngobe community leaders, their legal advisors, Panamanian environmental and human rights organizations including ACD, the UN Special Rapporteur on human rights and indigenous people, and members of the UNESCO delegation who visiting the area in January 2008 to assess the request for the La Amistad International Park to be listed as a World Heritage Site in Danger. A validation report based only on discussions with dam supporters would be non-credible and totally unacceptable.

Further reading for TÜV-SUD

“International Rivers Comments on Proposed CDM Methodology for Bayano Large Hydro Expansion (Panama)”

“Changuinola 75 Hydroelectric facility, Panama”

“AES To Build 150 MW Hydroelectric Plant with Long Term Contract in Panama; Company to Add a Total of 940 MW to Its Global Fleet, Business Wire, Jan 26, 2006

Sarah Cordero et al. “Análisis de costo beneficio de cuatro proyectos hidroelélectricos en la cuenca Changuinola-Teribe.” ACD/Asociación ANAI/CSF, July 2006

Ellen L. Lutz “Dam Nation.” Cultural Survival Quarterly, Winter 2007. “Letter of the Ngobe People affected by Dam Chan 75 of the Company AES Changuinola.” International Indian Treaty Council, March 2008

Jeffrey D. Stein, “Resistance to Dam Nation: An Analysis of the Stance and Strategies of the Opposition Movement to the Chan-75 Hydroelectric Project in Bocas del Toro, Panama.” BA thesis, Wesleyan University, Connecticut, April 2008.

Jessica Barber, “Paradigms and Perceptions: A Chronology and Analysis fo the Events of the Chan-75 Hydroelectric Project and the Roles and Relationships of Participants.” SIT Panama: Conservation and Development, May 2008.

More information:

Dams Threaten Biodiversity and Indigenous People in Panama

International Rivers Comments on CDM Methodology for Bayano Large Hydro Dam Expansion (Panama)

Contact us:

Patrick McCully
+1 510 848 1155


The Clean Development Mechanism (CDM) was established under the Kyoto Protocol. It is the most important global carbon trading system. It is intended to lower industrialized countries’ costs of cutting greenhouse gas emissions by allowing them to purchase «carbon credits» that subsidize supposedly low–carbon “sustainable development” projects in developing countries.

International Rivers’ experience in monitoring CDM projects has shown many serious flaws in its theory and application. Project proposal documents are marred by misleading and often patently false claims. International Rivers and others have explained these problems in numerous comments on specific hydro projects submitted during the CDM project approval process.

Many of the projects proposed (and many of those approved) for CDM credits are “non-additional.” This means that they would have taken place without help from sales of carbon credits. The end result is that developed countries are avoiding having to reduce their own emissions by claiming credits for fictitious emission reductions.

The hydropower industry is particularly culpable in cheating the CDM system. By mid-January 2008, 755 hydro projects with an installed capacity of 25,362 MW had applied for credits, almost two-thirds of them in China. International Rivers maintains a spreadsheet with data on hydropower projects in the CDM project pipeline. If the UN body that administers the CDM approves these projects the hydro industry will make billions of dollars from the Northern consumers and taxpayers who will indirectly pay for the credits. Meanwhile the global climate – and the effectiveness and credibility of the Kyoto Protocol – will suffer.

Many observers agree that the supposed “sustainable development” benefits of the CDM have failed to materialize. Only a tiny minority of credits are being purchased from “additional” sustainable energy projects with clear environmental and social benefits.

A European Union law called the Linking Directive regulates the use of CDM credits within the EU’s internal carbon trading system. The directive states that large hydro credits entering the European Trading System must comply with the criteria and guidelines of the World Commission on Dams. To date, none of the large hydros in the CDM pipeline have proven WCD compliance. International Rivers is working to ensure that credits from large hydro projects that cannot prove CDM compliance cannot be used within the European Trading System.

NRDC Letter to TÜV SÜD on Changuinola 1 (Chan 75) Large Hydro Project (Panama)

NRDC Letter to TÜV SÜD on Changuinola 1 (Chan 75) Large Hydro Project (Panama)

August 8, 2008

Comments on Changuinola I Hydroelectric Project (Panama)

Ms. Manja Welzel

TÜV SÜD Industrie Service GmbH
Carbon Management Service
Fax ++49 89 5791-2756

Dear Ms. Welzel:

Comments on Changuinola I Hydroelectric Project (Panama)

I am writing, on behalf of the Natural Resources Defense Council («NRDC»), to express our strong opposition to the application by AES Changuinola («AES») for certified emission reduction credits («CER») from the Clean Development Mechanism («CDM») for its Changuinola I Hydroelectric project («Chan 75») in Bocas del Toro, Panama.

NRDC is a non-governmental environmental organization with offices in the United States and China with more than 1 million members and activists. NRDC’s lawyers, scientists, and experts address the broad range of environmental challenges, including climate change and biodiversity preservation. As part of our BioGems Initiative, we have worked closely with communities and groups throughout Latin America to protect threatened special natural areas and further sustainable development. NRDC has monitored the serious social and environmental problems associated with Chan 75 over the last years; and a NRDC group visited the region in 2006. We have also reviewed the Project Design Document («PDD») dated June 11, 2008 for the project.

NRDC submits that this project fails to meet the requirement of «additionality» because the construction of a coal-fired plant is not a plausible alternative and the proposed project is financially viable without the requested carbon credits. We also believe that Chan 75 clearly does not meet the CDM’s stated goal of promoting «sustainable development». In fact, the proposed project will harm the people and biodiversity of the region as detailed in formal petitions now pending before the Inter-American Commission on Human Rights and UNESCO World Heritage Committee.

In regard to «additionality», AES asserts in the PDD that construction of a 250 MW coal-based thermoelectric plant is the only alternative to the Chan 75 dam. However, there is no precedent for the construction of such a coal plant in Panama. AES fails to identify other less-carbon-intensive alternatives, such as natural gas, wind, and solar

power – all of which have been identified as options in the National Policy on Hydrocarbons and Alternative Energy.[1]

There is already strong interest in Panama in wind power. The National Environmental Authority («ANAM») has received applications for 16 wind projects totaling 1,731.2 MW. ANAM has already approved the environmental assessments for wind projects totaling 140 MW and is evaluating two other wind projects each with a potential of 400 MW.[2]

AES also fails to identify energy efficiency as an alternative to the project. The Government’s National Energy Policy 2005-2020 calls for increased energy efficiency. The Government has identified 723.4 to 1,071.68 GWh/year of potential savings from energy efficiency[3], equivalent to between 12.4 and 18.4 percent of total generation in 2005.[4]

The PDD for Chan 75 asserts with little detail that it needs CERs to overcome low financial returns and barriers to hydroelectricity. In fact, the project appears to be completely viable without any CERs. AES has already secured a ten-year Power Purchase Agreement with Union Fenosa, S.A., Panama’s largest distribution company.[5] Hydroelectric dams can also sell power on the spot market at the same price as more expensive thermoelectric plants. Fitch, a credit rating agency, affirmed the positive rating of AES in Panama, noting that it benefited from «low-cost hydroelectric generating assets» and that its four hydroelectric dams with a total of 482 MW of installed capacity gave it a «very competitive position.» The Fitch report as well as AES Corporation financial statements, confirm that revenue for the company in Panama has grown due to high spot prices and increased hydroelectric volume.[6]

AES also claims there are barriers to hydroelectricity in Bocas del Toro, such as a lack of interconnection to the national grid. However, a transmission line is under construction that will connect the region to the National Interconnected System; AES signed an access contract with the state transmission company in early 2007.[7]

Hydroelectric plants also receive financial incentives under the 2005 Energy Policy for the Electric Sector, including the right to sell into the Central American power market. Panama is already a net electricity exporter into the Central American grid, exporting over 2% of its power generation in 2007.[8] A 230kV transmission line under construction from Changuinola to the Costa Rican border will add additional export capacity. A proposed transmission line connecting Panama to the South American grid via Colombia would further increase the capacity for AES to export electricity by 300 MW.[9]

It is clear that this project is indeed capable of moving forward without the requested credits. Any claim to the contrary is further undercut by the fact that AES has proceeded with construction of an access road and the start of work at the dam site itself.

The PDD claims that the project is important to the sustainable development of the Bocas del Toro province. However, the dam threatens the livelihood and cultural survival of approximately 5,000 members of the Ngöbe indigenous group living near the project site on the Changuinola River. The Ngöbe maintain a traditional lifestyle based on subsistence agriculture and fishing. These people will lose lands to flooding and potentially an important source of protein from fish species that are threatened.

The project has violated the fundamental rights of Ngöbes. Panama police hired by AES forced Ngöbe families to leave their homes and lands. The police also injured Ngöbe women and children during peaceful protests against the dam. AES coerced a number of Ngöbes to agree to the project. The Ngöbe have not given their free, prior and informed consent – as required by Articles 13 and 23 of the American Convention on Human Rights. In March 2008, Cultural Survival and Alianza para la Conservación y el Desarrollo filed a petition detailing these human rights abuses with the Inter-American Commission on Human Rights. More recently, the UN Special Rapporteur on the situation of human rights and fundamental freedoms of indigenous people, Mr. James Anaya, expressed to the Government of Panama his concern about the Ngöbe and Chan 75.

Chan 75 would also seriously harm a number of protected natural areas and species. The dam site is in the Palo Seco Protected Forest which is part of the La Amistad Biosphere Reserve (Panama-Costa Rica) and the Mesoamerican Biological Corridor. The Palo Seco Protected Forest also serves as a buffer zone for the La Amistad International Park, a UNESCO World Heritage Site which is home to diverse wildlife including endemic migratory species. The dam would affect the migration of the fish and shrimp in the Changuinola River, leading to the loss of major fish species upriver in La Amistad International Park. It would also impact the San San – Pond Sak Wetlands Ramsar Site, which is also part of the Biosphere Reserve and the Mesoamerican Biological Corridor. Thirty-seven Panamanian and international environmental, scientific and citizen groups filed a petition in 2007 with the UNESCO World Heritage Committee to designate Amistad as a site «in Danger».

ANAM approved the project’s Environmental Impact Assessment («EIA») despite its failure to meet both Panamanian and international standards for scientific quality and public consultation. Specifically, the EIA did not adhere to the guidelines of the World Commission on Dams on environmental, social, health and cultural impacts. European Union legislation known as the Linking Directive mandates that CDM credits from hydro projects over 20 MW can only be used in the Emissions Trading Scheme, the EU’s greenhouse gas market, if the projects adhere to the standards of the World Commission on Dams. We strongly advise the CDM Executive Board to follow this precedent when evaluating requests for certified emission reductions.

In conclusion, we strongly urge the CDM Executive Board to reject the request for CERs for Chan 75. The credits will not result in new added reductions in greenhouse gas emissions. CDM should not provide its support to a project which undermines the prospects for sustainable development with its injury to the rights and well-being of Ngöbe communities and damages protected natural areas. At the very minimum, the Board should refrain from making a decision until the Inter-American Commission on Human Rights and the UNESCO World Heritage Committee have acted on the petitions now before them.

We appreciate very much your consideration of these comments and would be pleased to respond to requests for further comments or information.


S. Jacob Scherr

Director, International Program

Natural Resources Defense Council

[1] Ministerio de Comercio e Industrias, Política Nacional de Hidrocarburos y Energías Alternativas 2005, < Energ%EDas%20Alternativas.pdf>

[2]National Environmental Authority, Climatic Change and Desertification Unit. Clean Development Mechanism, January 23, 2008. < Portafolio%20 Proyectos%20MDL%20Panama.pdf>

[3] Comisión de Política Energética, Política Energética del Sector Eléctrico 2005, <>

[4] Centro Nacional de Despacho, Informe de la Operación del Sistema y del Mercado Mayorista de Electricidad del CND – 2007, Panama.

[5] «AES to Build 150 MW Hydroelectric Plant with Long Term Contract in Panama; Company to Add a Total of 940 MW to Its Global Fleet.» AES Press Release, Jan. 26, 2006. <>

[6] «Fitch Affirms AES Panama’s IDR at ‘BBB-‘; Outlook Stable,» Business Wire, Sept. 4, 2007 <>

[7] «AES, Etesa ink transmission system access contract,» Business News America. Feb. 6, 2007. <,_Etesa_ink_transmission_system_access_contract>

[8] Centro Nacional de Despacho, Informe de la Operación del Sistema y del Mercado Mayorista de Electricidad, 2007, Panama.

[9] «Countries ink agreement to reach interconnection in 2012,» Business News Americas, August 3, 2008. < _ interconnection_in_2012>

More information:

International Rivers Comments on Changuinola 1 (Chan 75) Large Hydro Project (Panama)

CIEL Comments on Changuinola 1 (Chan 75)

Dams Threaten Biodiversity and Indigenous People in Panama

Contact us:

Patrick McCully
+1 510 848 1155

Download file Size
NRDC Comments on Changuinola 1 pdf version 2.37 MB

AES Corporation busca beneficios con bonos de carbono en Panamá

AES Corporation busca beneficios con bonos de carbono en Panamá

Una nueva represa hidroeléctrica en Panamá podría recibir fondos del Mecanismo para el Desarrollo Limpio de Naciones Unidas (CDM – Siglas en Ingles), advierten grupos en pro de la conservación del medio ambiente.

La represa «Chan-75» está siendo construida por una subsidiaria de la compañía basada en Virginia, Estados Unidos denominada «Allied Energy Systems Corporation» (AES – Siglas en Ingles), la cual ha solicitado la obtención de una certificación de Créditos de Carbono para su proyecto hidroeléctrico. Sin embargo, el proyecto puede tener un impacto ambiental devastador.

«La construcción amenaza el medio ambiente y viola los derechos humanos del pueblo indígena Ngöbe que vive en la región» – afirma Osvaldo Jordán de la Alianza para la Conservación y el Desarrollo (ACD), una organización ambientalista panameña.

A pesar que el proyecto Chan-75 no cumple con los lineamientos de la Comisión Mundial de Represas, el mismo ya está siendo construido dentro del Bosque Protector Palo Seco, zona protegida ubicada en la Reserva de la Biosfera La Amistad en la región de Bocas del Toro, Panamá. La construcción amenaza al Parque Internacional La Amistad, sitio declarado patrimonio de la humanidad por la UNESCO, el cual es compartido por Panamá y Costa Rica. El mismo es además parte del Corredor Biológico Mesoamericano. Incluso, hace algunos meses la cadena BBC News reportó que en el lado costarricense del parque, muy cerca de la frontera con Panamá, fueron descubiertas tres nuevas especies de anfibios.

La represa tiene muy altas probabilidades de causar un terrible deterioro de las poblaciones de los peces migratorios acuáticos mas importantes, así como de las especies de camarones dentro de «La Amistad», además de afectar negativamente las poblaciones de jaguares, tapires y águilas Harpías.

La represa también viola los derechos humanos de pueblo indígena Ngöbe. La agencia gubernamental panameña de protección al medio ambiente denominada Autoridad Nacional del Ambiente (ANAM) autorizó la construcción sin obtener antes el libre consentimiento del pueblo Ngöbe afectado. La represa implicaría la reubicación de más de 1,000 agricultores de subsistencia del Pueblo Ngöbe, así como la destrucción de su particular estilo de vida. La empresa AES ha respondido a las protestas de los Ngöbe por la construcción de la represa utilizando chantajes, sobornos e incluso represión policial con la intención de presionar a los agricultores Ngöbe a dejar sus tierras.

«El caso Chan-75 es una evidencia más de que el CDM esta siendo utilizado como subsidio para proyectos destructivos del ambiente», afirma Oscar Reyes de «Carbon Trade Watch» , proyecto del Instituto Trasnacional radicado en Ámsterdam. «Es un riesgoso escenario de doble perdida, donde el pueblo y el medio ambiente panameño son amenazados por un proyecto que permitirá que las industrias de otras regiones continúen contaminando.»