UN-backed coal power station linked to deforestation and land grabbing

As world leaders meet in Durban for critical climate talks campaigners are calling for an urgent overhaul of the way the Clean Development Mechanism (CDM) is governed after an Ecologist investigation revealed allegations a CDM approved power plant in India has displaced poor communities and will lead to the destruction of forest.

The Sasan thermal power plant in Madhya Pradesh, owned by Indian energy behemoth Reliance Power, is set to become the largest coal power project awarded carbon credits under the UN's flagship carbon trading scheme. This allows industrialised countries to offset their pollution by investing in projects that reduce green house gas emissions in developing counties.

During construction of the plant Reliance received finance from a consortium of banks including UK-based Standard Chartered. Despite the problems we discovered, Standard Chartered refuse to comment on the Sasan project and would not expand on the nature of the deal, claiming they do not divulge information on any discussions with clients.

The scheme is coming under fire on all fronts, raising serious questions for CDM a year before the first provisions for the Kyoto Protocol expire. Chief among them is the controversial methodology used to calculate carbon emissions savings from coal power plants, which critics argue allows companies to overestimate reductions and receive millions of artificial carbon credits.

This has now been recognised by the CDM Executive Board, which last week suspended the methodology with immediate effect pending a review of it's feasibility. It will come as an embarrasment to the UK government, who have backed more CDM coal power projects than any other developed country.

Why is coal being supported?

The Sasan plant is part of a wider electricity generation program being pushed by an Indian Government seeking to meet the energy demands of a rapidly growing economy. These Ultra Mega Power Projects, or UMPPs as they are know, are a series of 4,000 MW thermal plants dotted across the country.

Reliance Power has also been accused by campaigners of breaking the CDM rule of additionality, which requires projects to demonstrate the only alternative to credits would result in higher carbon emissions. Indian Ministry of Power documents seen by the Ecologist state that all UMPP projects must use more efficient supercritical technology. This means that the plant would have resulted in less carbon emissions regardless of being awarded credits under CDM.

These problems aside, critics argue that the very fact coal is now included in the Clean Development Mechanism framework sets a dangerous precedent because it shifts investment away from renewable energy and into the hands of an industry seen as a leading cause of carbon emissions.

'We are very concerned that the project type 'coal' has been allowed under the CDM in the first place,' says Eva Filzmoser, director of Brussels-based campaign group CDM Watch. 'Now having found all these problems, namely non-additionality, problems with the crediting rules... we think that the only way to address the problem is to exclude this project type from the CDM.'

Local community ignored

The Sasan project also exposes deeper problems with the implementation of CDM and how it affects communities in developing countries. Reliance Power say they have the consent of villagers impacted by the project, but people the Ecologist met spoke of a distinct lack of consultation and exclusion from the decision making process.

'No one came to talk to us,' says Ram Lakhan, who lived in one of the five villages that were destroyed to make way for the Sasan plant. 'They didn't feel the need to consult with the general public in the village.' Instead he told us that everything went through the “Sarpanch” or village head.

The same story is heard in Moher, where people will soon be moved to make way for the mine that is to feed the Sasan plant. 'The houses were identified, there was measurement of the land,' says Priya Pillai, Greenpeace India policy officer. 'It was happening in front of [villagers'] eyes but nobody, even the Reliance people who came down to the village, never spoke to them, never told them what they were doing.'

Forgotten promise of jobs

Reliance Power offered those displaced by the Sasan project a compensation package including housing, employment, schooling and healthcare. Whilst people express satisfaction at the provision of free education for their children they complain other promises have not been kept.

'It's been three years since they've kept us tied up with the promise of employment and now our children are starving because of it,' laments Sipahilal Baishya. 'We desperately need work.' This is the fourth time Sipahilal has been displaced by a large scale infrastructure project.

Despite sustainable development being a condition of CDM approval, Reliance Power and many other CDM project developers are falling short of their commitments, claim critics. Part of the problem is a lack of UN oversight or financial incentives for companies to prioritise sustainable development, which does little to encourage trickle down benefits for local communities.

'Perhaps we shouldn't be surprised because you don't get extra money for sustainable development benefits,' says Professor Peter Newell of Sussex University. 'The money you get through the carbon credits is for reduced emissions, it's not for showing that you've delivered things you promised in your project design document.'

Amrawati Namdeo has lived in Moher all her life and like most people in her village holds contempt for the new settlement Reliance is offering. 'We wouldn't be able to live in those tiny houses,' she told the Ecologist. 'They are like the toilets we build – they should be toilets – how will families live in them? I have five daughters. When they come over where will they stay?'

For Parvati Saket, who lived in the village of Amlori, the change could not have been crueller. Displaced by the early incursions of the Reliance Power mine, she now lives over 50 kilometers from her extended family in the rehabilition settlement of Suryavihar. Many of the cramped houses surrounding her stand empty, testament to the rejection of the displaced who chose instead to rebuild on plots of land elsewhere.

From their new home it is not viable for Parvati's husband to spend half his daily wage on transportation to the Northern Coalfields mine where he work's as a mason. Instead, he must stay away for five to six days and returns to his wife and their three young children only once a week.

'What have Reliance given us?' Parvati says. 'They've given us nothing – no facilities, no work, no electricity. What facilities are there here? They may be saying people are being looked after, but they aren't; no one is living in peace.'

But in the village she left behind, life is becoming unbearable as the mine begins to take shape with damaging consequences. 'Our village was full of corn, people were growing things,' Ramsa Jiven told the Ecologist. 'Now people can neither eat because of all the dust nor sleep because of all the noise. People are supposed to sleep for 8-10 hours, we don't even manage two.'

Forest livelihood lost

On top of the displacement, Greenpeace India say thousands of acres of forest land will be lost as part of the project. The rich vegetation is home to a plethora of large mammals including cheetahs and bears, as well as being a vital livelihood source for a number of tribal groups.

The Ecologist visited a hamlet located in a forest clearing on the outskirts of Moher, which is home to a small group of families from the ancient Baiga tribespeople. We spoke to 85-year-old Jeetlal, who expressed confusion at the news he could soon be displaced and the forest on which he relies destroyed.

'We will beg them to relocate us to a place with jungles and mountains with herbs and plants in it,' he says. 'Us Baiga people protect the forest and everything we need comes from the forest. So we look after it and protect it.'

The ancient traditions of people who use the resources of the forest could be lost forever, as modern India collides with the past. And without a consistent wage only poverty is likely to await. These knock on impacts are largely missing from the project design document Reliance submitted to the CDM board.

'You look at one project, ignore where the coal is coming from – ignore the forest and the people and the costs that is associated with acquiring coal to run this plant,' argues Tarsh Thekaekara from India's Shola Trust. 'And then, within that narrow framework, you look at one little box and check it and say yes, on it's own, the coal plant is better than it would be otherwise and so it gets carbon credits; it's a completely ridiculous idea.'

The Ecologist asked Reliance Power to comment on the detailed allegations in this article. They replied claiming that it contained 'inaccuracies'. They did not specify what they were, nor provide any further observations.

Luke Starr is a journalist with investigative agency Ecostorm

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