Dilemmas
Some of our energy projects present dilemmas for FMO. We seek to
balance our ambition to promote sustainable energy with our goal to
increase access to electricity in developing markets. In some
low-income countries, making energy available to large numbers of
businesses and households is presently only feasible by increasing
conventional power-generating capacity. In such cases, we may
decide to finance conventional power projects, as was the case in
2011 when we financed two emergency fossil fuel energy projects in
Bangladesh, in response to the country's tremendous need for
electricity.
Sustainable energy projects can also present challenges. For
instance, the ongoing Addax bioethanol
project in Sierra Leone involves planting 14,000 hectares of
sugar cane, developing a sugar cane plantation, constructing an
ethanol refinery and a biomass-fuelled power plant. While the plant
will supply reliable and affordable energy for 20% of Sierra
Leone's national grid, shifting dependence on fossil fuels and
reducing greenhouse gas emissions, it also involves relocating
several rural families. However, to minimize physical and economic
resettlement (avoiding food producing areas), the project layout
has undergone several revisions. This has also resulted in limited
impact on biodiversity in the area. FMO has high-standard
compensation plans in place for these instances. Despite this
dilemma, the project is also positively impacting local people by
providing direct employment and community skills development
programs for people in the area, which is one of the poorest in
Sierra Leone. The sponsor has established a Farmer Development
Programme aiming at household food security for all households
directly affected by the project which in the first year has proven
to be a success. By helping residents make more efficient and
effective use of land resources, food security, socio-economic
development and agricultural income will be improved in the long
run.
The project was preceded by three years of rigorous evaluations
of the potential social, environmental and economic impacts. The
project developers and land owners in the project area, assisted by
a lawyer, agreed on a share in the land lease payments that goes
far beyond national legal requirements.
The sponsor entered into intense dialogue with non-governmental
organizations to find responsible solutions to all issues related
to the Sierra Leone project and will continue to work closely with
international and local NGO stakeholders to address similar
dilemmas in future projects.