INCA, International rivers network,
friends of the earth international, cee
bankwatch network, world wildlife fund
international
March 13, 2003
NGOs call on Banks not to Fund Large Dam
and Smelter Project in Iceland
An international coalition of 120
environmental organizations today called on
private banks and international financial
institutions not to provide any funds for the
large Kárahnjúkar dam and aluminum smelter
project in Iceland. Iceland’s National Power
Company and the Alcoa Corporation are
expected to sign the project’s power contract
on March 15.
If built, the Kárahnjúkar project will
consist of nine dams, three reservoirs, a
series of tunnels and river diversions, and a
690 megawatt power plant. It is only the
first in a series of large new dam projects
in Iceland’s highlands that are supposed to
power new aluminum smelters. “Kárahnjúkar
will destroy unique environmental treasures
on Iceland’s Eastern Highlands - the second
largest remaining wilderness area in Western
Europe”, says Arni Finnsson of the Iceland
Nature Conservation Association (INCA).
Alcoa is closing smelters in other parts
of the world and is moving to Iceland as part
of a cost-saving strategy. The company is
interested in tapping Iceland’s cheap
electricity, and will not have to pay for the
CO2 emissions of its new smelter because
Iceland has an exception under the Kyoto
protocol. “It is unacceptable to sacrifice a
large, pristine wilderness area for producing
cheaper aluminum”, says Peter Bosshard of
International Rivers Network (IRN). “In its
2001 Vision Statement, Alcoa aspires to
become ‘the best company in the world’.
Developing the Kárahnjúkar project would
clearly be at odds with such a claim.”
Iceland’s National Power Company intends
to raise funds for the Kárahnjúkar project
from the European Investment Bank (EIB), the
Nordic Investment Bank (NIB) and private
banks. INCA, IRN, the CEE Bankwatch Network,
Friends of the Earth International and WWF’s
International Arctic Programme have today
called on the EIB, the NIB and all banks that
have unded the National Power Company in the
past not to provide any funds for he
Kárahnjúkar project. The NGO appeal was
endorsed by 120 organizations from 47
countries.
“Financial institutions such as the EIB
that claim to be environmentally sensitive
should not give a penny to this disastrous
project”, says Magda Stoczkiewicz of the CEE
Bankwatch Network, who monitors the European
Investment Bank with Friends of the
Earth/International. “NGOs will continue to
follow the Kárahnjúkar project, and will hold
any financial institution that puts money
into it accountable for irreparable
environmental damage.” Samantha Smith of
WWF's International Arctic Programme, said:
"We hope that the Kárahnjúkar proposal is the
last time we see such an environmentally
irresponsible power development plan see the
light of day. What Iceland needs are plans to
protect its environment - not destroy
it."
Background on the Kárahnjúkar project:
If built, the Kárahnjúkar project will
have massive environmental impacts on
Iceland’s fragile Eastern Highlands
wilderness area. It will irreparably damage a
rare oasis of highland vegetation, and will
destroy or severely impact sensitive habitats
for the pinkfooted goose and other rare
birds, almonids, seals, and reindeer. The
project’s Environmental Impact Assessment was
rejected by Iceland’s National Planning
Agency, a decision that was later overruled
by the Minister for Environment.
The economic benefits of the Kárahnjúkar
project for Iceland are questionable. The
National Power Company’s assumptions
regarding cost and time overruns and aluminum
price trends are optimistic. A thorough
economic evaluation commissioned by INCA
estimates that (under its lightly different
previous parameters) Kárahnjúkar will entail
annual losses for Iceland of $36 million.
The Kárahnjúkar project is a highly
politicized undertaking, and a divisive issue
within Iceland. Three Icelandic citizens and
INCA sued the Minister for Environment for
overturning the negative decision on the
project’s Environmental Impact Assessment.
Iceland’s Courts of Law will consider this
case in early April. In addition, INCA and an
Icelandic citizen filed complaints with the
EFTA Surveillance Authority regarding an
infringement of the European Economic Area
Agreement, asserting that the Icelandic
Government unduly subsidizes electricity and
aluminum production through a variety of
measures.
The Kárahnjúkar dam and a 40 kilometers
headrace tunnel from the reservoir to the
powerhouse will be built by Impregilo of
Italy. Six international consortia recently
pre-qualified to submit bids for the electro
mechanical contracts of the project.
For further information:
Arni Finnsson, INCA, arnif@mmedia.is, ph
+354 897 2437
Peter Bosshard, IRN, powerfinance@irn.org,
ph +41 1 491 7021 .
Magda Stoczkiewicz, CEE Bankwatch/FoE
International, magdas@foeeurope.org, ph +31
20 622 1369
Samantha Smith, WWF International Arctic
Programme, ssmith@wwf.no, ph +47 22 03 65
00
For a list of potential funders and the
NGO appeal to financial institutions,
including the list of endorsements, visit
International Rivers network
More information on the Kárahnjúkar
project, including an independent economic
assessment and photos, is available at
www.inca.is
. Please contact
Jóhann Ísberg for copyright, phone +354
554-5553, mobile +354 893-8909.
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