Massive Infrastructure Projects Are Failing At Unprecedented Rates

Big fossil-fuel, mining, hydroelectric, and other "mega projects" are struggling thanks to competition from newer, cleaner technologies and a firestorm of market and civil forces.

Though few recognised it at the time, 2011 may mark a turning point for the era of building mega energy and mining projects around the world, according to experts. That year, a series of natural disasters energised civic resistance to giant projects. At the same time, alternative and renewable energy technologies have evolved as cheaper, safer options. And more traditional industrial projects that have moved forward have tended to be smaller scale.

In March 2011, an earthquake and tsunami destroyed the 41-year-old, 4,700-megawatt Fukishima Daiichi nuclear power station in northern Japan, one of the 15 largest nuclear electrical generating plants in the world.

Seven months later and 4,800 kilometres east, two more mega energy projects failed in India. Early in December a large group of farmers and activists, supported by a Himalayan state government’s concern about fisheries and flooding, barricaded access roads and shut down construction of the $1.6 billion, 2,000-megawatt Lower Subansiri hydropower dam on the border between Arunachal Pradesh and Assam. On December 31, 2011, along the Bay of Bengal coast in Tamil Nadu, Cyclone Thane wrecked the $2 billion Nagarjuna oil refinery as it was nearing completion. Operations at the hydropower dam and the refinery never resumed.

In the years since, a number of mines, mega power plants, and other huge industrial infrastructure projects have failed around the world. A series of ecological, social, market, and investment forces have aligned on six continents to foil industrial developers who want to tear at the Australian landscape for coal, drill through Arctic ice for oil, move villages out of Himalayan valleys for hydropower dams, scrape South American mountainsides for new mines, divert rivers in South Africa to cool power plants, clear forests to mine Alberta sands for oil, construct a new nuclear plant in South Carolina, and race across the countryside with new pipelines to transport liquid fuels.

“There have always been big projects that failed,” said Bent Flyvbjerg, professor of major program management at Oxford University's Saïd Business School and a widely cited global authority on mega projects. “What is different now is that we have many more mega projects, they are much bigger, and there are spectacular failures that are more visible.”

Most of these trends are at work on the proposed Keystone XL oil pipeline, which would cross the Great Plains. The Nebraska Public Service Commission will decide on Monday whether to allow TransCanada to build the $8 billion, 1,900-kilometre project. The Keystone XL was introduced nine years ago at the start of the tarsands oil boom in Alberta, Canada. Its path has been blocked by intense political opposition that demanded the attention of two U.S. presidents.


A GROWING TREND OF RESISTANCE?

Underlying the turbulence are some 21st century economic, ecological, and social trends that make building billion-dollar plus energy and mining projects more difficult and risky than before. The colossal scale of designing, engineering, and planning mega projects confounds construction schedules and cost assessments. The time between designing big industrial projects and their operation frequently is a decade or more—sufficient time for market conditions to change. Virtually every mega construction project in the world, according to Flyvberg, is running overdue and over budget. That has made investors increasingly nervous.

“I haven’t measured it yet, but there might be something new that is happening given the change in the weather and the change from a carbon-based economy to a renewable economy,” said Flyvbjerg. “Both of these trends have impacts on mega projects and failures.”

And the Earth itself often hasn’t made big projects easy, with floods, droughts, storms, and earthquakes. A vicious Himalayan flood in Uttarakhand, India, in 2013 destroyed or severely damaged 10 big hydropower dams and killed between 6,000 and 30,000 people, according to government and science group estimates. The earthquake two years ago in Nepal severely damaged 14 hydropower dams.

Other factors include demography and communications technology. Enormous dams and power plants, mines, and oilfield projects do not easily fit into landscapes now thick with people. More than 7.4 billion people are alive today, twice as many as in 1970. All over the globe well-organised and influential local opposition campaigns have formed to safeguard land and water. Such groups often clash with developers of mega projects, leading some to cancel plans or halt construction.

As recently as 2010, in its Master Energy Plan, Bangladesh envisioned building 19 large coal-fired power plants by 2030 to power its textile-based export economy. Visible progress has been made on just one plant, near Rampal, but even that is the site of fierce protests over alleged land seizures and potential water and air pollution. Seven other projects, financed by Korean, Chinese, and Japanese investment banks, have been shelved entirely, largely due to rising costs and public opposition.

China closed or cancelled 103 coal-fired power plants earlier this year. Dozens more coal-fired plants closed in the U.S. and India.


A protester shows a document to a police officer during a march against the Myitsone dam project on March 23, 2014 in Yangon, Myanmar.
PHOTOGRAPH BY KHIN MAUNG WIN, AP

RISING ALTERNATIVES

One reason for the recent struggles of fossil-fuel projects has been the fact that the cost of renewable energy has dropped so low that solar and wind plants are often less expensive to build. And they often see less local opposition, although they can still face siting and other problems.

Last year, utility-scale solar stations produced 37 percent of new electrical generating capacity in the U.S., more than any other source of electricity, according to the Energy Information Administration, an Energy Department data group.

Nearly 40 percent of the electrical generating capacity in Tamil Nadu, India, is now produced from wind and solar power, according to the Central Electric Authority. One wind project alone, the 1.5-gigawatt Muppandal wind farm, is the largest in the world outside China. Not far away lies the Adani Group’s 648-megawatt Kamuthi solar photovoltaic plant, the largest in India and one of the biggest in the world. It took 18 months and $670 million to plan, design, and build the plant—a quarter of the time it takes to develop and construct a similar-sized fossil-fuel power plant.

“I tend to be cautious, but I see that there is a significant trend from past trajectories of cancelled mega projects,” said David Michel, an infrastructure specialist and nonresident environmental security fellow at the Stimson Center, a Washington-based think tank. “The projects are long-lived and on a grand scale that take significant amounts of time and money. A lot changes between beginning and start of operations. We are seeing many examples of projects being stopped or cancelled.”

All this doesn’t mean no massive energy projects will be proposed in the future. But the experts interviewed for this story identify a developing trend away from massive resource-based infrastructure projects and toward smaller scale efforts.

Here is a sampling of other failed mega energy, mining, and industrial projects compiled by National Geographic:

I. ECOLOGICAL RISKS, GOVERNMENT POLICY, AND CIVIC PROTESTS LEAD TO FAILURES

Vietnam Prime Minister Nguyen Xuan Phuc, in April 2017, halted work on the $10.6 billion, 4,200-acre Hoa Sen Group steel plant to prevent a chemical spill like one in 2016 that occurred at another steel plant run by Formosa Ha Tinh Steel Corporation, a Taiwan company. The toxic spill wrecked fisheries, damaged fishing communities, elevated public protest, and prompted the government to halt permits to build mega industrial projects with high pollution risks.


$5 billion Conga Mine project in Peru abandoned. In February 2016, Colorado-based Newmont Mining alerted the U.S. Securities and Exchange Commission that it was shelving the $5 billion Conga gold and copper mine project it was developing in the northern Andes of Peru. Social protests over water supply and pollution drove fierce resistance that led to the mine closure.

$8.5 billion Pascua-Lama gold mine in Chile shut down. In 2013, after a decade of protests and unfavourable court rulings over perceived threats to water supplies and glaciers, Toronto-based Barrick Gold Corporation indefinitely suspended work on the huge open pit copper mine on the Chile-Argentina border, after spending $5 billion.

The $3.6 billion, 6,000-megawatt Myitsone Dam in Myanmar. Construction was halted in 2011 by new government policy and civic opposition.


II. FAST CHANGING ECOLOGICAL AND POLITICAL CONDITIONS LEAD TO FAILURES

Australia’s four big desalination plants were built but never used. Following a cruel 12-year drought in Australia that ended in 2010, national authorities launched an aggressive program of desalination development in big coastal cities. Almost $US 10 billion was invested in four big desalination plants in Sydney, Adelaide, Melbourne, and Brisbane. The Melbourne plant alone cost $US 4 billion, making it the most expensive reverse-osmosis desalination facility in the world. The plants were ultimately so expensive to operate that were immediately shuttered.

Shell’s Arctic drilling campaign shut down. In September 2015, after spending $7 billion and asserting that its Chukchi Sea offshore drilling project would yield world-class quantities of oil and natural gas, Royal Dutch Shell pulled out of the Arctic. The company cited as reasons its fruitless effort to discover commercial quantities of fossil fuels, dangerous Arctic drilling conditions, rising expenses, and civic protest.

$5.9 billion Tampakan copper and gold mine on Mindanao, Philippines. In 2015 Glencore, one of the world’s largest mining companies, pulled out of the development of one of the richest precious metal prospects on Earth. The mine has been the focus of fierce local conflict for over a decade following a tailings pond disaster at the Marcopper open pit copper mine on Marinduque Island. A breach in the tailings pond containment wall in March 1996 unleashed millions of tonnes of toxic mud and water, flooding communities and ruining productive fisheries. In April 2017 the Philippines banned new open pit mining.

III. COST OVERRUNS LEAD TO FAILURE

VC Summer nuclear power station, one-third completed, was abandoned in South Carolina on July 31, 2017. Construction on the Westinghouse-designed, 2,200-megawatt generating station started in 2013 and was scheduled to be completed by 2018 at a cost of $11.8 billion. Scana Corp. and South Carolina Electric and Gas, the plant’s developers, stopped work after estimated completion costs ballooned to $25 billion and the construction schedule was extended well into the 2020s. The decision to halt the project came four months after Westinghouse declared bankruptcy.

Keith Schneider, who’s reported on energy, water, and the environment from the frontlines of six continents, is the western environment and public lands correspondent for the Los Angeles Times and senior editor for Circle of Blue.

Lead Image: Reporters visit the crippled Fukushima Daiichi nuclear plant on April 14, 2017, in northeastern Japan. The disaster there has increased anxiety about such large projects among investors and the public. PHOTOGRAPH BY KYODO VIA AP

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