Laos has not been reluctant to let the world know about its ambition to become the largest energy exporter in the region, or the “Battery of Asia.” As of part of efforts to realize its goal, the landlocked communist country has pushing for building more hydropower plants over the years, in spite of the current and projected impacts on the future of the Mekong River, one of the world’s longest, largest, and resource-rich rivers.
With a current installed capacity of approximately 6,000 MW, the Lao government aims to achieve 14,000 MW of energy production by 2020. Its primary export targets are neighboring countries where there are growing demands for more energy. With Thailand as its current main customer, the country is poised to export more to others, including potentially other countries in mainland Southeast Asia as well.
Therefore, it is no coincidence that recent visits by Lao government officials have been accompanied by suggestions that such energy agreements might be possible, even though there remain significant challenges to actually reaching them and then following through. To take just one example, when Lao Minister of Energy and Mines Khammany Inthirath visited Hanoi in early April, he met with Vietnamese counterpart Tran Tuan Anh and discussed the possibility of exporting more energy to Vietnam while exploring ways to develop a legal framework and infrastructure to make it happen.
There certainly is a case to be made that growing energy demands in mainland Southeast Asia call for greater investments in more energy sources. Take Vietnam, for example. Electricity consumption in Vietnam has increased rapidly in past years due to strong economic growth and expansion of the manufacturing industry. According to one estimate, the country’s energy imports are expected to increase by 37.5 percent by 2025 and by 58.5 percent by 2035. Yet it is constrained by limited energy infrastructure.
Vietnam is not alone in this journey to seek more energy. The situation in neighboring Myanmar is similar. Its electricity demand is growing 13 percent annually while the demand is estimated to reach 4,500 MW by 2020 and 13,410 MW in 2030. Laos announced in January last year that it was planning to export 200 MW of electricity to Myanmar by the year 2020 and possibly more in coming years.
Yet how to achieve these growing energy needs is the real question, and on this, there are unsurprisingly divided opinions. The Lao government has long said that it views hydropower as critical to its energy needs. According to one estimate, Laos currently operates a total of 42 power plants: 39 hydropower plants, one coal-burn lignite plant, and two sugarcane-powered plants. As numbers suggest, the country’s energy production heavily depends on hydropower plants and that tendency is expected to grow. A total of 53 hydropower plants are under construction or in the planning stage, while there will be more than 90 hydropower plants to be constructed in the country in coming years.
This is also not just a question of current need but future opportunity: hydropower makes Laos an attractive destination for foreign investors that hope to take advantage of a Southeast Asian nation’s rapid economic growth. Since 1986, when Laos opened itself up to overseas investors, about $6.6 billion in foreign funds have been poured into projects to develop hydropower plants in Laos, accounting for about 33.4 percent of the total foreign investments the country has attracted.
However, critics have rightly sought to draw attention to the potential for negative impacts, such as long-term environment consequences and the threat to more traditional industries, including fishing and farming, in the broader Mekong subregion. As an example, International Rivers, an NGO that has long been focused on the Mekong River, has repeatedly shown that impacts of to-be-built dams are expected to result in a drastic reduction in food security and agricultural productivity, alongside increased poverty levels and heightened climate vulnerability in much of the Lower Mekong Basin.
The watchdog’s concern was echoed by other organizations as well, including the Mekong River Commission (MRC), an intergovernmental river basin organization. The MRC released a report on April 6 that details negative trade-offs between water, energy, and food resulting from the construction of 11 large hydropower dams on the Mekong’s mainstream, and 120 tributary dams planned over the next 20 years. In the 3,600-page report, MRC offered comprehensive evidence to back up its case, including, for instance, the fact that fish stocks would lose 30 to 40 percent of current fisheries by 2040 as a result of ongoing developments around the river.
Despite this overwhelming evidence, Laos still seems determined to boost its hydropower output. Government officials still say that they are convinced that its needs can be addressed even while managing or mitigating these concerns. Though there might be a case for such a balanced approach, to date the concerns around the Mekong River, including by neighboring states, have not only continued but have in some ways heightened. Whether Laos likes it or not, that reality will likely continue to complicate its hydropower ambitions for years to come.