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Kárahnjúkar Hydropower Project Official Assessment Karahnjú kaŕ Hydropower Project Iceland Project Stage: Operation Assessment Date: 07/09/2017 to 15/09/2017 Final Report Date: 12/07/2017 Client: Landsvirkjun Lead Assessor: Dr Joerg Hartmann, Independent Consultant Co-assessors: Dr Bernt Rydgren, Principal Environmental Consultant, Sweco; Dr Eleni Taylor-Wood, Principal Consultant, Entura Project size: 690 MW Cover page photo: Kárahnjúkar dam, with 'Vortex' art work in foreground and Snaefell mountain in background. The Hálslón reservoir is at full supply level, and the spillway is operating. Kárahnjúkar, Iceland www.hydrosustainability.org | i Acronyms Acronym Full Text ASÍ Icelandic Confederation of Labour CEO Chief Executive Officer CSR Corporate Social Responsibility DMM Dynamic Maintenance Management EU European Union EIA Environmental Impact Assessment GDP Gross Domestic Product GHG Greenhouse Gas GPS Global Positioning System GRI Global Reporting Initiative GWh Gigawatt-hour HSE Health Safety Environment IHA International Hydropower Association IMF International Monetary Fund ISK Icelandic Krona ISO International Organisation for Standardization KAR Kárahnjúkar project kV Kilovolt LV Landsvirkjun m.a.s.l. Meter above sea level MoU Memorandum of Understanding MW Megawatt NGO Non-Governmental Organisation NVE Norwegian Water Resources and Energy Directorate OECD Organisation for Economic Co-operation and Development OH&S Occupational Health and Safety OHSAS Occupational Health and Safety Assessment Series SCSI Soil Conservation Service of Iceland UNECE United Nations Economic Commission for Europe WFD Water Framework Directive Kárahnjúkar, Iceland www.hydrosustainability.org | ii Table of Contents Acronyms .................................................................................................................................. ii Table of Contents ..................................................................................................................... iii Executive Summary .................................................................................................................. iv Sustainability Profile .................................................................................................................. v Table of Significant Gaps .......................................................................................................... vi Introduction .............................................................................................................................. 1 1 Communications and Consultation (O-1) ........................................................................... 7 2 Governance (O-2) ............................................................................................................. 14 3 Environmental and Social Issues Management (O-3) ...................................................... 21 4 Hydrological Resource (O-4) ............................................................................................ 29 5 Asset Reliability and Efficiency (O-5) ................................................................................ 34 6 Infrastructure Safety (O-6) ............................................................................................... 40 7 Financial Viability (O-7) .................................................................................................... 46 8 Project Benefits (O-8) ....................................................................................................... 52 9 Project Affected Communities and Livelihoods (O-9) ...................................................... 59 10 Resettlement (O-10) ........................................................................................................ 66 11 Indigenous Peoples (O-11) ............................................................................................... 66 12 Labour and Working Conditions (O-12) ........................................................................... 67 13 Cultural Heritage (O-13) ................................................................................................... 73 14 Public Health (O-14) ......................................................................................................... 77 15 Biodiversity and Invasive Species (O-15) .......................................................................... 81 16 Erosion and Sedimentation (O-16) ................................................................................... 87 17 Water Quality (O-17) ........................................................................................................ 94 18 Reservoir Management (O-18) ........................................................................................ 98 19 Downstream Flow Regime (O-19) .................................................................................. 102 Appendix A: Written Support of the Project Operator ......................................................... 108 Appendix B: Verbal Evidence ................................................................................................ 109 Appendix C: Documentary Evidence ..................................................................................... 114 Kárahnjúkar, Iceland www.hydrosustainability.org | iii Executive Summary This report presents the findings of an assessment of the Kárahnjúkar project using the Operation Stage tool of the Hydropower Sustainability Assessment Protocol. Kárahnjúkar is a 690 MW hydroelectric power project, owned and operated by Landsvirkjun, located in eastern Iceland. Landsvirkjun is a strategic company for the Icelandic economy and for its owner, the Icelandic government. Kárahnjúkar is the largest power project in Iceland and accounts for about 1/3 of Landsvirkjun’s and 1/4 of Iceland’s electricity generation. The assessment was carried out over the period August to November 2017, with an on-site assessment, including a visit to the project area and interviews with stakeholders, conducted from the 7th to the 15th of September, 2017. This assessment meets the requirements of an Official assessment, as described in the Terms and Conditions for the Use of the Protocol. Kárahnjúkar, also named Fljótsdalur for the location of its power station, was commissioned in 2007. It was built primarily to supply power to Alcoa’s aluminium smelter in Fjardaál, through dedicated transmission lines. This is the largest industrial facility in Iceland, producing about 350,000 tonnes of aluminium per year. At the time of construction, the hydropower project and smelter were more controversial than any other large projects in Iceland’s history. Over the first ten years of operations, Landsvirkjun and Alcoa have made significant efforts to mitigate their social and environmental impacts, to create socio-economic benefits, to document changes in the region through a transparent process, and to communicate and cooperate with local communities. Although the Kárahnjúkar project is closely connected with Landsnet’s transmission lines and Alcoa’s smelter, this assessment covers only the hydropower project. Its most significant impacts are related to loss of wilderness areas, caused by land inundation by several reservoirs as well as improved access to the highlands, and to changes in the flows of several rivers, all the way to the coast. At the same time, the project has led to significant socio-economic change and has enabled the smelter, which is by far the most important employer in this remote region. These issues are reflected in the findings of this assessment, and in a range of high scores that summarise the findings. Kárahnjúkar meets proven best practice on 11 out of 17 relevant topics: Communications and Consultation; Environmental and Social Issues Management; Asset Reliability and Efficiency; Financial Viability; Labour and Working Conditions; Cultural Heritage; Public Health; Biodiversity and Invasive Species; Water Quality; Reservoir Management; and Downstream Flow Regime. Kárahnjúkar exceeds Basic Good Practice on all six remaining topics, each of these with one significant gap against proven best practice: Governance; Hydrological Resource; Infrastructure Safety; Project Benefits; Project-Affected Communities and Livelihoods; and Erosion and Sedimentation. Two of these gaps are outside Landsvirkjun’s sphere of influence, and would have to be addressed by Government; the other four could be addressed through internal corrective action. Two topics, Resettlement and Indigenous Peoples, are Not Relevant in the Kárahnjúkar project. The scores for all topics are summarised in the following Sustainability Profile and Table of Significant Gaps. Kárahnjúkar, Iceland www.hydrosustainability.org | iv Sustainability Profile Kárahnjúkar, Iceland www.hydrosustainability.org | v Table of Significant Gaps Level 3: Significant Gaps Level 5: Significant Gaps against Basic Good against Proven Best Practice Practice Assessment No significant gaps No significant gaps Management No significant gaps No significant gaps O-9: Feedback to individual landowners Stakeholder regarding bank erosion mitigation, and No significant gaps how it fits in within the broader Engagement program of works being undertaken by Landsvirkjun, is not thorough or timely. O-6: Recent reviews have shown a number of minor non-conformances with dam safety standards and Conformance/ protocols; for example, some No significant gaps Compliance instrumentation records are incomplete, and review and analysis of monitoring data
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