Burning Rubber: Buchanan Renewables’ Impact on Sustainable Development in Liberia
affiliation not provided to SSRN
December 19, 2011
Buchanan Renewables (BR) established its operations in Liberia in 2006, a time when the country was just recovering from its devastating civil war, and when a new energy strategy based on the use of biomass as an important energy source had been developed in Europe. While the company actively promoted its business model of producing biomass from old unproductive rubber trees as a sustainable one, it also received criticism due to the fact that smallholder rubber farmers were not benefiting as much as they had expected. This research aims to assess how a number of stakeholders have been affected by the practices of BR, and to what extent these practices reflect the socially and environmentally sustainable public image of the company. The report evaluates four different issues related to BR’s activities: The regulatory framework for BR’s operations in Liberia; the impacts on smallholder rubber farmers; the impacts on the Liberian charcoal market; and tax avoidance through its corporate structure.
BR’s activities include the production of biomass from old rubber trees, which it sources from both smallholder rubber farmers and from large plantations, and the construction of a biomass-fueled power plant to supply the capital of Monrovia. The company agrees to clear the old trees from the smallholder farms, then replant new seedlings and provide maintenance for the first seven years. The power plant still has not been built, which means that all of the biomass that the company produces is currently being exported, mainly to Europe. The combination of renewable energy production and the rejuvenation of Liberia’s rubber farms form the basis of BR’s image as a socially and environmentally responsible company. Based on this image, BR has been able to secure loans and guarantees from development financing institutions, while Swedish utility Vattenfall has acquired a minority share of BR. The ultimate parent company of the group is a mailbox company in the Netherlands.
This report has identified a number of issues that contradict BR’s public image of a company that contributes to Liberia’s sustainable development. Firstly, while BR has begun to address a number of the complaints by smallholder farmers, a number of other demands have yet to be addressed. Although the experiences of these farmers may not reflect the experiences of all the farmers that BR is involved with, the authors conclude that it does illustrate a need for more effective monitoring than is currently undertaken by the relevant government agencies.
Keywords: energy, rubber, biomass, Liberia
Date posted: December 19, 2011