The dam proposed by China’s first President Sun Yat-sen more than eight decades ago is intended to reduce flooding and cut pollution. Coal-burning now fires two-thirds of the power output in the world’s fastest-growing major economy. Detractors are opposed to the 600 kilometer-long reservoir that is filling up behind the wall and submerging towns and villages.

“When you define ‘clean’ as inclusive of the potential ecological impact that’s caused by the Three Gorges Dam, then I guess that’s questionable,” Victor Shum, of Singapore-based energy consultants Purvin & Gertz, said in a May 15 interview.

Fourteen generators producing 9,800 megawatts are complete and in operation by Shanghai-listed China Yangtze Power Co. Its parent, China Three Gorges Corp., builder of the project, has tasked Yangtze Power with running the 84.7 billion kilowatt-hours of power the site is scheduled to produce by 2009, an amount equal to 10 nuclear reactors.

The 2009 power-production target is equivalent to 3.4 percent of China’s 2005 electricity output, said Judith Chen, an analyst at KGI Consulting Co. in the southern city of Shenzhen.

Yangtze Silt

Meanwhile, more than half of the silt that the Yangtze once carried downriver is now settling in the reservoir, which may result in a harmful buildup, said Edmond Lee, a Hong Kong-based analyst at JPMorgan Chase & Co.

Environmental questions haven’t halted work on the dam, since former Premier Li Peng revived the project and construction started in 1993. Completion of the wall is about nine months earlier than officials originally estimated, according to state media reports.

By the end of April, 126 billion yuan ($15.7 billion) had been spent on the project, a figure that may be capped at 180 billion yuan in 2009, the official Xinhua news agency said this week.

About 45 percent of the budget has been earmarked for relocating and compensating people that live in the area the dam is submerging, JPMorgan’s Lee said. So far, 1.25 million people have been moved at a cost of almost 45 billion yuan, according to state media reports.

Adequate Compensation?

“The problem is whether these people are adequately compensated,” Lee said. “You never know.”

Some of the money intended for those forced to abandon their homes was stolen. Huang Faxiang, a former construction bureau chief in Fengdu county, was executed in December 2003 for embezzling 12 million yuan in relocation funds.

The case for building the dam is strengthened by the power shortages that have caused blackouts in Chinese homes and factories during the last three years. China had 25,000 megawatts less electricity than it needed when demand peaked last summer, a shortfall that may narrow to 10,000 megawatts this year, the National Development and Reform Commission, the state planning body, said in March.

Sales of that power will enable the project to pay for itself less than a decade after starting full operations, according to Yang Ya, chief accountant at China Three Gorges. By 2020, the dam will have generated 1 trillion kilowatt-hours of electricity, earning an estimated 250 billion yuan, Xinhua quoted Ya as saying on May 17.

Project’s Advantage

The project has the advantage of being located in the Yichang section of the Yangtze, “where natural conditions are quite favorable for hydroelectricity generation,” Morgan Stanley analysts including Hong Kong-based Michael Tong wrote in a Jan. 23 report.

Hydropower offers lower operating costs than coal-fired plants that are quicker to build, especially at a time of high coal prices, Tong wrote. Prices of thermal coal, used to generate electricity, reached records last year. Spot export prices for thermal coal shipped from Newcastle, the world’s biggest export harbor for the fuel, have gained 44 percent since mid-November.

Critics of the Three Gorges project cite safety risks including the dam’s location near six active geological fault lines, according to the Web site of Probe International, a Canada-based environmental group.

China may build 100 hydro-electric plants on the Yangtze and its tributaries during the next two decades, Xinhua reported on May 13. Still, the engineering risks associated with plants the scale of Three Gorges may discourage similar dams, said Goerild Heggelund, a China energy specialist at the Fridtjof Nansen Institute, a Norwegian environmental, energy and resource research foundation.

“It’s a project that was planned many, many years ago,” Heggelund said in a telephone interview this week. “If it were up for a vote in the National People’s Congress today, some people think it might not have been approved.”