Authorities in Chile’s Aysén region this month granted environmental approval for the highly controversial, five-dam hydroelectric project HidroAysén, sparking widespread protests.

Chileans of all political stripes are criticizing the May 9 decision, mainly out of concern about the dams’ potential impacts on two pristine rivers in Chilean Patagonia—the Baker and the Pascua, which are highly prized as ecotourism and recreational resources. Some also are portraying the approval as evidence of poor foresight in Chile’s energy planning.

Opposition to the US$7 billion project has stemmed at least as much from the decision’s manner as from its content. Right-leaning Chilean President Sebastián Piñera and many of his ministers publicly voiced support for the dam project just before the regional regulatory body, Aysén’s Regional Environmental Commission (Corema), made its decision. And some government agencies, such as Chile’s national forest service, Conaf, were found to have changed recommendations by their own technical experts in order to speed the project’s approval.

Though project supporters contend the project review was rigorous and aboveboard, critics insist the handling of HidroAysén has called into question the legitimacy of Chile’s system of environmental oversight. “The environmental institutions of this country have been violated,” says Antonio Horvath, a center-right politician representing Aysén in Chile’s Senate. “Unfortunately, the central government made clear they wanted regional authorities to vote in favor, and that’s what has happened. We will now take this issue to the courts.”

Says Patricio Rodrigo, head of a coalition of environmental and citizen groups opposing HidroAysén: “Environmental-impact evaluation in Chile is a comedy and a farce.”

Police estimate that some 60,000 people protested the decision on May 20 in downtown Santiago, one of the largest demonstrations in Chile in recent memory. Protests also broke out in Coyhaique, Valparaiso, Concepción, Temuco, Puerto Montt, Punta Arenas, Iquique and elsewhere. Worldwide, demonstrations on HidroAysén have occurred in Rome, Madrid, Berlin, San Francisco, Mexico City and elsewhere.

Opinion polls in Chile show broad-based opposition to the dams. Before the project’s approval, a poll by Ipsos found 61% of Chileans opposed the project. A week after the decision, the La Tercera newspaper in Santiago released a poll showing 74% opposed.

HidroAysén is jointly owned by Endesa Chile (51%), which is controlled by Italy’s Enel, and Chile’s Colbun energy company (49%), which is owned by the Matte Group, a large Chilean conglomerate.

The project calls for five dams on the Baker and Pascua rivers with a collective installed capacity of 2,750 megawatts, or about 20% of Chile’s current energy supply. The project’s US$7 billion price tag comprises $3.2 billion for building the dams and $3.8 billion for installing the transmission lines.

Though the dams have been approved, jousting over HidroAysén is far from over. The companies will not begin construction until they win approval for the 1,400-mile transmission lines needed to get the power from the dams to the capital, Santiago. Challenges are expected in the environmental-impact review process for that project.

Construction of the transmission lines entails installation of towers 70 meters high (equivalent to 25-story buildings) every 400 meters, cutting a 100-meter-wide corridor through forested areas, across 6 national parks, 11 national reserves, 26 sites deemed priorities for conservation, 16 wetlands, and 32 private protection areas in 7 regions of Chile.

The companies also must obtain financing, and environmental groups have been working to block their options. After meeting with representatives of the Patagonia Without Dams campaign, the Spanish bank BBVA announced in Jan. 2010 that it would “not finance” HidroAysén because it “does not comply with our established sustainability criteria.”

For their part, HidroAysén executives say they are satisfied with the Corema decision, though they are evaluating whether they can comply with some of the conditions that the regional agency placed on the project. Among those conditions is a pledge to reduce Aysén residents’ electric bills by half.

Daniel Fernandez, HidroAysén’s executive vice president, argues that without the project, Chile will not have enough energy at the end of the decade. He adds that the company did a “very rigorous and very technical environmental-impact study that guarantees the project will be environmentally viable.”

But Ana Lya Uriarte, the former environment secretary in the center-left Michelle Bachelet government, said that before handing over power in March 2010, the previous administration was about to reject HidroAysén due to the numerous technical and legal problems in the company’s environmental-impact study.

“This project will cause irreversible damage to the environment and the tourism economy in Aysén,” says Uriarte. “Only about 15 to 17% of Chile’s energy goes to turning on the lights of Chileans; the rest goes to industry, and primarily to the mining sector. It’s time industry started helping the country foot the bill for their own energy use. To say that the HidroAysén project is essential to meet Chile’s future energy needs is a lie.”