Putting the Hydro Industry’s Fox in Charge of the Henhouse?

The foxes of the private sector have always enjoyed guarding the henhouse. In the United States, Wall Street bankers have for many years taken senior positions at the Treasury Department, where they have weakened the oversight of the banking sector. Before it was disbanded over the disastrous oil spill in the Gulf of Mexico, the government’s Minerals Management Service maintained a revolving door with the oil industry, and had a direct financial stake in the activities of industry which it is supposed to oversee. Such arrangements benefit the companies, but not the public at large.

Now the hydropower industry wants to get its part of the pie. The International Hydropower Association, the hydropower industry’s main lobbying group, has released what it calls a Hydropower Sustainability Assessment Protocol. Developed with a select group of partner institutions over the past three years, the Protocol is a scorecard to assess how hydropower projects compare against a list of relatively vague criteria. It is not a binding set of social and environmental standards.

The new protocol does not define any bottom lines of acceptability. For example it does not require that projects comply with national law. Many scores for “basic good practice” are weaker than existing standards – and particularly the framework of the World Commission on Dams (WCD) – in important aspects. In the eyes of the dam industry, “basic good practice” does not, for example, require that all available energy options are assessed in a balanced way.

The Protocol states that the scores for basic good practice are “broadly consistent” with the industry group’s own Sustainability Guidelines of 2004. As Shripad Dharmadhikary of the Manthan Research Center in India has pointed out, “the protocol is essentially designed to assess projects against a standard developed by the hydropower industry itself, which clearly has a vested interest in the standards being less stringent”.

The protocol was developed in an exclusive process, without the involvement of Southern NGOs or affected people. The document has been copyrighted and is being tightly controlled by the IHA. Anybody who wants to assess a project under the protocol needs to get a license from the industry association. Dam builders pay the auditors who assess their projects. They arrange their assessment program, and have to be notified in advance about any independent research which the auditors intend to do. There is no obligation that affected people are consulted as part of an assessment.

The IHA claims that its members will use the protocol to voluntarily improve the social and environmental performance of their dam projects. Behind the scenes, the industry lobby is, however, trying to replace existing, stronger standards with the new tool. The IHA has already proposed that in the future, hydropower projects that sell carbon credits on the European market should no longer be required to respect the strict framework of the WCD, but could instead be assessed by their protocol. The industry association has also suggested that projects which score well under its protocol get public subsidies and green credits.

In a critique of the new protocol, 57 civil society groups, international networks and independent experts assert that a private document “is not an appropriate tool of public policy”, and that “binding standards should not be replaced with voluntary industry commitments to ‘good practice’”. The groups call on governments, international organizations, financiers and other institutions not to endorse the protocol.

The poor record of self-regulation in the financial sector and offshore oil drilling suggests that putting this particular fox in charge of the henhouse would not result in healthier rivers or better hydropower projects. International Rivers will scrutinize the early assessments of projects under the protocol, and will expose the flaws of the industry approach. We will also make sure that the new tool does not replace existing social and environmental standards.

Peter Bosshard is the policy director of International Rivers. He blogs at www.internationalrivers.org/en/blog/peter-bosshard