World Bank Advised to Stop Supporting Dams with Carbon Credits
For projects to be eligible for carbon credits under the Kyoto Protocol's Clean Development Mechanism, they must fulfill two criteria: sustainable development and additionality. Unfortunately, host countries get to decide if a project promotes sustainable development - a slippery slope, as you can imagine, since a developing country that wants to bring international investment to its country will usually be unwilling to find a project lacking in sustainable development criteria. For a project to be additional, it means that the project could not have moved forward without the extra funding due to the sale of carbon credits. Without the aid of a crystal ball (do you know any good fortune tellers?), it is impossible to know what would have happened if the funding from the carbon credits hadn't been available. Furthermore funding non-additional projects means there is less funding for truly renewable projects, such as solar plants.
The Bank unfortunately is not very good at following its own advice, as International Rivers witnessed when the World Commission on Dams' recommendations were released. Bank management has requested the IEG to outline other financing options for funding hydropower in Africa. As we have shown time and again, it's the wrong climate for big dams in Africa. Climate change makes any form of financing for large dam hydropower in Africa a risky business.