German Utility RWE Meets Climate Targets by Supporting Forced Evictions in China

Thursday, December 4, 2008

Report shows Germany failing to enforce EU law on hydro carbon credits

A report released today reveals that German power utility, RWE, plans to buy carbon credits from a dam in China that fails to meet World Commission on Dams (WCD) guidelines, a breach of EU law. RWE, one of the biggest CO2 emitters in Europe, is buying the credits to avoid having to reduce emissions from its coal plants in Germany.

The report is based on a field visit by International Rivers' consultant Tina Lea, a Chinese-speaking researcher.* It finds that 7,500 people were forcibly evicted to make way for the Xiaoxi Dam, that the project developer failed to restore pre-eviction incomes, had given arbitrary compensation amounts to affected people, and that there was no legal recourse for those who had suffered losses. These all constitute clear violations of WCD guidelines.

One local villager told Tina Lea:

“The government told my family: ‘You will have to move out of the village, or we will force you. You have no choice.’ We did not know where we would move. The government destroyed all our neighbors’ houses . . .”

In line with German government requirements, RWE paid for certification company TÜV SÜD to assess the WCD compliance of Xiaoxi. TÜV SÜD found that the dam is WCD compliant.

TÜV SÜD is one of the “validators” accredited by the UN to assess whether projects are eligible to receive income from selling Clean Development Mechanism credits. In this case TÜV SÜD was first paid by RWE to validate the dam as CDM compliant, and then again contracted by RWE to prove that the dam was WCD compliant.

Patrick McCully, Executive Director of International Rivers, said:

“Xiaoxi is in blatant violation of the WCD guidelines and its credits are therefore not valid for use in the EU. It is disappointing that TÜV SÜD found the dam to be WCD compliant, but it is hardly surprising given the company’s obvious conflicts of interest. By giving Xiaoxi a passing grade for both the CDM and the WCD, TÜV SÜD has just done what its client RWE wanted.”

Xiaoxi is one of at least 11 Chinese large hydro projects from which RWE is buying credits. They have commissioned TÜV SÜD to do WCD compliance reports for 10 of these projects. TÜV SÜD found all to be compliant.

Every one of TÜV SÜD compliance reports for RWE concludes that “directly affected stakeholders have not been socially or culturally disadvantaged,” and “there is no negative impact on the river, the livelihood and the environment in general.”

Patrick McCully said:

“It is simply not credible to claim that 10 large hydro projects displacing almost 10,000 people can be built and cause no social harm and no negative environmental impacts. This is more magical realism than realistic auditing. Our consultant’s field visit to the Xiaoxi Dam highlights the lack of reality in TÜV SÜD’s conclusions for that project. There is no reason to believe that their other compliance reports are any more reality based.”

The EU has been trying for the past year to reach agreement among its member states on a harmonized procedure for applying the WCD to CDM dams. The latest draft guidelines recommend that WCD compliance be done by one of the CDM-accredited validators.

Patrick McCully said:

“The TÜV SÜD experience shows that the CDM validators cannot be relied on as independent third-party auditors. For this process to have credibility the EU should adopt the WCD’s own recommendation which is for compliance to be monitored by independent expert panels convened by an advisory group of all project stakeholders.”

*Tina Lea is a pseudonym to protect local people who assisted her field trip. Tina’s report is available here.

Supporting facts:

  • The World Commission on Dams – an independent multi-stakeholder body that released its final report in 2000 – established a set of criteria and guidelines for dam construction globally.
  • An EU law known as the Linking Directive states that CDM credits from hydropower projects larger than 20MW can only be used in the EU Emissions Trading System if the projects comply with the WCD criteria and guidelines.
  • As of November 1, 2008, 729 Chinese hydro projects representing 22,489 MW of capacity had applied for approval to sell carbon credits from the Kyoto Protocol’s Clean Development Mechanism. Most of these projects are probably “non-additional” – i.e. they did not require CDM income to be completed.
  • Xiaoxi Hydropower Project is a 135 MW dam on the Zishui River in China’s southeastern Hunan province. It began construction in 2004. The CDM Executive Board is currently reviewing Xiaoxi’s application for CDM credits.
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