Letter to Buyers of CDM Credits from Chinese Hydros

Wednesday, December 19, 2007

(A similar letter has been sent to the following buyers of carbon credits from Chinese hydros: ENEL, EDF Trading Limited, ICECAP, CAMS AB Sweden, RWE Power AG, MGM Carbon Portfolio, Kommunalkredit, EcoSecurities, Energy Systems International, Eco Energia, Endesa Generacion SA, CDCF, Factor Consulting, IXIS, Int System Energy Corporation, Arreon Carbon, Sindicatum Carbon Capital International, KfW, Ecoinvest, ICF, ESI BV, WBCF, CCAN)

Marco Monroy
President & CEO
MGM Carbon Portfolio
Via e-mail: marcogmonroy@mgminter.com

Dear Marco Monroy:

We note that you intend to obtain carbon credits from large hydropower projects in China.

You are presumably aware of the adoption of the Linking Directive by the European Union in 2004, regulating the admission of CDM credits into the EU’s emissions trading scheme (EU ETS).

Article 11b,6 of the Directive states: "In the case of hydro–electric power production project activities with a generating capacity exceeding 20MW, Member States shall, when approving such project activities, ensure that relevant international criteria and guidelines, including those contained in the World Commission on Dams year 2000 Final Report, will be respected during the development of such project activities."

The Chinese government and hydro developers have refused to adopt the World Commission on Dams recommendations. China is known to neglect environmental and social concerns in hydropower development and to sideline the affected population in decision-making and disregard their rights in the resettlement process. This is in violation of the values, principles and priorities of the World Commission on Dams. Therefore, unless it can be convincingly proven otherwise for any specific project, it must be assumed that Chinese hydro projects do not respect the criteria and guidelines of the World Commission on Dams.

It is thus unlikely that any carbon credits that you procure from large Chinese hydropower projects will be usable in the EU ETS. International Rivers will be working with colleagues in Europe and contacts in governments and the European Commission to track hydro credits entering the ETS and ensure that they comply with the Linking Directive.

We look forward to hearing from you on how you intend to address this issue.


Patrick McCully
Executive Director
International Rivers

cc: Marzena Chodor, DG Environment, European Commission