UNFCCC Approves Controversial Coal and Hydro Projects in India

CDM Watch, Sierra Club and International Rivers
Wednesday, October 5, 2011

For immediate release

Brussels, 5 October 2011. The CDM Executive Board approved two controversial Indian mega projects: a new coal fired power plant and a hydro power plant which had recently made headlines because of its non‐additionality and the harm reportedly caused to the local population. CDM Watch, Sierra Club and International Rivers condemn the decisions and call on the Board to publish the findings of the review assessments that approve the compliance with CDM requirements for these projects.

Despite heavy criticism about the environmental integrity of coal projects in the CDM, the CDM Executive Board has approved yet another supercritical coal project in India. The project is part of Reliance Power Ltd. owned by the Indian billionaire Anil Ambani. Over the next 10 years the power plant is expected to receive 21 million CDM credits while at the same time emitting 240 million tons of CO2.

In order to qualify as a CDM project, a project developer must show that the project would not have used supercritical technology without CDM support. The newly registered project failed to do so because the Government of India has required by law that this project use supercritical technology. Moreover, because of skyrocketing coal prices and severe shortages, power producers are increasingly switching to supercritical technology regardless of CDM support.

Steven Herz from Sierra Club, who has independently evaluated a number of Indian coal projects seeking CDM registration comments: "This is not a project that slipped through the cracks of the CDM review process. The CDM Executive Board was well aware of these fundamental problems and closely reviewed the project. Their decision to approve the project anyway raises serious questions about their willingness to enforce CDM rules in an objective matter."

This statement is supported by Reliance's annual report to its shareholders that explicitly states that the CDM is a "new revenue stream for the Company" making it clear that CDM support is not necessary to finance the project.

"This is a remarkably poor use of CDM resources. This project will fill the coffers of a billionaire while emitting massive quantities of carbon dioxide and other air pollutants. It not only undermines the goal of addressing climate change, but also completely fails to support sustainable development in India," said Anja Kollmuss from CDM Watch.

This also holds true for the second project: The 412 MW Rampur Hydroelectric Project located near Rampur in Himachal Pradesh, India has long faced criticism about its additionality claim and stiff local opposition as a result of its lack of public consultation and failure to deliver sustainability benefits. Satluj Jal Vidyut Nigam Limited (SJVN), an Indian hydropower company originally created by the World Bank, signed an agreement with the local government to implement the project back in 2004. The Indian Prime Minister laid the foundation stone in 2005. The World Bank approved a major loan for Rampur in 2007. This project would clearly have gone forward with or without the support of the CDM.

"The Rampur project is the latest example of an Indian project that undermines the credibility of the CDM. Now that the project has been registered, it will increase global CO2 emissions, at a cost of €120 million to unsuspecting energy consumers in Sweden," said Katy Yan from International Rivers.

A diplomatic cable from 2008 published last month by Wikileaks provides additional evidence that most of the CDM projects in India are non‐additional. Asked about the allegations Martin Hession, chair of the CDM Executive Board stated in a recent interview with the journal Nature that "the CDM is much more transparent and predictable than the tenor of these remarks might suggest."

However transparency in the CDM is limited. When projects submit their registration requests, they are reviewed both by the Secretariat and the Registration and Issuance Team. Yet, current CDM procedures do not require that their findings are made public.

"The CDM too frequently promotes projects that neither cause additional emission reductions nor support sustainable development," said Eva Filzmoser from CDM Watch, "facing criticism that decisions by the CDM Executive Board are often tainted by conflicts of interests, we are asking the Board to publish the findings of the review assessments that state how these contentious CDM projects comply with CDM requirements" she added.

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