Large Hydro Carbon Credits Banned from European Climate Exchange
According to the EU Law known as the Linking Directive, the EU European Trading System (ETS) will only accept CDM credits from hydro credits if they conform to World Commission on Dam (WCD) standards. Back in 2007, the European Climate Exchange (ECX) decided to ban hydro from its exchange due to uncertainty over how the Linking Directive would be applied by different EU governments. Last July the European Commission established harmonized rules to address this problem. But since the harmonization is voluntary, ECX was still concerned "that it would not be possible to guarantee that all member states would abide by the new rules," according to Sara Stahl, ECX's director of market development. Let's hope that the Paris-based Bluenext exchange and Leipzig's European Energy Exchange follow ECX's lead, which are also considering whether to accept carbon credits from hydro projects.
Having scrutinized hydro projects in the CDM since its inception, we know of almost no project that is WCD compliant. In fact, we have forced the German government to review its approval of the Xiaoxi project in China as WCD compliant.
Furthermore, we know that the majority of all CDM projects, not just hydro projects, are non-additional. In fact, as of December 2009, 80% of all projects (not just hydro) were up and running when they were approved by the CDM! It will be interesting to see how many hydro projects the CDM Executive Board allows through at its current board meetng. Stay tuned for more info next week!
