Second NGO Letter to German Environment Minister Jürgen Tritten

To:

Minister Jürgen Tritten
Federal Minister for Environment, Nature Protection and Nuclear Safety

Dear Minister Tritten,

Many thanks for your letter of 13 December explaining the position of the Federal Environment Ministry (BMU) on the application of WCD recommendations within the CDM, and in particular with regards to the La Esperanza hydropower project in Honduras.

First we would like to note our strong appreciation for your statements on the importance of the WCD and the implementation of its recommendations. We especially appreciate your support for the requirement within the EU Linking Directive that hydropower projects with an installed capacity of more than 20MW should comply with the WCD recommendations. We look forward to the transposition of this EU requirement into German legislation.

We also strongly welcome your commitment to argue for other institutions and players to follow the example of KfW in requiring WCD compliance. You can most certainly rely upon us and many other NGOs around the world in continuing to promote WCD compliance as essential for the planning, construction and management of dams.

We also note with interest your statement that BMU is "pleading for viable procedures so compliance with WCD rules can be demonstrated by project developers and investors and can as well be validated by an independent accredited certifier." We very much share your concern for the development of clear procedures to show WCD compliance and hope that BMU can work with national and international NGOs to develop these procedures.

We disagree, however, with your position that the WCD criteria are not applicable to the La Esperanza project. We believe that La Esperanza is in fact an important test case for showing how projects can demonstrate compliance with the WCD.

While La Esperanza is smaller than the size limit set in the EU Linking Directive, it should have to meet WCD criteria according to the BMU’s own standards for CDM projects, which do not include a size limitation for hydropower. The WCD report itself does not include any size threshold below which its principles should not be applied. As we noted in our letter of 26 November, the June 2004 KfW//BMZ/GTZ report on "Implementation of the WCD recommendations within German Development Cooperation" notes the importance of applying the WCD recommendations to dams of all sizes.

There is also no basis for the argument that La Esperanza does not have to comply with the WCD because it is a run–of–river plant. First, the WCD nowhere says that its recommendations do not apply to run–of–river dams (one of the poorest performing and most damaging dams studied in detail by the WCD, Pak Mun in Thailand, is a run–of–river project). The BMU’s standards (and the EU Linking Directive) also do not make any distinctions between run–of–river and storage dams. In any case there is no clear, internationally agreed definition to distinguish between "run–of–river" and storage dams, and La Esperanza is described in its Project Design Document as a "containment run–of–river" project, an unusual term which suggests the project is not a pure run–of–river project. The historical dam regulating the watercourse that you mention in your letter is being rehabilitated through the CDM project and its rehabilitation should therefore be required to meet WCD standards.

As you note, we have not raised objections against the impacts of the project per se. Our concern with this project is that because KfW is an investor in the project via the World Bank’s Community Development Carbon Fund, it should comply with KfW and the German government’s standards for dams and the CDM. It would set an extremely damaging precedent for the carbon market in general if a signal is sent that investing via a World Bank carbon fund or other intermediary vehicle exempts national government agencies from meeting their own standards. We also believe that this project can set a positive precedent in showing how a hydropower project can demonstrate compliance with the WCD. Conversely, not applying the WCD in this case could harm the credibility of the German government’s CDM guidelines, and of its role as the leading governmental supporter of the WCD.

We do also have serious concerns about the additionality of the project and thus its eligibility for CDM credits. We were pleased to note that several members of the CDM Executive Board share our concerns and have requested a review of the project. The decision whether to conduct a review will be taken at the 18th meeting of the CDM Executive Board in late February 2005. There should therefore be time for the CDCF to undertake an assessment demonstrating whether the project complies with the WCD.

We look forward to continued cooperation on these vital sustainable development issues of implementing the recommendations of the WCD and ensuring the integrity of the CDM.

Yours sincerely,

Sabbir Shams, Advancing Public Interest Trust (APIT), Bangladesh
Zakir Kibria, BanglaPraxis, Bangladesh
Ben Pearson, CDM Watch
Lars Friberg, Climate Action Network Europe
Christine Eberlein, Erklärung von Bern, Switzerland
Jutta Kill, FERN, Europe
Patrick McCully, International Rivers Network
Himanshu Thakkar, South Asia Network on Dams, Rivers & People, India