Study Adds Urgency to Reform Offsetting Scheme in Durban

Katy Yan
Increase of credits from large hydro expected by 2020
Increase of credits from large hydro expected by 2020

A new study released in time for the climate negotiations in Durban confirms that over 20% of all carbon credits under the UN's offsetting scheme, the Clean Development Mechanism (CDM), could come from business-as-usual large hydropower projects. This is not surprising considering that hydropower is heavily supported and subsidized in many countries, especially in China and India, who host a combined 78% of all the registered hydropower projects in the CDM. Large hydro projects are projected to generate 2 billion carbon credits by 2020, which could be a lot of hot air.

CDM Hydro Projects Just Business-as-Usual

The White Paper, produced through the University of California at Berkeley by Barbara Haya and Payal Parekh, shows that large hydro projects under the CDM do not comply with the mechanism’s essential additionality requirements, because they are being built regardless of climate financing from the CDM. This is particularly true for China and India, the major beneficiaries of carbon credits, whose renewable energy sectors are dominated by hydropower (and have been so for many years before CDM credits kicked in). CDM carbon credits from these business-as-usual projects could increase global emissions because they are bought by industrialized countries that need these carbon offsets to meet climate targets (instead of meeting targets through actual reductions on-site).

Registered large hydro
Registered large hydro

The rules that define how projects have to prove that they are only viable because of the CDM – i.e. additionality testing – have long been criticized as ineffective. Even those closely involved with the CDM admit that additionality tests are a joke, as seen in the recent wikileaks cable from India. At a recent meeting of the CDM Executive Board, longstanding member Lex de Jonge even said:

"Additionality testing – are there flaws? I'm afraid the answer is: yes. Experience shows that this concept is too simplified and invites creativity and free riders...Let's face it, that's how it really looks." 

The study shows that these projects are not being built because of CDM support but because of strategic decisions by governments, such as energy security.

Sustainability Problems Come in All Sizes

Hydro types: Run-of-River vs. Reservoir
Hydro types: Run-of-River vs. Reservoir
Kumar et al 2011

The study also looks at social and environmental impacts of hydropower projects and assesses the implementation of the EU's screening process to filter out especially harmful large hydropower projects, which need to show compliance with the World Commission on Dams (WCD). The authors review a number of key studies and conclude that hydropower projects of all sizes can have substantial negative social impacts, including small projects (which are usually understudied and underregulated). In addiition, local communities often face serious challenges because there is no requirement to monitor sustainability criteria. In an open letter sent last week, civil society groups called on Environment Ministers to address these shortcomings at the climate change conference in Durban.

Among the study's recommendations are the following:

  • Large hydropower should be excluded from the CDM in all countries, because it is common practice, unlikely to be additional, and additionality testing is inaccurate and easy to manipulate.
  • Small hydro projects should only be allowed where there are not already being built or are being built at much slower rates than they would with carbon credits, and in countries where governments are less able to financially support them.
  • All hydro projects should be required to go through an extra check regarding environmental and social impacts.
  • There should be independent oversight of the validation process by EU Member States and public access to WCD compliance reports.  

Take Action!

Now that you've heard about how flawed the CDM is, click on the buttons below and tell the UNFCCC that it's time to reform the CDM and recognize that large hydro is just business-as-usual:

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