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The parallel universe of a CDM consultancy: a view from Hanoi (Watch This! #5)

27 Mar 2013

Garbage dump in Hoang Cau, Hanoi Garbage dump in Hoang Cau, Hanoi (showing the contrasts in Hanoi). Source. By Mattijs Smits, PhD candidate at the University of Sydney and M-POWER research fellow

By Mattijs Smits,
PhD candidate at the University of Sydney and M-POWER research fellow

The number of hydropower CDM projects has boomed in the last few years in Vietnam, on the back of a strong push for hydropower to meet the country’s rapidly increasing electricity demand. On 1 March 2013, there were 169 hydropower CDM projects registered in Vietnam with a further 16 hydropower projects undergoing completeness checks, and 4 still in validation stage. In this short article, I want to reflect on some of the insights from interviews I conducted in Hanoi in October last year, which are part of a research fellowship on the relation between CDM and water governance in the Mekong region.

One of the most striking aspects for me, as a relative outsider to carbon finance, was the extent and the importance of CDM consultancy companies in the CDM cycle. In October, there had been 29 different consultants involved in CDM hydropower projects in Vietnam, with the 10 biggest involved in more than 85% of the projects. Some of them are local consultancy organisations, but most of them are either branches of international companies or are involved in joint-ventures. The role of the Vietnamese government is minimal, with the DNA having just a handful of employees and lacking specific technical knowledge. However, the government’s power lies in the role as gatekeeper for signing off on projects. I learned that having a director of your consultancy organisation who has good links with the government (preferably a former high-ranking government employee) therefore helps a lot to get more projects.

Most projects that do have potential to be additional and make contributions to sustainable development, get crowded out by business-as-usual hydropower projects.

Many of the consultants I interviewed were remarkably frank about (the lack of) additionality and sustainable development of their CDM projects. Some admitted—not without a sense of pride—that it is their job to prove additionality, and that there are many ways to achieve this. They were also rather sceptical about the contributions of CDM to sustainable development, given that the process hardly adds any requirements beyond those already present in Vietnamese legislation. One consultant even found that during the compulsory local consultations ‘nobody cared’ about the process. One of the benefits I’ve seen so far is some increased transparency. However, CDM documents are only publicly available in English (on the UNFCCC website) and not in Vietnamese (and not exactly written in layman’s language!).

All the above observations made me see the CDM scene in Vietnam as a kind of parallel universe. Being in an air-conditioned consultancy office in one of the many new high-rise building in Hanoi often made me feel literally so: far away from the Vietnamese people who struggle every day to claim their share of Vietnam’s impressive economic growth. I do not blame the consultancy companies for benefitting from the newly created niche market. However, the sad truth is that even if their nice and smart employees wanted to make more meaningful contributions to reducing global carbon emissions and promoting sustainable development of Vietnam, the current system would not allow them to do so. Moreover, most projects that do have potential to be additional and make contributions to sustainable development, get crowded out by business-as-usual hydropower projects. With the focus now shifting to least-developed countries in the region such as Cambodia, Laos and Myanmar—and their large hydropower potential—the lessons from Vietnam and elsewhere should be taken very seriously. The final report of this study, which will include more detailed findings and a local case study from Vietnam, will be available towards the end of this year.

 

Read more from Watch This! NGO Voices on Carbon Markets #5