by Barbara Haya* and Payal Parekh
* Energy and Resources Group, University of California, Berkeley

Hydropower makes up 16% of installed electricity capacity worldwide and is in many cases already cost competitive and/or strongly supported by government policies. Hydropower makes up 30% of all carbon offsets projects registered under the Kyoto Protocol’s Clean Development Mechanism (CDM) – just over 1000 projects as of 1 September 2011, the most of any project type. Hydropower also often has negative and sometimes severe impacts on river ecosystems and communities, including displacement of communities, loss of agricultural land, and decline in biodiversity. This means that effective criteria to ensure that accepted CDM hydropower projects generate new and additional emissions reductions and do not cause substantial social and environmental harm is critical. Otherwise, allowing hydropower to participate in the CDM risks generating large numbers of credits from business-as-usual projects that do not represent real emissions reductions, and risks transferring costs of climate change mitigation from polluters in the North to poor communities in the South.

This paper examines means for filtering CDM projects that have high likelihoods of generating real and new (additional) emissions reductions, and of avoiding substantial adverse social and environmental impacts. We focus the additionality analysis on China and India with a combined 78% of registered hydropower CDM projects, and on the Least Developed Countries (LDCs) which are the only host countries from which the European Union (EU) will accept CDM carbon credits for projects registered post-2012. We also evaluate the EU’s assessment of compliance with World Commission on Dams (WCD) guidelines, a requirement for all large hydropower projects that wish to sell carbon credits into the European Emissions Trading Scheme.