The Clean Development Mechanism (CDM) is meant to catalyze climate-friendly and sustainable projects in low-income countries. Instead, it’s provided massive subsidies to hydropower developers while increasing greenhouse gas emissions. Through deception and abuse of the system, at least two-thirds of all CDM projects are likely not additional, and more are slipping in each year.
In an attempt to cure its ills during the second commitment period of the Kyoto Protocol, the CDM Executive Board has initiated a year-long policy dialogue. Having failed to reach any decisions about reform at Durban, the CDM policy panel members will examine unresolved issues ranging from stronger rules for public participation to an appeals procedure. Of particular concern to the global movement for rivers is ensuring that the CDM imposes greater limitations on large hydropower projects, which are more likely to create enormous environmental and social problems for local communities than smaller community-driven decentralized projects.
Despite these good intentions, the CDM continues to approve egregious hydropower projects while delaying any improvements. In December 2011, an EU-commissioned report recommended the European Union consider banning credits from large hydro projects. However, the EU has decided to delay any action, essentially ignoring the urgency for reform raised by this study.
The Hall of Shame Honorees
Below are some of the worst hydropower projects that we’ve seen in the CDM pipeline since 2008. If all of these projects are issued carbon credits or CERs, and it turned out they were non-additional (as most of them are), that would mean European countries will shell out €27 million per year over the lifetime of these projects while allowing emissions to increase. [Current CER price: €4.11.]
Registered by the Executive Board
- In Panama, the Barro Blanco Dam is currently undergoing construction despite investigations into the developer’s human rights abuses and failure to consult the local indigenous Ngobe communities living along the Tabasara River. Despite ongoing protests by indigenous communities against dam building and mining in the region, the CDM Executive Board approved the project for 67,000 CERs or about €300,000 per year.
- In Uganda, the World Bank-funded Bujagali Dam, which drowned a treasured waterfall and forced hundreds from their lands, was registered by the CDM Board to the tune of 858,000 CERs for the Netherlands or €3.5 million per year for the developer, even though it is near completion.
- In India, the Rampur run-of-river project was registered despite being nearly complete and the recipient of a World Bank loan back in 2007. India will sell these credits to Sweden at 1.4 million CERs, or about €5.8 million per year.
Approved by a validator
- In China, the 513MW Hubei Duhe Pankou Hydropower Project is seeking carbon credits despite relocating 23,000 people in a process fraught with conflict and inadequate compensation claims. Another 10,000 or more will have to be relocated. If registered, it would generate 803,000 CERs for Switzerland or €3.3 million per year for the developer.
Seeking validation approval
In Cambodia, the Kamchay Dam, already operational and built by the world’s largest dam builder, China’s Sinohydro Corporation, is currently seeking validation for the second time. The project has been plagued by controversy, safety concerns, and a lack of transparency ever since it was awarded a development contract in 2005. If registered, it would generate 281,000 CERs for the UK or €1.2 million per year for Sinohydro.
- In Burma, the Dapein I Dam is already operating but recently applied for carbon credits at 678,000 CERs annually, or €3 million. This project was also the site of the June 2011 violence between the Burmese army and the Kachin Indepence Organization. The fighting displaced an estimated 30,000 people. 90% of the electricity will go to China, as will 100% of the credits.
- In Brazil, the 1,800MW Teles Pires Dam is being planned for the Teles Pires River, a tributary of the Tapajós River, which in turn is one of the principal tributaries of the Amazon. Civil society in Brazil considers it a dismal example of violations of indigenous rights and environmental legislation. It will likely flood 123 square kilometers of land and be a carbon source rather than carbon neutral. It is estimated to sell 2.5 millions CERs or €10 million per year. It is currently open for public comment.
Delaying the solutions
The irony to all this is that the CDM may be dying, largely under the weight of its own uncertain future and a lack of demand for credits given the economic downturn in Europe. However, instead of putting political will and resources behind cutting our dependence on fossil fuels, reducing emissions in our own backyards, investing directly in truly clean energy projects, and helping the most vulnerable countries adapt to the impacts of climate change, wealthy countries are seeking other loopholes. For instance, New Zealand, the U.S., Japan and Australia want to create their own CDM-like mechanisms, which will likely run into the same problems that the CDM has experienced.
As for the policy dialogue, the CDM can only be salvaged now with a serious commitment to restructure the entire system. With additionality being near-impossible to prove, perhaps it should be eliminated entirely. After all, what the CDM needs now is a major overhaul, not a makeover.
Kamchay Dam in Cambodia, photo courtesy of Marcus Rhinelander, 2008.