Linking Directive

EU legislation known as the Linking Directive states that CDM credits from hydropower projects larger than 20MW can only be used in the European Emissions Trading System (ETS) if the projects comply with the recommendations of the World Commission on Dams (WCD).

Large hydro projects (>20 MW) that generate Clean Development Mechanism credits that are used in the European Emissions Trading System (ETS), need to comply with the World Commission on Dams' recommendations, according to the EU's Linking Directive. The European Commission is currently drafting guidelines for EU member states on how to assess WCD compliance.

The following assessment by International Rivers compares the compliance report for the 135 MW Xiaoxi Dam to the Strategic Priorities of the World Commission on Dams, and the requirements of the German Emissions Trading Authority. The report is of very low quality and does not provide a basis for the German government to accept the project as WCD compatible.

A series of discussions are under way among the governments that ratified the Kyoto Protocol on what commitments developed countries (Annex I Parties, in the Protocol's jargon) should take on after the first phase of the Protocol expires in 2012. They are also discussing means to meet these commitments, including potentially redesigning the Clean Development Mechanism.

The UK's Department of Environment (DEFRA) has prepared a checklist which can be used to assess whether a large hydro project complies with the World Commission on Dams criteria. The checklist is Annex C in DEFRA's "guidance on approval and authorisation to participate in Clean Development Mechanism project activities" which can be downloaded below.

(A similar letter has been sent to the following buyers of carbon credits from Chinese hydros: ENEL, EDF Trading Limited, ICECAP, CAMS AB Sweden, RWE Power AG, MGM Carbon Portfolio, Kommunalkredit, EcoSecurities, Energy Systems International, Eco Energia, Endesa Generacion SA, CDCF, Factor Consulting, IXIS, Int System Energy Corporation, Arreon Carbon, Sindicatum Carbon Capital International, KfW, Ecoinvest, ICF, ESI BV, WBCF, CCAN)

The German Environment Ministry in October 2007 issued a "Guideline for Determination of Compliance with the Recommendations of the World Commission on Dams Regarding Hydroelectric Power Projects with a Capacity over 20MW, within the Context of Joint Implementation (JI) and Clean Development Mechanism (CDM) Projects."

Similar letters to the below were also sent to ECIS (now known as INCIS) members Barclays, Citibank, Fortis, MorganStanley, Credit Suisse, Deutsche Bank, Dresdner Kleinworth and Climate Change Capital.

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In November 2004, the European Union adopted legislation regulating the admission of CDM credits (CERs) into the EU’s greenhouse gas Emissions Trading Scheme (ETS). The legislation, known as the Linking Directive, states that CERs from large hydro projects can only be used in the ETS if the projects meet the standards of the World Commission on Dams (WCD).