Failed Mechanism: How the CDM is Subsidizing Hydro Developers and Harming the Kyoto Protocol

The Kyoto Protocol's Clean Development Mechanism (CDM) is set to provide massive subsidies to hydropower developers while increasing greenhouse gas emissions, according to an investigation by International Rivers. As of November 1, 2007, 654 hydro projects had received or applied to receive carbon credits from the CDM. If approved, these credits would provide hydro developers with a windfall of around a billion dollars each year. Hydro is now the most common technology in the CDM, representing a quarter of all projects in the project pipeline.

International Rivers' report, "Failed Mechanism: How the CDM is subsidizing hydro developers and harming the Kyoto Protocol," was released on December 2, 2007, at the UN climate negotiations in Bali. "The CDM is blindly subsidizing the destruction of rivers, while the dams it supports are helping destroy the environmental integrity of the CDM," says report author Barbara Haya, a consultant for International Rivers.

The great majority of hydros in the CDM would very likely be built regardless of receiving credits (in CDM-jargon they are "non-additional"), in contravention of the mechanism's basic principle. The CDM was designed to issue credits to projects that are "additional" – projects which are only being built because they receive revenue from selling carbon credits. Each CDM credit sold from a "non-additional" project means one extra tonne of CO2 is released to the atmosphere. The hydros currently in the CDM pipeline are requesting over 60 million credits per year.

Download the full report by Barbara Haya