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Hydropower sustainability assessments can unlock carbon financing

Public funding of hydropower through multilateral channels has grown, but many OECD governments are reluctant to expand support through carbon financing schemes, largely due to controversy over dams’ environmental and social impacts. The EU Emissions Trading Scheme finances large hydropower only if it “respects” the World Commission on Dams’ (2000) framework on sustainability. But the compliance procedures currently used to measure this are inadequate. Instead, market regulators should require use of the Hydropower Sustainability Assessment Protocol (HSAP). The HSAP can help realise lawmakers’ aspirations to use OECD support only for socially and environmentally acceptable hydropower and to foster renewable energy resources that complement each other. Although a HSAP costs US$80–150,000 this would not be a financial barrier to accessing the EU ETS when carbon prices rise beyond US$6 per tonne.

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Agriculture in large-scale rice irrigation schemes needs to be made to work for both the state, in terms of economic returns and national food security, and for the smallholders whose livelihoods depend on it. When it comes to the development of new dams and large-scale irrigation, more information is needed about their economic viability and how the water, land, and economic benefits can be shared equitably to support local development.

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