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.