Investigative Report Exposes Fraudulent CDM Hydropower Project in China

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Investigative Report Exposes Forced Evictions and Fraudulent Claims at Chinese CDM Hydropower Project

A field visit by Germany’s GEO Magazine finds that the Taijiang Yanzhai Hydropower Project located in Guizhou province, China, does not deserve to receive carbon credits through the UN’s Clean Development Mechanism (CDM). GEO Magazine found that the project does not result in real greenhouse gas emission reductions and also violates the rights of the local population. Local dam-affected farmers assert that they were forcibly evicted from their homes.

The Project Design Document (PDD) for the project submitted to the CDM was marred by misleading and often patently false claims, according to GEO. For example, construction on the project began eight months earlier than reported in the PDD, and the importance of the income generated through the CDM to increase the financial viability of the project was grossly inflated.

The use of CDM credits from hydro projects within the European Union’s internal carbon trading scheme is regulated by the EU Linking Directive. They must comply with the criteria and guidelines of the World Commission on Dams (WCD), the most comprehensive framework for energy and water planning that protects dam-affected people and the environment, and ensures that the benefits from dams are more equitably distributed.

RWE, a German power company and one of the biggest CO2 emitters in Europe, is hoping to buy the credits from the Taijiang Yanzhai project to avoid having to reduce emissions from its coal plants. RWE paid for certification company TÜV SÜD to assess the WCD compliance of the Taijiang Yanzhai dam. TÜV SÜD found that the dam is WCD compliant.

“Taijiang Yanzhai is a blatant violation of the WCD and CDM guidelines and therefore should not be granted carbon credits,” said Dr. Payal Parekh, Climate Program Director at International Rivers. “GEO Magazine clearly documents forced evictions of farmers in the river valley. This is not the first time that TÜV SÜD has prepared a shoddy report. In March of this year, the CDM Executive Board suspended TÜV SÜD for six month from auditing projects, as it had approved a number of projects that were later found to have problems.”

TÜV SÜD is one of the “validators” accredited by the UN to assess whether projects are eligible to receive income from selling CDM credits. In this case, TÜV SÜD was first paid by RWE to validate the dam as CDM compliant, and then again contracted by RWE to prove that the dam was WCD compliant.

“Unfortunately, the Taijiang Yanzhai project is not an isolated case,” Dr. Payal Parekh, Climate Program Director of International Rivers, said. “Analysis by International Rivers shows that the majority of hydro projects in the CDM would very likely be built regardless of receiving credits. By crediting non-additional projects, the climate is conned.”

The CDM, established under the Kyoto Protocol, is by far the largest global carbon offset program. It is intended to lower industrialized countries’ costs of cutting greenhouse gas emissions by allowing them to purchase “carbon credits” that subsidize supposedly low-carbon “sustainable development” projects in developing countries, while continuing to pollute at home. A project must prove that it would not be built if it were not for the extra income through the sale of carbon credits. (In CDM jargon, this is known as additionality). If a non-additional project is approved, then emissions actually increase.

“It is very easy to manipulate financial data, so that a project appears to be dependent on carbon credits for financial viability. The World Bank and researchers at Stanford University have warned the CDM Executive Board about this loophole, but there has been no change in the rules,” said Dr. Parekh.

International Rivers is an environmental and human rights organization with staff in four continents. For over two decades, International Rivers has been at the heart of the global struggle to protect rivers and the rights of communities that depend on them.

International Rivers