Hydropower back in World Bank's good books

By Ritu Gupta
Published: Sunday 15 October 2006

-- (Credit: Shyamal)Big hydropower projects are poised to re-enter the good books of the World Bank (wb) and the Asian Development Bank (adb). In the early 1990s, the wb had stopped funding the Sardar Sarovar Project under pressure from the Narmada Bachao Andolan. That marked the beginning of a phase during which the bank was a reluctant lender to big hydro-projects.

But the new thinking within the bank is that hydropower and nuclear energy projects hold the key to reducing carbon emissions, and in mitigating climate change. Similarly, the adb, which had stopped funding nuclear power projects in 1995, is reorienting its stance. The banks obviously can't resist the lucre of the multi-billion dollar carbon market. Funding hydro and nuclear power will earn them carbon credits.But critics say that in their haste to earn carbon credits, the banks have overlooked the old question marks over these projects.

An April 23, 2006, meet of the World Bank's Development Committee marked the first formal inklings of change. The bank's top decision-making body deliberated on a confidential report, Clean Energy and Development Towards An Investment Framework, that day. The report makes a strong case for hydropower and nuclear projects as insurance against climate change. The April 23 meet vetted this stance, and decided that the wb should approve a reorientation in funding policies by September-end.
Myths Is hydropower a good agent to reduce emission targets then? The International Hydropower Association believes that is the case. A pamphlet of this association notes that hydropower mitigates climate change by substituting -- and hence cutting down the use of -- fossil fuels. Reservoirs associated with large hydropower projects are also touted as carbon sinks. But this is a seriously disputed contention. A report of the World Commission on Dams, for example, notes "A first estimate suggests that the gross emissions from reservoirs may account for between one and 28 per cent of the global warming potential of greenhouse gas emissions. This challenges the conventional wisdom that hydropower produces only positive atmospheric effects... in some circumstances the gross emissions can be considerable, and possibly greater than the thermal alternatives."

Similarly, a report of the International Rivers Network (irn) argues that the carbon sequestering benefits of reservoirs have been unduly hyped. They afford limited, and sometimes temporary, benefits, the report notes. In some cases, the greenhouse gas emissions from a reservoir are far more than its sequestering capacity, so the water body actually ends up harming the environment. The irn report cautions that a "large amount of further research is needed to come up with any reliable estimates of the full climate impacts of reservoir construction".

Moreover, an increased dependence on large hydro-projects could well mean increased vulnerability to climate change vagaries. Most dams are built on the assumption that the hydrology of the river will remain what it was in the past. But experts say that extreme weather events (such as floods) resulting from climate change could threaten dam safety and performance. Then there are those who criticise the wb's decision on grounds that it leaves old questions over big dams unanswered. Hydropower might cut down fossil fuel use, but what about the hazards it poses to ecosystem and communities, they ask.
Is nuclear clean? The industry touts nuclear energy as clean. But its role as a climate change mitigator is seriously disputed. A 2006- report of the uk government's Sustainable Development Commission, for example, concludes that doubling the country's nuclear capacity would mean insignificant reductions in reducing carbon emissions by 2035. Similarly, according to researchers from the Massachusetts Institute of Technology and Harvard University, the prospects for nuclear energy as an alternative option are limited by four problems high relative costs; perceived adverse safety, environmental, and health effects; potential security risks stemming from proliferation; and unresolved challenges in long-term management of nuclear wastes.

The last nuclear plant built in Ontario went from initial projected costs of about us $3 billion to over us $18 billion. That's just the cost overruns in building it; never mind the debt build-up from running it. All energy bills in Ontario come with an added tariff that is specifically for paying down a little of the nuclear debt in that province. That's not even accounting for the costs associated with the eventual decommission of reactors, and long-term management of the wastes.

The debate over clean energy has more implications than carbon credits (see box The German debate). For the banks this doesn't seem to matter.


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