Climate funds such as the Prototype Carbon Fund and the European carbon market prioritize support for renewable energy technologies, and exclude large hydropower from this definition. There are good reasons for this: Big dams irreversibly damage freshwater ecosystems, which are already reeling under the impacts of climate change. Slow, lumpy investments in large dams are not well suited for the uncertainties of climate change, which call for nimble, decentralized and flexible energy strategies. Finally, the purpose of carbon credits is to facilitate emission reductions that would not happen without them. Yet developers of big hydropower projects will not make billion dollar investments based on the uncertain prospects of receiving carbon finance. Carbon credits for big dams are the icing on the cake of projects that are already going forward, and will not bring about reductions in greenhouse gas emissions.
Large hydropower projects increase countries’ vulnerability to climate change. Yet they also serve the interests of a closely-knit hydro-industrial complex. They offer large contracts for the international dam industry. They serve the interests (and sometimes line the pockets) of ribbon-cutting politicians and bureaucrats. And they appeal to development financiers who need to push big loans out of the door quickly. These may be the reasons why the new Energy Strategy of the World Bank, which will be published soon, proposes an increase in funding for large hydropower.
The World Bank has had a love affair with big, centralized, concrete projects for many decades. Since 1992, a series of World Bank reports have identified a pervasive “pressure to lend” within the institution, which encourages staff and management to neglect risks and prioritize big loans that can be disbursed without much overhead. This “big is beautiful” philosophy has resulted in the approval of white elephant projects such as the Kariba, Kedung Ombo, Pak Mun, Sardar Sarovar and Yacyreta dams. In spite of this legacy, the new Energy Strategy says it “will seek to increase the average size of [energy] projects to reinforce World Bank Group operational efficiency,” even if this “may seem somewhat at odds with the goal of scaling up” small, decentralized renewable energy projects.
A particular target for the World Bank’s renewed large hydro push is Africa.
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