Mr Phillip Hauser, Vice President Carbon Markets, GDF Suez Latin America Hydropower is influenced by climate change, but it can also contribute to alleviating the problem. Panellists will present and discuss four aspects of these relationships: Science and uncertainty relating to the impact of climate change on hydrology; Reviewing the relationship between hydropower and the natural greenhouse gas (GHG) emissions in the river basin; Methods and incentives to use hydropower to offset GHG emissions from more carbon-intensive sources of energy; and assessing the role of hydropower infrastructure in the face of increasing floods and drought. For more information about this event, visit: http://ihacongress.org

1. Mr Philipp Hauser
GDF Suez Latin America
Hydropower’s role in climate change mitigation
Presented at the
IHA 2013 World Congress

2. Hydropower’s role in
climate change mitigation
How Carbon Markets can help to promote
hydropower
24 May 2013, Kuching
Philipp Hauser
VP Carbon Markets
GDF SUEZ Energy Latin
America

3. The uneven challenge to limit Climate Change to 2˚C
 Energy causes 66% of global GHGs & non-OECD account for 100% of growth;
 Non-OECD countries as they account for 90% of population and energy
demand growth and require huge investments in capacity and mitigation;
 Many countries in Latam, Afrika and Asia have hydropower potential, but
struggle to develop it due to high up-front cost, risks and poor regulation;
 GHG intensive thermal expansion is still the baseline and leads to a
technological look in which is capable to close the door to 450 ppm.
Source: IEA 2011 World Energy Outlook.

4.  OECD perspective:
 Mitigation requires gradual
reform of infrastructure
 Mitigation cost to be contained
by substituting depreciated
assets with new technologies
 Mitigation Potential is
insufficient when compared to
emission grow of non OECD
countries
 OECD needs time for smooth
transition and asset rotation
 Non OECD needs immediate
incentives for clean growth
Energy Security
& unconstraint
economic growth
Minimum
ST-Cost
Social &
Environmental
Costs & Benefits
Importance of a global carbon market
Perspective and objectives
of emerging countries:

5. Energy Security
& unconstraint
economic growth
Minimum
LT - Cost
Global Climate
Compliance
Social &
Environmental
Costs & Benefits
Importance of a global carbon market
 OECD perspective:
 Mitigation requires gradual
reform of infrastructure
 Mitigation cost to be contained
by substituting depreciated
assets with new technologies
 Mitigation Potential is
insufficient when compared to
emission grow of non OECD
countries
 OECD needs time for smooth
transition and asset rotation
 Non OECD needs immediate
incentives for clean growth
Carbon
Markets

6. Clean Development Mechanism:
prototype with need and opportunities for evolution
Finance sustainable development for developing countries
Reduce cost of GHG mitigation for Annex I countries

7. Hydropower, sustainable development & barriers
Poor regulatory environment, cost of financing, concerns about sustainability
and lack of markets or support for project benefits are key barriers.
Benefits of hydropower
High efficiency, flexibility and cost efficient energy storage technology [1].
Energy payback up to 280 is best among all sources ( Solar & Wind <50) [1].
High correlation between degree of HPP- & economic development [2]
Proximities of HPPs often have higher HDI and better environmental
protection than their respective regions (Brazil) [2].
Hydropower is capable to generate socio-environmental benefits
of 0,4 to 1 US$ for each US$ invested [1].
Most GHG efficient generation technology [1] and important for water
management and adaptation.
[1] IPCC 2011 – SRREN [2] Brazilian Energy Ministry

8. Build on and combine existing & emerging policies
CDM
→ ET
MDBs
&
GCF
NAMAMRV
Value GHG Reduction
 Carbon Market Instruments
(CMIs) are best suited to identify
“least cost options” and assure
their profitability
A reformed CDM can
play this interim role as
universal CMI
Provide Funding in Least
and Less DC’s
 MDBs & GCF have capability to
finance clean growth & attract
Private Sector
 CDM adds credibility and
assures profitability
MRV
 CDM offers well
established principles
for MRV, bottom up
baseline setting and
Methodologies for ER measurement
Unparalelled DOE and PD
capability is (still) available
Domestic Efforts in
advanced DCs
 Advanced DC’s & private
sector finance NAMA policies
 Top down baseline & policies
are basis for sector wide
programs and activities

9. Hydropower as a result of CDM and NAMAs
Project Project 7027 : Jirau HPP
Status Registered 26 Aug 12 (Date of registration action 16 May 13)
Capacity 3.750 MW
kCERs
p.a.
6.180
Incentive
Policies
i) Priority project of national interest and priority
ii) PPP with 60/40 between private & public sector
iii) Inflation adjusted PPA of 30 years as basis for project
finance.
iv) National development bank offers advantages when
compared to GHG intensive generation technologies:
• Reduced Interest spread of 1.4%
• Increased leverage and payback period.
• CDM revenues as part of the financing to increase
leverage

10. Economic
sustainability
Monetized
Benefits
Monetized
Costs
Hydropower: Valuing 6 dimensions of benefits
 Market valuation of benefits can finance sustainable climate resilient
& GHG efficient water management and hydropower infrastructure.
 Institution building and international cooperation are key to overcome
market barriers.
0
1
2
3
Energy
Storage
Flexibility
Flood
Control
Irrigation
Transport
Mitigation
Run-of River Storage Pump Storage