Preparing hydropower projects for the post-Paris regime: An econometric analysis of the main drivers for registration in the Clean Development Mechanism

The 2015 Paris Climate Accords promises to reign in a new era in the fight against global climate change. The Agreement supports the establishment of new cooperative approaches including internationally transferred mitigation outcomes, through which individual countries can meet their nationally determined contributions. Hydropower projects, however, are in danger of being left out in the new regime mainly due to its dubious position as a renewable energy source. Hydropower in the Clean Development Mechanism (CDM) has been criticized for non-conformance to additionality and sustainability objectives originally set out in the Kyoto Protocol. To confirm such issues, and to provide recommendations that may mitigate them, this study conducted an econometric analysis of 2717 hydropower projects in the CDM pipeline leading up to 2016. Specifically, a logit model was constructed to identify the main drivers for registration success. Results of the analysis showed the capacity and expected carbon credits of hydropower projects to be the dominant factors for registration, rather than their financial requirements or technological barriers. Most problematically, large scale projects not requiring carbon credits were registered, while their social and environmental impacts have not been extensively scrutinized. Policy recommendations to rectify the verification process are proposed, so that when implemented, the right hydropower projects may be included in the new market mechanisms of the post-2020 regime.