IHA comments on recent EC hydropower investment criteria proposal

The International Hydropower Association says it welcomes changes made by the European Commission to proposed investment criteria for hydropower as part of a new regulatory regime for sustainable finance.

IHA joins the Norwegian government in supporting the revision to the rules for hydropower plants, which cover minimum criteria for power density and life-cycle carbon emissions.

The update to EU Taxonomy Climate Delegated Act, a classification system for environmentally sustainable economic activities, comes after IHA and other respondents raised concerns with the original proposed requirements. The act is now aligned with hydropower sector good practice requirements described in the Hydropower Sustainability ESG Gap Analysis Tool, compliance with which is necessary to secure green bond financing through the Climate Bonds Initiative, IHA said.

“This welcome update means that the EU Taxonomy, Climate Bonds Initiative, International Finance Corporation and World Bank requirements for infrastructure are all now aligned with the Hydropower Sustainability ESG Gap Analysis Tool,” said Eddie Rich, chief executive of IHA. “In practice, this means that hydropower projects that commission an assessment using the tool can now demonstrate alignment with all of these classifications.”

The criteria for hydropower are now more context-specific. Run-of-river plants or plants with a power density above 5 W/m2 will not have to undertake a life-cycle-based greenhouse gas emission assessment to prove that they comply with the 100g threshold. Plants with a reservoir and a power density below 5 W/m2 will have to confirm that they meet the threshold.

Importantly, the act also now recognizes all types of pumped storage hydropower as making a substantial contribution to climate change mitigation.

According to the EC, these changes achieve a better balance in protecting the environment, while promoting hydropower and avoiding excessive administration.

With the rapid roll-out of variable renewables, and the phasing-out of fossil-fuel plants, hydropower will have an increasingly important role in managing the growing need for flexibility in the European power grid. IHA is supporting innovation in flexible hydropower technologies as part of XFLEX HYDRO, an EU-funded initiative to demonstrate how such technologies can help countries meet their carbon reduction targets and support variable renewables.

IHA is a non-profit membership organization committed to sustainable hydropower. Its mission is to advance sustainable hydropower by building and sharing knowledge on its role in renewable energy systems, responsible freshwater management and climate change solutions.

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