Environmental and social effects of hydropower projects need to be carefully considered. Countries should follow an integrated approach in managing their water resources, planning hydropower development in co-operation with other water-using sectors, and take a full life-cycle approach to the assessment of the benefits and impacts of projects.
Hydropower is one of few carbon-free energy sources capable of large scale & low cost generation and large potential of GHG reduction
Construction cost: 2,500 $/kW, operation rate 50%, payout period 50 years If all of the “technically exploitable capability” is exploited, CO2 reduction will be :
Electricity price: 3.1 cents/kWh or 5.8 cents/kWh
If CO2 reduction unit is 0.5kg-CO2/kWh and carbon credit is $5/t-CO2, additional income will be 0.25 cent/kWh
Technically exploitable capability 11,570 TWh × emission factor 0.5 t-CO2/MWh = 5.79 billion t-CO2（25% of world’s CO2emission)
Result: Reduction effect： 4 ～8 % of electricity price
Source: New Energy Foundation ( NEF)
Carbon finance may become important for hydro-power development.