The World Wildlife Fund (WWF) has published a new report exploring how insurers can facilitate sustainable hydropower development.
The report, ‘Insuring a nature-positive world, an insurers guide to hydropower’ acknowledges the role that hydropower will play in the clean energy transition, as an enabler of other variable renewables, such as wind and solar power.
It offers practical advice on how insurance companies, which play a crucial role in project development, can ensure that they facilitate only sustainable hydropower projects.
International Hydropower Association (IHA) Chief Executive Eddie Rich says: “IHA welcomes WWF’s new report, which offers sound guidance on how insurers can play their part to help improve the sustainability of new hydropower developments.
“As the planet’s largest source of renewable energy, hydropower has a vital role to play in the clean energy transition. Dams are also an essential tool in flood control, helping to protect communities from the damage caused by flooding.
“Going forward, the only acceptable hydropower is sustainable hydropower, and as recommended by WWF, developments need to be done in accordance with the internationally recognised Hydropower Sustainability Standard.”
The Standard, launched in 2021, is an independent global sustainability certification, and WWF and IHA are both part of the multi-stakeholder group and governance body that developed it.
Mr Rich adds that IHA would welcome the opportunity to work more closely with insurers and encourages them to consider joining the Standard’s Hydropower Sustainability Council to become more involved.
Hydropower development needs to ramp up to reach net zero
According to IHA’s 2022 Hydropower Status Report, hydropower development is falling short of the rates required to meet net zero targets. The International Renewable Energy Agency (IRENA) reports that to limit increases in global temperatures to 1.5°C by 2050, the planet needs to develop at least 1,200 GW of additional installed hydropower capacity.
New hydropower capacity is presently growing at about half the pace required to reach these targets and almost two-thirds of the additional capacity in the last decade has come from just one country, China.
If the planet is to avoid the devastating effects of temperature rises above 1.5°C, the financial sector must act now to support more hydropower capacity.
How insurers can help improve hydropower’s sustainability
Insurance companies play a key role in facilitating new hydropower projects acting as risk managers, insurers, and investors.
WWF’s report encourages insurers to take measures to embed sustainability into new projects. This includes creating ESG policies for underwriting hydropower investment, declining to cover projects in protected areas, requiring an independent and credible social and environmental impact assessment and requiring a maximum greenhouse gas threshold.
These recommendations align with the Hydropower Sustainability Standard as well as the San Jose Declaration on Sustainable Hydropower, which is an industry commitment to sustainable development.
IHA also has a no-go commitment for new hydropower projects in World Heritage Sites which is supported by WWF, UNESCO World Heritage Centre, and IUCN. Furthermore, IHA has led on the development of an effective tool to measure greenhouse gas emissions, the G-Res Tool, in partnership with the UNESCO Chair in Global Environmental Change and as part of a multi-stakeholder group.