SGS should not validate Bayano Hydroelectric Project as a CDM project. The project is non-additional - it is already more than two-thirds complete and is scheduled to be completed whether or not it receives carbon credits.

The estimate of avoided emissions due to the project is not scientifically sound. The project may result in substantial emissions of methane which have not been evaluated in the Project Design Document.

Environmental impacts of the project are inadequately evaluated. The PDD does not mention that the required consultation with stakeholders took place. A proper environmental impact evaluation and stakeholder consultation process are especially important in this case as Bayano is a particularly environmentally damaging dam and has long been a cause of hardship and conflict among local indigenous and peasant communities.

Validation of Bayano would not result in any reduction in greenhouse gas emissions and would undermine both the credibility of the CDM and the effectiveness of the Kyoto Protocol.

1. Additionality

Comments on this Project Design Document (PDD) by CDM Watch/CAN Europe establish clearly that this project is non-additional.

2. Failure to Assess Extra Methane Emissions due to Project

The Bayano expansion project may lead to a considerable increase in methane emissions from the dam and reservoir. Methane emissions from the existing project have not been measured but evidence from other tropical reservoirs suggests Bayano's contribution to global warming could be of a similar or greater magnitude to fossil fuel plants generating the same amount of power. A comprehensive, independent scientific study is needed to assess current reservoir emissions and likely changes in these emissions due to the ongoing expansion project.

The PDD states:

"Hydropower is a clean energy source that is emissions free, and there will be no GHG emissions that are directly related to the use of hydropower for electricity production." (p.15)

This statement is fallacious. It is now well established that dams and reservoirs cause gross emissions of methane and carbon dioxide. Emissions have been recorded at all of the approximately 30 reservoirs where scientists have done field surveys of methane and/or CO2 emissions. Emissions are particularly high for tropical reservoirs such as Bayano.

Average gross emissions for tropical hydropower reservoirs are estimated to range from 200-3000 grams C02-equivalent per kWh (based on a methane GWP of 21). By comparison, natural gas combined cycle plants emit around 430-635 gC02-eq./kWh.

The statement on p.15 of the PDD is in fact contradicted on p.43 which correctly states that:

"The existence of the reservoir, results in GHG emissions through the decomposition of organic matter and as a result of the deforestation related to the creation of the reservoir."

The PDD then goes on to say that:

"The impacts of the Bayano Expansion reservoir will be neglected because the reservoir was created 25 years ago and this project don't [sic] increase the size of the reservoir."

This statement wrongly implies that 1) emissions are negligible 25 years after reservoir creation and 2) that there is no link between increasing power production and increasing emissions.

Reservoir emissions do not just result from the decomposition of leaves, twigs and other rapidly degradable biomass flooded when the reservoir is first filled. Slowly decaying woody biomass, organic matter washed into the reservoir from upstream, and the growth of biomass in the reservoir provide long-term sources of methane production. Reservoir emissions last for many decades at least, and presumably for the life of the reservoir.

Other measurements from tropical reservoirs include 1300 mg/m2/day recorded at the surface of the one-year-old Petit Saut reservoir in French Guiana; 15-205 mg/m2/day from the 15-year-old Tucuruí reservoir in Brazil and 66 mg/m2/day from the 21-year-old Curuá-Una reservoir in Brazil. Studies conducted in 1988 on Gatun reservoir in Panama, which filled in 1914, found average emissions of methane from the water surface of 412 mg/m2/day. Emissions from the 25-year-old Bayano reservoir are thus likely still to be significant.

Bayano reservoir has several of the characteristics associated with reservoirs with long-term high emissions. These include:

• its location in a tropical region
• the large amount of biomass flooded (according to the World Bank Bayano flooded 350 km2 of forest)
• the proliferation of macrophytes (aquatic vegetation) (see EIA annexed to PDD, p.10)
• the colonization and degradation of the watershed leading to high nutrient inflows (see EIA p. 10)
• anaerobic reservoir conditions (see EIA, p.10)

Studies at Petit Saut have shown that substantial emissions are released when water with high amounts of dissolved methane is discharged by spillways and turbines. Methane emissions immediately downstream of Petit Saut were much greater than the total emissions from the surface of Petit Saut's 365 km2 reservoir.

It is likely that substantial amounts are released by degassing at the turbines and spillway at Bayano. The expansion project would lead to less water being spilled and more water being turbined for energy production. The PDD does not provide information on the depths from which water is discharged through turbines or spillway. However it can be assumed that Bayano's turbine intakes are lower in the reservoir than its spillway. Methane concentrations increase with depth, meaning that turbined water is likely to result in more methane emissions than spilled water.

It is thus likely that increasing power production at Bayano will increase the project's methane emissions.

For an overview of the consensus position of scientists working on the issue of reservoir emissions see the World Commission on Dam's Montreal Statement on Reservoirs and Climate Change (http://www.damsreport.org/docs/kbase/thematic/drafts/tr22_workshop.pdf).

3. Inadequate and contradictory evaluation of environmental impact of project

It is stated on p.43 that "this project don't [sic] increase the size of the reservoir." Yet the on p.20 of the EIA it is stated that the expansion project will minimize downstream flooding during storm events as the reservoir will have a greater storage capacity. If the reservoir is to store more water, more land upstream will be flooded than before the expansion.

The environmental impacts of increasing the reservoir size and changing the operation regime (with implications on flooding patterns both up- and downstream) should have been evaluated in the EIA. Potential impacts include

• increased methane emissions if the reservoir's drawdown area is enlarged (weedy vegetation growing in the drawdown may lead to substantial methane emissions when it decays after the reservoir fills).
• negative impacts on any people living along or farming the edges of the reservoir.
• changes to downstream water quality and release patterns with impacts for ecological values and human uses of the river.

4. No mention of whether required stakeholder consultation took place

Construction of the Bayano dam has had numerous negative impacts on the Kuna and Embera indigenous people. These impacts include:

• the submergence of 80% of the Kuna's central territory;
• the forced relocation of Kuna and Embera from their traditional lands to lands of poorer fertility;
• the illegal invasion of non-flooded Kuna and Embera lands by landless peasants;
• waterborne illnesses caused by mosquitoes which have proliferated in the rotting vegetation in the reservoir.

The Kuna and Embera have for 25 years been fighting for reparations for their losses in the Panamanian courts and through the national political system. In 2001 the Kuna and Embera took their case to the Inter-American Commission on Human Rights.

As explained on the Senter International website (under General Information: Baselines): "Under CDM you . . . must submit your project design to interested parties for consultation. You report on this in the baseline." There is no mention in the Baseline document for Bayano of any consultation with the Kuna and Embera or any other interested stakeholders. Given the long history of harmful social impacts and controversy surrounding the project it is particularly important that such consultation take place.

Conclusion

The Bayano hydroelectric project should not be validated as a CDM project. It is non-additional and is likely to lead to increased methane emissions which have not been considered in AES Panama's Baseline Report. The Baseline Report contains an inadequate and contradictory evaluation of the environmental impact of the project and contains no mention of any consultation with local communities.

Validating Bayano would not result in any reduction in greenhouse gas emissions, and would subsidize a project which may be increasing them. It would thus descredit the rationale for the CDM and undermine public support for carbon trading strategies.

References:

Éric Duchemin et al., (2002) "Hydroelectric reservoirs as an anthropogenic source of greenhouse gases," World Resource Review (in press).

Philip M. Fearnside (2002) "Greenhouse gas emissions from a hydroelectric reservoir (Brazil's Tucuruí dam) and the energy policy implications," Water, Air, and Soil Pollution 133:1.

Corinne Galy-Lacaux et al. (1999) "Long-term greenhouse gas emissions from hydroelectric reservoirs in tropical forest regions," Global Biogeochemical Cycles 13:2.

Hector Huertas and Bonarge Pacheco (1999) 'El Embalse Hidroelectrico Bayano', presentation at Latin America Regional Consultation of World Commission on Dams, 12 August.

World Bank (1996) 'The World Bank's Experience With Large Dams: A Preliminary Review of Impacts. Profiles of Large Dams (Background Document)', 15 August.

World Commission on Dams (2000) "Dam Reservoirs and Greenhouse Gases: Report on the Workshop held on February 24 & 25. Hydro-Quebec, Montreal. Final Minutes," Thematic Review II.2 Dams and Global Change, Cape Town.