Promoting a clean, green, image2 March 2002
As fledgling green markets emerge in the US, should owners of existing hydro facilities feel confident that energy from their project will qualify as 'green'? The answer isn't as straightforward as one might think. Fred Ayer spoke with Lydia Grimm, executive director of the Low Impact Hydropower Institute in the US
Like many other consultants working on hydroelectric projects, I find myself on planes travelling from one place to another. Often a seatmate will ask, what do you do? And I cautiously mumble something like, I work on the regulatory aspects of hydroelectric projects…, hoping that this amorphous non-description will elicit no more than a 'Gee, that must be interesting'.
What has surprised me is the number of times the response is more positive and while it varies, it usually comes out like: 'Well, it must be pretty gratifying work to be involved in renewable energy projects that have little or no environmental impacts.'
I smile to myself, and think about the number of Federal Energy Regulatory Commission (FERC) relicensing proceedings that have cost millions of dollars and taken years to complete. I try to explain that it isn't quite that way at all, and a number of folks don't see all existing hydro as environmentally benign.
This difference of opinion about whether existing hydro facilities produce green power has created much discussion. While the traditional hydro industry gnashes its teeth, talks about green Power, and plans its political strategy, others take a very unique approach. They Act.
Their action? Creating the Low Impact Hydropower Institute (LIHI) in the US. With participation by representatives from the environment and, hydro power industry, government officials and power marketers, American Rivers and Green Mountain Energy Company created a voluntary certification programme.
LIHI is dedicated to reducing the impacts of hydro power generation through the certification of environmentally responsible hydro power. It aims to develop and administer a voluntary programme to certify hydro facilities with low environmental impacts compared to other facilities, based on objective environmental criteria. The certification programme's goal is to reduce environmental impacts by creating a credible and accepted standard for consumers to use in evaluating hydro power. To be certified by the Institute, a hydro power facility must meet objective criteria in the following eight areas:
• River flows.
• Water quality.
• Fish passage and protection.
• Watershed protection.
• Threatened and endangered species protection.
• Cultural resource protection.
• Facilities recommended for removal.
A hydro power facility meeting all eight certification criteria will be certified as a low impact hydro power facility. Once certified, the owner or operator can market the power from the facility to consumers as produced by such a certified facility. To date, the following hydro power facilities have been certified as low impact by LIHI:
• Stagecoach dam and reservoir on the Yampa river in Colorado.
• Island park facility on the Henry's Fork in Idaho.
Certification is designed to provide consumers with assurance that a facility has impacts that are low, compared with other hydro power facilities, and generally means the facility is well sited, well operated and exceeds current legal requirements.
Certification from the Institute may also qualify the power produced for other green energy certification programmes, such as:
• The Green-e Renewable Electricity Programme, see www.green-e.org,
• Renew 2000 in the Pacific Northwest, see www.cleanenergyguide.org
• Utility green pricing programmes, such as the Salmon Friendly Power programme, see www.4sos.org.
I wanted to see how successful the LIHI had been since its creation. So, I caught up with its executive director, Lydia Grimm and asked her for an update on the organisation's progress and her hopes for its future.
Fred Ayer: 'I saw and heard you respond to an audience that was almost exclusively made up of hydro industry representatives last summer and it was obvious that they were not big fans of the LIHI's programme. How would you characterise the industry's response to this green power effort?
Lydia Grimm: I think much of the reaction you saw was not surprising given the industry's general belief that all hydro power dams should be considered eligible for green power status, along with solar and wind power, for example. With that viewpoint, any effort that certifies some hydro power dams and not others would be objectionable, even if the certification is entirely voluntary.
I think this viewpoint will modify as the markets become more robust, and people in the industry realise what we offer - a credible, voluntary, impact-based (as opposed to capacity size-based), environmental certification for projects that meet our tough but attainable standards.
That's not to say we aren't listening to the specific concerns dam owners have about our programme. We're always looking for ways to improve it, and in fact late last year we adopted a number of changes, some of which were recommended to us by our hydro power industry advisory panel.
Our challenge is to try and address the slow pace of market development without undermining the credibility of the environmental standards we've adopted, and that's a continuously evolving process, for which we encourage dam owner feedback and participation.
Ayer: Your web page shows that there are only two certified projects. Are you discouraged that you have not had more hydro projects sign up for certification?
Grimm: Well, we actually have two more applications for certification, and they look like pretty good candidates. I will say that the slow start is disappointing but not surprising given what's happened in the energy markets here over the last two years. I think we expected that there would be a strong green market developed, but with the collapse of the California market, and the Enron debacle, the pace of development of retail green power markets has certainly slowed.
Without a robust retail green market, there isn't much in the way of price premiums for green power, and without those price premiums, there is not much direct economic incentive for hydro power dam owners to obtain certification. But we're optimistic - retail markets are still developing (Texas is the latest example), there's been a huge growth in existing regulated utilities offering green options for their customers, and green tag trading programmes are starting to take off as well.
All of these things point to the steady development of green power markets in which certified hydro power should be able to participate. Also, even without a direct price premium, certification offers value to dam owners as an acknowledgment of good environmental stewardship. Companies can use the certification as means to more broadly market their environmental ethic.
Ayer: It always seemed to me that if a hydro project had received a licence in the post-Electric Consumers Protection Act (ECPA) period, that it should automatically be certified since it had to be scrutinised under the 'equal consideration' criteria of the amended Federal Power Act. (The ECPA was passed in 1986 but it was not until 1989 that final FERC regulations were issued and the new requirements were fully implemented). Why doesn't that work for your organisation?
Grimm: While the 'equal consideration' standard did raise the profile of environmental measures in the licensing process, it is still no guarantee that the most environmentally protective conditions identified for a particular project are put into place for operations. As a result, projects licensed or relicensed after ECPA may still produce significant adverse environmental impacts. That means that a post-1986 licensing standard is not credible as a green standard in itself. A more site-specific, project-specific inquiry is required to provide assurances to the green power purchaser that the particular hydro power facility is protecting or improving river flows, water quality, fish, watershed health, threatened and endangered species, cultural resources, and recreation use and access. Many projects licensed after ECPA will be able to meet those certification standards, but some will not.
Ayer: I know you have been asked to speak in Europe about your programme. Are Europeans generally more comfortable with green certification than we are?
Grimm: My general sense is the European community is more accepting of the importance and value of developing and promoting green power sources as a means of addressing global warming. That being said, though, I think the European community is struggling with the same kinds of issues we are struggling with here in North America about what is 'green', including what hydro power is 'green'.
There are a number of different standards in play, but the European Green Electricity Network (EUGENE) is trying to agree on appropriate criteria for hydro power. It;s interesting to note that when a recent international 'green tag' or tradable renewable energy certificate company was launched (World Wide Green in the Netherlands), the only hydro power 'tags' they will accept are from plants that meet the Naturemade Star standards in Switzerland, or the low impact standards here in the US.
Both of these are site-specific, impact-based standards addressing a range of resources. I think that ultimately, some sort of impact-based standard with some regional variations will be utilised in Europe, and a parallel effort is possible here in North America.
Ayer: How can hydro projects, particularly existing ones, be made more attractive to a green market focused on the new renewables (ie. wind power, fuel cell, etc.)?
Grimm: This is one of the biggest obstacles to hydro's participation - much of the green market interest is in developing new renewable resources to replace existing fossil fuel sources, rather than using existing sources such as hydro. Since there is unlikely to be much new dam development in the US, US hydro owners need to demonstrate to green energy consumers how their existing dams should earn a premium along with the new non-hydro renewable developments.
I think this is where our certification programme can help. First, as a general matter, our certification can be used to highlight the specific environmental improvements (increased instream flows, fish passage facilities, etc) that earned the project a certification. In this way, green power consumers can be shown why their purchase of this existing power source is still a positive benefit for the environment.
Second, in response to our hydro power industry advisory panel's recommendation, we recently expanded the programme to cover 'new' hydro - hydro capacity added to existing dams. Certified facilities with new capacity may be able to meet the 'new renewables' components of many of the green power programmes.
Ayer: You used to work on the regulatory side of hydro power licensing, as counsel to federal agencies involved in the relicensing process. What made you decide to work instead for LIHI?
Grimm: I believe the hydro power relicensing process is a critical opportunity to obtain environmental improvements at hydro power projects, but I also think the regulatory process can be overly long, contentious, and in the end result in only incremental improvements at existing sites.
I was interested in the LIHI programme because it focused on a more positive approach to encourage environmental improvements - to have dam owners voluntarily take extra steps to improve their projects in order to gain a certification that would also provide them value, directly and indirectly. Basically, I was interested in trying a carrot approach to improving conditions at hydro power dams, rather than the regulatory stick.
Ayer: What is your vision for the LIHI and what will it look like in five years? Has your vision changed since you became the director?
Grimm: My vision for the LIHI is that it provides the credible and accepted voluntary programme for US hydro power's participation in green power markets worldwide. We will have established the value of the certification in the marketplace so that it rewards dam owners who take the additional steps necessary to improve conditions at their projects to meet the certification standards.
Much depends on the growth of the green power markets generally, but I think we'll be getting close to that in five years time.
I don't think my vision has changed since becoming director, but the path leading there has shifted. With the slow pace of market development, we've had to focus more on recruitment of projects to the programme, and on ways to make the programme easier to apply for, while also maintaining the credibility of the programme as a rigorous environmental certification. In these interim years as the green power markets develop, that may mean establishing a variety of certification options for hydro power. For example, we might continue with our current standards as a premium certification, and offer something less rigorous but still environmentally sound to allow for more of the market to develop.
I also now think that the international market for green power, including hydro power, will play a much larger role than originally anticipated. I think within five years there will have been a tremendous growth in the use of 'green tag' trading internationally, and that in order for hydro power to participate, there will be demand for use of rigorous certification systems like LIHIs.
In exchange, dam owners in the US will have an international market for the green power they produce. Just last year, for example, the Dutch company Nuon announced it has purchased the green tags for the output of a Guatemalan hydro power project. Why not purchase the green tags for LIHI-certified US facilities? It's something we'll be exploring.'
Lessons to be learnt
What I take out of this discussion with Lydia Grimm is that LIHI is probably a good platform for developing a legitimate green certification process for existing hydro. While the industry might consider creating its own certification process, it will only be as effective as the participation of a broad range of stakeholders.
I also believe that stakeholders who participate in a green certification programme will need to be creative and come to the table with an open mind; the hydro owner recognising that some facilities will not be certified, and the river advocate accepting the notion that for a green certification programme to succeed, it will need to be more expansive and inclusive. Finally, to sell a green certification programme and create a robust market, there will need to be adequate products. Certifying adequate numbers of existing green hydro should be the common mission of all stakeholders.