The World Wide Fund for Nature (WWF) has released Insuring a nature-positive world: An insurer’s guide to hydropower, to guide insurers in supporting low-impact hydropower and safeguarding rivers that are vital for people and nature.
WWF said that to tackle the threat of climate change, we must rapidly accelerate the renewable energy revolution to reduce emissions but also avoid harming communities and destroying even more ecosystems in the process.
Hydropower, long the world’s dominant renewable energy source, has provided stable, low-carbon energy across the world. However, “with freshwater species in freefall and rivers under ever increasing pressure, we cannot afford to build any of the thousands of high impact hydropower projects that are still on the drawing board from the Amazon to the Zambezi.”
WWF said the insurance sector has a critical role to play. Insurance companies act as risk managers, insurers and investors and provide support for the development of hydropower projects in all three of these roles. Hydropower projects are complex and costly infrastructure projects. In most cases, private companies will not engage in the construction of new hydropower projects without insurance coverage, and private investors will insist on relevant insurance being in place before committing to invest.
The guide was launched with the support of the UN Environment Programme’s Principles for Sustainable Insurance (UN PSI). It details seven key actions insurers can take:
Support the transition to low-carbon, low-cost and low-conflict (LowCx3) energy by favoring renewable energy projects that are part of an integrated, system-wide renewable energy plan;
Create a company ESG policy for underwriting, and investments in, hydropower;
Decline cover for hydropower projects in Protected Areas;
Require an independent and credible social and environmental impact assessment;
Require that stringent frameworks and standards are applied;
Require calculations of a project’s greenhouse gas emissions and set a maximum threshold; and
Consistently screen hydropower as a potential controversial activity in investment decision making.
Healthy, free-flowing rivers provide diverse benefits to societies and economies, from mitigating flood risks to cities to sustaining freshwater fisheries that feed hundreds of millions, nourishing floodplain fields, and keeping densely populated deltas above the rising seas, according to WWF. But only one third of long rivers remain free flowing and most of these are at risk from planned, high-impact hydropower.
Low-impact hydropower, including refurbishing and retrofitting existing dams and off-river pumped storage, has a role to play. Every project must be carefully screened to ensure it is part of the best energy mix for people, nature and the planet, WWF said.
Climate change is also making hydropower an increasingly risky business as worsening floods and droughts threaten electricity generation and dam safety along rivers. An analysis using WWF’s Water Risk Filter scenarios found that 61% of existing and planned hydropower projects will be in river basins with high risk of floods, droughts or both by 2050.
