Amazon Hydroelectric Dams, Brazil and the Clean Development Mechanism

Why are Brazilian negotiators fighting to resuscitate the CDM that already has one foot in the grave? With aim of plopping it into Article 6 and ICAO’s carbon offsetting scheme?


ECO has been informed that a new report ( by six Brazilian and international NGOs finds that Brazil’s scandal-plagued national power company, Eletrobrás, and its affiliates could make hundreds of millions of dollars on currently worthless CDM projects for Amazon dams if the Paris Agreement and ICAO incorporate the CDM.

Eletrobrás told the CDM Executive Board that financing from carbon credits was necessary to build the dams. Markets have collapsed and there isn’t any finance, yet the company has built and is operating the dams anyway; it is clear that a CDM revenue stream wasn’t necessary to build the dams and that they would have been built regardless. Selling these fake emissions reductions as offsets will make things even worse, to say nothing of the methane emissions generated and the many other environmental and social impacts caused by the dams, which are subject to much criticism by civil society.

Furthermore, ECO heard that Eletrobrás and the dams are under investigation in the “Operation Car Wash” corruption investigation that has already imprisoned dozens of politicians and top executives of state oil company Petrobrás and other major companies for bid rigging and kickbacks. The dams incurred billions of dollars of cost overruns – apparently for the bribes and kickbacks to contractors and political parties – causing Eletrobrás’ stock prices to crash. Investors are suing for fraud in US federal court. Meanwhile, the dams are facing dozens of legal actions from federal prosecutors in Brazil for massive, and largely unmitigated, social and environmental impacts.


This is yet another example of why the new Sustainable Development Mechanism needs to start with a clean slate and avoid repeating the mistakes of the past.