Pablo Valverde Deputy CEO IHA, reflects on recent world events and their potential impact on hydropower development.

Over the last couple of weeks, I have found myself dusting off my old social sciences books trying to understand what impact the global changes that we’re seeing will have on IHA’s mission to promote sustainable hydropower over the coming years.

A paradigm shift?

In international relations, it’s common to think in terms of paradigms, or the general consensus on how we view the world and interact with it. When the paradigm changes, how we interact, speak about, and even think about relationships between countries, companies and people can be reshaped overnight.

One of the interesting things about paradigm shifts is that whilst they can usually be linked to a specific moment (think of the Fall of the Berlin Wall), these watershed moments are generally understood in hindsight to be ‘tipping points’ rather than triggers. They are less of a new framework being created in the moment and more of a systemic (i.e. universal) acknowledgement that a new framework is in place.¹  

The second inauguration of Donald Trump is arguably one such moment. Relations between countries and trade are in a sudden state of flux. Is a new paradigm shift now upon us?  

Into the (well-known?) unknown

In the scramble to adjust to the new reality, I find it helpful to remember that this new paradigm (if that is what this is) has probably been there for some time; many of us just didn’t know it before now.  

I say ‘many of us’ because how easily we embrace the new paradigm will depend on how committed we were to the last one. As Martin Wolf of the Financial Times points out quoting a recent study by the European Council on Foreign Relations, for much of the world the new paradigm is just how things have always been:

“Postwar Europeans really believed in the 'liberal international order'. For them, its disappearance is a huge disappointment. The so-called 'global south' mostly never did and so is more comfortable with Trump’s transactional approach”.

It’s the economy, stupid

From this perspective, the future for renewables in general, and for hydropower in particular, is arguably more positive than many of us realise. If, in fact, much of the world was already living in the new paradigm, their progress in recent years suggests that whilst the arguments for the energy transition may change, the mechanics underpinning the transition will continue to accelerate.

If we look at some of the countries making the greatest progress on renewables, their progress is not only grounded on international targets; it is also based on their assessment that dominance in these markets will provide well-paying jobs, cheaper energy for their industries and better environmental conditions for their citizens.

In a world that is more competitive, we may well find that where international commitments and solidarity struggled to deliver, national self-interest may lead to more progress as countries seek to avoid being left behind in the economy of the future, demonstrate their claim to regional/global leadership and address the very real and increasingly urgent problems that climate change is causing them.

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Energy security in an uncertain world

A more competitive and transactional world is arguably also going to be a more unpredictable world. Energy security will be increasingly important, as will diversifying sources of energy and building flexible, reliable and robust grids.  

Here renewables have a key role to play in promoting energy independence, and we can expect that some of the perennial problems affecting their development – especially around licensing – may be addressed much faster than before.

This in turn will make sustainability standards like the Hydropower Sustainability Standard more important than ever. If national and local governments end up prioritising energy security over, say environmental or social good practices, it will be up to companies and financers to step up and demonstrate that projects are being delivered to be sustainable and low risk over the long term. It will also be up to local communities, social society and industry organisations like IHA to demand that they do so.

Shorter supply chains will benefit

Unfortunately, the same argument about energy security can be expected to work against industries with long supply chains or where key elements are dominated by one or few countries. For the time being, we can expect that countries with existing manufacturing capacity will continue to increase their dominance in renewables with long supply chains. This in turn will make them cheaper to produce, but more expensive to sell to traditional markets, as countries seek to grow their own industries through tariffs and subsidies.  

For hydropower, however, the story should be different. As IHA’s own membership shows, this is an industry where the key components – water and elevation – are site-specific and not tradable. Even the main ‘tradeable’ products – especially cement and turbines - are generally manufactured within each region. I think this means that governments should be more willing to support the sector domestically as a way of growing and developing local industries.  

Scenarios and implications

It is still too early to work with anything other than scenarios. It is entirely possible that international collaboration will continue to thrive and that leadership gaps left by some, for example on climate change, will quickly be filled by others. There is always the chance that what looks like a paradigm shift now, may in hindsight turn out to be just a readjustment.  

If there has indeed been a shift, there is a small window of time while the new paradigm crystalises to be part of shaping it. For those of us working on promoting sustainable hydropower, we need to:

1. Emphasise hydropower’s role in energy security and grid flexibility.  When trying to address problems with licensing or permitting, this is likely to be a more effective argument going forward.

2. Highlight the role of international organisations like IHA and the Global Renewables Alliance as platforms for collaboration and exchanges between regions. Organisations that exist to promote an industry, rather than national or regional interests, can help reduce risks and promote dialogue in a more competitive world.

3. Stress the importance that independent sustainability standards will have going forward. This is relevant both as a way of reducing transboundary risks in major energy infrastructure projects and ensuring that more efficient licensing does not happen at the expense of local communities or the environment.

4. Capitalise on hydropower’s short supply chains and emphasize its nature as a “local industry”, with significant potential for domestic job creation. This is particularly relevant in a more competitive world. We may begin to see an increase in larger infrastructure announcements as countries bolster national pride through landmark projects.  

A resilient technology, whatever the paradigm

These four points were of course as true last year as they are today.  The difference, I would argue, is one of priorities, rather than the technology.

This, I think, is the key point that all of us who work to promote sustainable hydropower should remember: Whilst our arguments need to adapt, the technology we champion is resilient and has provided solutions to the world’s energy challenges for over a century – whatever the paradigm in place.

i. For a really interesting example of this from an anthropological perspective, check out Alexei Yurchak’s “Everything was forever, until it was no more” on how the last Soviet generation experienced the years leading up to the collapse of the Soviet Union.