BEIJING — August 11, 2025 — China’s ambitious $167 billion Yarlung Tsangpo hydropower project in Tibet — set to be one of the world’s largest dams — is under intense environmental and financial scrutiny as it seeks access to green financing.
Planned and developed by state-owned China Yajiang Group, the project is designed to generate massive amounts of clean energy, bolster China’s carbon neutrality goals, and expand its green debt market. However, lenders, ESG-focused investors, and international environmental watchdogs are raising red flags over its location in a fragile Himalayan ecosystem, one of the planet’s most important biodiversity hotspots.
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| $167 billion hydropower project in Tibet |
Environmental Concerns Threaten Green Bond Approval
- While the dam could significantly increase renewable energy output, experts warn of irreversible ecological damage, including:
- Disruption to endangered species habitats
- Risk of landslides and earthquakes in the seismically active Himalayan belt
- Alteration of downstream river systems affecting India and Bangladesh
- Potential cultural and social displacement of Tibetan communities
- Such risks could hinder the dam’s eligibility for green bonds and sustainability-linked loans, as ESG frameworks require strict adherence to biodiversity protection and community impact mitigation.
China’s Green Finance Dilemma
Green financing tools such as People’s Bank of China–issued green bonds have fueled infrastructure projects aligned with renewable energy targets. But analysts note that this project could become a test case for China’s ESG credibility — whether it prioritizes environmental protection alongside energy security.
“From a purely renewable energy perspective, the dam is a milestone. From an ecological standpoint, it’s a potential disaster,” said one international ESG analyst.
Geopolitical Sensitivity
The Yarlung Tsangpo flows into India’s Brahmaputra River, making the project a strategic and geopolitical flashpoint. India and Bangladesh have expressed concerns over water security and downstream ecological effects.
The Road Ahead
Before securing green funding, the project must pass environmental impact assessments and meet international sustainability criteria. Failure to do so could push developers toward conventional financing methods, potentially increasing borrowing costs.
As China aims for carbon neutrality by 2060, the mega-dam represents both a clean energy opportunity and a sustainability paradox — a project that could power millions but at the cost of a fragile ecosystem.
FAQs
Q1: What is the Yarlung Tsangpo mega-dam project?
A: It’s a $167 billion hydropower project in Tibet, set to become one of the world’s largest dams, aimed at boosting China’s renewable energy capacity.
Q2: Why is it facing green financing scrutiny?
A: Because it’s located in an ecologically sensitive area, raising concerns over biodiversity loss, environmental degradation, and compliance with ESG standards.
Q3: Who is developing the dam?
A: The project is led by state-owned China Yajiang Group.
Q4: How could it impact neighboring countries?
A: The dam could alter river flows into India and Bangladesh, potentially affecting water security and ecosystems downstream.
Q5: Can the project still receive green bond funding?
A: Yes, but only if it meets stringent environmental and sustainability compliance requirements — which remain in question.
