This paper examines the effectiveness of additionality and sustainability criteria being applied to hydropower projects applying for carbon crediting under the Kyoto Protocol’s Clean Development Mechanism (CDM). It examine the conditions under which hydropower development decisions are commonly made, with a focus on China and India where the majority of CDM hydropower projects are hosted. It find that the CDM is having little effect on large hydropower development, and that the basic conditions needed for an accurate additionality assessment are not met.