The production of clean energy has become a worldwide priority due to the increase in energy demands, coupled with the focus on reducing emissions of greenhouse gases.
Under the Kyoto Protocol of the United Nations Framework Convention on Climate Change (UNFCCC), industrialised and developing countries have defined a binding target to limit emission of six greenhouse gasses (GHG) in order to stabilise greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.
In 2004, the Austrian Development Cooperation was approached by the Bhutanese government for co-operation in the development of a CDM hydropower plant. The Department of Energy, Ministry of Trade & Industry in Bhutan and Pöyry signed a contract for CDM Capacity Development Services on 31 March 2005. The objective of these services was the elaboration of a detailed proposal for emission reductions generated by a CDM hydro project in Bhutan under the Austrian JI/CDM Program.