The hydropower industry is looking to take a role in tackling climate change. The technology has no operational carbon emissions, and is seen by many as key to achieving a low carbon future. Doing this in increasingly liberalised markets will be a challenge given the massive up-front costs of dam construction. However, recent initiatives to promote renewable generation twinned with future developments in carbon taxation and emissions trading, look set to improve the competitive position of hydropower. But climate change also brings some bad news for hydropower.