In the economies striving for low-carbon footprint hydropower plays an important role, as one of few sources of renewable energy for which the technology is available, affordable, and reliable. Hydropower is an important source in the mix of renewable energy sources (RES) on the pathway to meet the ambitious targets set in the EU Directive 2009/28/EC and the Europe 2020 strategy. However, hydropower development may impair the integrity of water courses and river health, in contrast to the objectives of the Water Framework Directive (2000/60/EC). In this chapter we review a mix of economic policy instruments, designed separately and at least partly for different purposes, but all acting together in a way hydropower potential was exploited in Italy. Feed - in tariffs (FIT) and especially tradable green energy certificates (GEC) had been introduced to build supply-side competition among the RES and to curtail the costs of renewables. The actionable concession award or operating large hydropower plants are an opportunity to coerce environmental improvement. Yet these opportunities have not been used so far
