Clean Development Mechanism and Geothermal Power

Abstract

The Clean Development Mechanism (CDM), promoted by the Kyoto Protocol, encourages developed countries to invest in renewable energy projects based in developing countries and receive credit for the carbon emissions saved by these projects for use to offset the greenhouse gas emissions in their own countries. The aim of the mechanism is to foster financial partnerships that provide access to affordable low-greenhouse gas emitting commercial energy technologies for developing countries.

This paper examines the financial implications for geothermal projects in developing countries for two levels of carbon tax which have been reported. How geothermal compares against wind and biomass renewable energy systems in competing for this clean development investment credit is also examined.