Potential and Obstacles for Using the CDM to Promote Geothermal Energy

Abstract

The CDM has the potential to become a powerful incentive for geothermal projects. Many countries with an attractive geothermal potential and geothermal expansion plans have already started to prepare themselves for CDM implementation. However, geothermal energy has not figured prominently in their CDM plans. Thus the geothermal community should enhance its presence in the development of national CDM strategies and in the international climate negotiations. Baseline rules and CER prices have a crucial impact on the attractiveness of CDM projects to geothermal developers. At high CER prices and baselines, geothermal projects can cover a significant share of the investment costs through CER sales. At current low prices and grid benchmarks, revenues cannot affect the overall investment decision. While forestry projects can help the developers to safeguard water recharge, they do not yield enough CERs to have a real impact on revenues.