Potential Clean Development Mechanism Incentives for Geothermal Power Projects in Developing Countries

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 incentives, which could be realized for geothermal power projects in developing countries using the CDM for two levels of carbon tax.