Impact of the Clean Development Mechanism (CDM) on Geothermal Development

Abstract

The Clean Development Mechanism (CDM) established under the guiding principles of the Kyoto Protocol has encouraged organizations in developed nations to fund geothermal projects in developing nations. The CDM can in that way promote and/or accelerate the development of geothermal energy utilization in developing countries. As a result CDM is becoming a very powerful incentive for geothermal projects.

At last, the geothermal industry can participate in CDM on a full power. The environment that the CDM has created, the ability to sell carbon credits, is an important additional revenue stream contributing to the development of commercial scale geothermal projects and makes a number of geothermal projects attractive that have hitherto been uneconomic.

Geysir Green Energy is a shareholder in Shaanxi Green Energy Geothermal Development Co. (SGE) through its subsidiary Enex China. The first project of the company was the construction of a geothermal district heating system in the city of Xianyang in Shaanxi Province, China. The geothermal heating system is replacing coal burning facilities, thereby significantly reducing emission in the community. The approval of the CDM methodology AM0072, Fossil Fuel Displacement by Geothermal Resources for Space Heating, will give the district heating project in Xianyang a new economy, which will enable a further expansion of the project. SGE is currently in the application process for the validation and subsequently registration of the Xianyang project as a CDM project.