The CDM and Geothermal Projects, Indonesia

Abstract

Developing a geothermal power plant project is a financial challenge, and is harder than developing more traditional forms of renewable energy. One aim of the Kyoto protocol is to speed up the development of renewable energy power and indeed the evolution of such sources over the last decade has increased.

A Geothermal power plant project is considered a major long term investment due to the resources required and the length of payback period. Fortunately, there is an alternative additional funding source to contribute to the long term financial performance of geothermal projects. The UNFCCC (United Nations Framework Convention on Climate Change) has developed, as part of the Kyoto protocol, three flexibility mechanisms to help finance renewable projects and to reduce greenhouse gas (GHG) emissions worldwide. The Clean Development Mechanism (CDM) is one of these, which allows developing countries to participate and benefit from mankind’s effort to save the earth.

For a geothermal project to receive carbon credits there are a set of certification stages to fulfill. The process requires careful attention and aid from CDM project partners.