Central American carbon finance guide

Central American carbon finance guide

A project developers' carbon finance guide of the seven Central American nations based on their efforts to reduce carbon emissions through renewable energy projects

Central American states are aware of the implications of the climate change challenge and are attempting to combat it through the use of the abundant renewable resources of the region for energy generation and fossil fuels substitution. At the international level, the markets for greenhouse gas emission reductions and renewable electricity certificates have been fragmented. This picture is changing but a great deal of knowledge is required from the project developers to maximise the carbon benefits for their projects. This carbon finance guide represents the collective analysis of the seven Central American nations on their efforts at reducing carbon emissions both locally and by acting as sinks. It encourages the execution of renewable energy projects, allowing project developers to incorporate in their action plans the additional benefits of the Certificates of Emissions Reductions trading.

The guide reveals that Belize, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua and Panama have partnered with Finland and Austria to implement sustainable demonstrative projects on the appropriate use of renewable energy sources, such as bioenergy, hydroelectric, solar, wind and geothermal technologies. The guide provides the following information for project developers:

  • background information on UNFCCC and the Kyoto Protocol
  • explanation of what is meant by Clean Development Mechanism (CDM) and small-scale projects, how the project cycle looks like and what the related costs are
  • introduction of project financing to help developers in understanding typical requirements of financial institutions to participate in projects
  • description of all CDM project activities from Central America registered by the CDM Executive Board up to the end of 2006 to help potential project developers, including (i)The methodology applied      (ii) the project description (iii) how the project contributes to sustainable development of the country   (iv)estimation of CO2 Emission Reduction
  • brief outlook on the emerging international carbon markets.
The guide is useful for the following:
  • helping projects to reduce the greenhouse gas emissions and its financial capitalisation will increase project developers' profitability, incentivising them to implement such projects
  • improving project preparation, since it helps to steer developers towards implementing bankable and small-scale renewable energy project proposals that will increase their profitability in the long term.
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