Determining factor for the development of CDM biomass power projects

In this paper, a hypothesis that government's guarantee of power purchase rather than guarantee of carbon credit purchase determines the development of CDM biomass power projects in developing countries is tested by an empirical analysis using objective indicators and by an econometric analysis. The empirical analysis shows that there are indications that guarantee of power purchase rather than guarantee of access to sell carbon credits or guarantee of carbon credit purchase determines the development of a large percentage of registered CDM bagasse power projects in Brazil, India and Thailand. The result from the econometric analysis supports the hypothesis. The result also suggests that power purchase guarantee significantly determines whether or not there is development of a CDM biomass power project based on agricultural residues in a country. This suggests that implementing policies and regulations that guarantee an access for biomass power developers to sell electricity to the grid at an attractive price could lead to the development of biomass power projects in a larger number of developing countries.