Geothermal handbook: PlanninG and Financing power Generation t e c h n I c a L r e p o r t 2 / 2

ENvIrONMENTAL ISSuES
Maintaining the natural environment and the integrity of underlying ecosystems is an important 
consideration for any significant development project; effective safeguards need to be in place 
to protect the environment and communities living in the area. The fundamental concepts of 
environmental and social sustainability are now widely recognized by policymakers, development 
institutions, and society at large. International financial institutions, such as the World Bank Group 
(WBG), have developed environmental and social safeguard policies to ensure the sustainability of 
projects they support (Annex 1). Similar guidelines are increasingly followed on a voluntary basis 
by the private sector.
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Guidelines specific to geothermal power were issued in a noteworthy 2007 
document entitled “Environmental, Health and Safety Guidelines for Geothermal Power Generation” 
(IFC/World Bank 2007). 
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Capacity factor is defined as the ratio of the actual output of a power plant over a period of time and its output if it had operated at full 
nameplate capacity the entire time. 
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In some cases and locations, environmental management costs might have to be added to these figures, for example, when NCGs gases 
like H
2
S appear in very high concentrations.
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An example of such voluntary commitment is the launch in 2003 of The Equator Principles (EPs) by private sector banks led by Citigroup, 
ABN AMRO, Barclays, and WestLB. Financial Institutions adhering to the EPs commit to not providing loans to projects where the borrower will 
not or is unable to comply with their respective social and environmental policies and procedures that implement the EPs.

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