Central America has succeeded in developing a relatively large number of small hydro projects for Clean Development Mechanism (CDM) emissions reductions. However, emerging social problems related to these projects and the increasingly difficult challenge of proving the additionality of each of these projects could slow the growth of this sector. Other CDM opportunities for process efficiency and fuel switching are limited by the size of industries in the region, which are too small to justify the CDM project costs. A lack of initiative in the forestry and transport sectors suggests that renewable energy will be the most promising area for development.

While hydro electric projects will most likely continue to dominate the landscape for Certified Emission Reductions, there may also be limited geothermal and wind development. A variety of new renewable energy laws have been passed that will also help promote development in this sector. However, a plethora of technical, financial, social, institutional, and political barriers in the region could prevent the full potential of these projects from being realized.