Download The Challenge of Climate Change and Economic Development in

Prepared by: Dennis Tirpak, Senior
Fellow, World Resources Institute;
Associate,International Institute of
Sustainable Development
December 4, 2010
Supported by GTZ




Cities currently account for approximately 50% of the
global population and this is expected to increase to 60%
by 2030
Urban areas currently account for around 67% of world
energy use and 71% of world greenhouse gas emissions
from energy (IEA, 2008)
Approximately 80% of the growth in energy use and 89% of
the growth in emissions by cities is expected to come from
developing countries.
City administrations have responsibility for street lighting,
government buildings, transportation networks, landfills,
tree planting, and other systems that have impacts on GHG
emissions.
 By
the end of 2013, 10 Indonesian cities will,
with participation by civil society, have
developed and agreed upon nationally
approved integrated climate action plans
CLIMATE CHANGE INITIATIVES IN INDONESIA
TOWARD LOW CARBON DEVELOPMENT
2007: COP13 on Bali and National Action Plan on
Climate Change (RAN-PI)
2009: Technology Needs Assessment (TNA)
2009: Indonesia Climate Change Trust Fund (ICCTF)
2009: President announces mitigation targets (-26%
/-41%)
2010: Indonesia Climate Change Sectoral Roadmap
(ICCSR)
2010: Indonesian Second National Communication
(SNC)
Emerging: Development of Indonesian NAMAs
The Indonesian Mitigation Target (2020)
S
-41%
with international
support
-26%
without international support
Sector
allocation
s
Actions
now
Forestry + Peat REDD+ Agriculture
Power energy
Transpor
t
Waste
Industry
Mid-Term Development Plan, sector-strategic 5-year plans
National Mitigation Action Plan (RAN-GRK):
Dual approach
RAN-GRK: Dual long-term approach for
allocating mitigation efforts
Sectoral
Regional
• Agriculture, forestry and
land use
• Energy (Industry, transportation,
electricity)
• Waste
• Develop local mitigation
action plans (RAD-GRK) incl.
provincial targets
SCENARIOS
Selection of
optimum
scenario
TARGETs
Selection of actions
Revision
STANDARD/
PROTOCOL
Compatible with
international best
practice
INVENTORY
Revision
Re-inventory at a
predetermined
interval or period
NAMAs
Implementation of
policies, measures,
projects,
PERFORMANCE
TRACKING
FINANCIAL
MECHANISM
M
 Standard
Protocol – ICLEI, WRI GHG Protocol
or others
 Inventory – Boundaries, emission factors,
IPCC 20006, sector tools
 GHG Projections – Baselines, simple spread
sheet/expert judgment, MARCAL, LEAP,
sector tools
 Target Setting – Criteria, tools (ESMAP Rapid
Assessment Framework), Consultations
 Financing – Fast track financing and longterm transformation of financing system






The motivation for long-term borrowing at market rates is
very limited, the number and volume of loans taken is
relatively low.
Local governments do not want to create a burden for
subsequent city administrations by long-term borrowing
The process to receive a loan, from the central
government, but also from commercial banks, is
considered very burdensome.
Interest rates for loans from commercial banks are
considered to be too high.
Local governments are concerned that they will not be
able to service new loans.
The regulations on issuing municipal bonds are restrictive.





Provide educational material for mayors, financial
management departments, sub-national Parliaments and
other city officials on different types of financing
mechanisms
Work with cities to issue municipal bonds; which can have
significant benefits in productivity, the quality of life and
the environment if used for infrastructure.
Help city officials to expand the types of fees that can be
collected to service debt instruments
Educate regional banks (BPDs), development banks and
commercial banks about the financial risks and
opportunities of city NAMAs
Revise and reform local regulations that may inhibit local
governments from using innovative financial instruments




Build capacity within city administrations to prepare
bankable projects that could be submitted to bilateral
donors, national development banks, tenders from
international development agencies, CDM, other financial
mechanisms.
Help provincial governments to prepare ‘bankable’ project
proposals to secure funding for projects needing to be
aggregated from multiple cities and of a particular size
Work with the MOF to change regulations which limit the
use of alternative financial instruments that can be used
by cities
Change the approval processes imposed by the national
government for long-term loans

Cities in Indonesia can play a major role in contributing to the
goal of reducing GHG emissions by 26 per cent below business as
stated in the RAN-GRK and can benefit if high-priority actions are
funded.

Nationally Appropriate Mitigation Actions (NAMAs) by cities are an
important policy tool in national efforts to reduce GHG emissions
—feed in to subsequent revisions of RAN-GRK, including the
national GHG inventory.

The most basic elements of a city NAMA consist of developing a
GHG emission inventory using a widely accepted international
methodology; developing projection of emissions; selecting a
reduction goal; identifying specific actions, policies or projects;
assessing financing options and securing funding; and
implementing performance tracking.

There are many technical, administrative and financial barriers
that will need to be overcome if city NAMAs are to become a
source of significant emission reductions below BAU.



Financing is a significant challenge—a two-track approach
should be considered: 1) fast track funding through the
ICCTF and 2) sustainable and transformational long-term
financing through a combination of administrative and
policy reforms and domestic and international mechanisms
Technical and financial partners will need to work together
to overcome many of the financial barriers
Performance tracking (MRV) for domestic purposes will be
essential and could serve a number of purposes, such as,
evaluating the effectiveness of the project and sharing
information on how to overcome technical, administrative
and financial barriers