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PELANGI Doing Business while Mitigating Climate Change Moekti H. Soejachmoen -Yayasan Pelangi Indonesia Jakarta, 25 January 2006 Yayasan Pelangi Indonesia PELANGI Structure of presentation Climate change – what is it Causes of climate change Impacts of climate change – in Indonesia? Tackling climate change globally – UNFCCC More actions – the Kyoto Protocol Clean Development Mechanisms Yayasan Pelangi Indonesia PELANGI WHAT IS CLIMATE CHANGE? Yayasan Pelangi Indonesia PELANGI Yayasan Pelangi Indonesia PELANGI Yayasan Pelangi Indonesia PELANGI CAUSES OF CLIMATE CHANGE Yayasan Pelangi Indonesia PELANGI Natural Causes of Climate Change Volcanoes eruption Forest fire Respiration process – O2 CO2 Organic decomposition – CH4 Yayasan Pelangi Indonesia PELANGI Anthropogenic Causes Fossil fuel combustion Industrial process Electricity & power generation Transportation Cement industries Hydrocarbon based industries Non-energy activities: Agriculture, farming & husbandry Waste disposal – municipal waste Deforestation & land clearing Yayasan Pelangi Indonesia PELANGI IMPACTS OF CLIMATE CHANGE Yayasan Pelangi Indonesia PELANGI Diseases outbreak at El-Nino 1997/98 (WHO) Yayasan Pelangi Indonesia PELANGI Annual Rainfall (A) 1931-1960 and (B) 1961-1990 (Source: Kaimudin, 2000) Yayasan Pelangi Indonesia PELANGI Yayasan Pelangi Indonesia PELANGI Yayasan Pelangi Indonesia PELANGI Yayasan Pelangi Indonesia PELANGI Yayasan Pelangi Indonesia PELANGI Predicted Impacts Shifting of seasons – length and characteristics as well as period and duration Changing of precipitation – strength, length and characteristics Extreme weather – stormy weather, typhoon, extreme drought Desertification – especially for arid area Yayasan Pelangi Indonesia PELANGI Predicted Impacts Melting of ice (cryosphere) – not only polar ice but also other ice-caps Sea level rise – small and flat islands Tropical diseases – malaria, dengue Degradation of biodiversity – coral reef, fishes Food (in-)security – failed harvesting Yayasan Pelangi Indonesia PELANGI Impacts in Indonesia In Indonesia, based on studies (1994, 1998): Sea level rise – most coastal zone especially in northern Java; eastern Sumatera; southern, eastern & western Kalimantan; western Sulawesi; swamp area in western and southern of Papua. Impacts will be: Relocation of coastal population Loss of land Infrastructure and communication damages Special case for Jakarta – already sinking due to draining of groundwater table, soil compression because of heavy construction. The sea level has risen 4.5 mm annually due to tectonic movements Yayasan Pelangi Indonesia PELANGI Agriculture – as impact of drought, flooding and shift of precipitation pattern: Deterioration of soil quality Soil erosion/land slides Abrupt changes in water supplies Declining of agricultural products Coastal zone: Sea water warming (0.2-2.5C) Coral bleaching Diminishing of productivity of marine resources Migration of marine species Marine-based tourism will be affected heavily Yayasan Pelangi Indonesia PELANGI Human health – increase of diseases incidence: Malaria – due to changes in mosquito breeding habitat and changes in incubation period Dengue fever – (similar case as malaria) Cholera & diarrhea – due to contamination of water supply by flooding Yayasan Pelangi Indonesia PELANGI TACKLING CLIMATE CHANGE GLOBALLY Yayasan Pelangi Indonesia PELANGI End of 1980s World Meteorological Organization (WMO) observed changes of world climate and meteorology 1988 Intergovernmental Panel on Climate Change (IPCC) was established by WMO and UNEP 1991 Intergovernmental Negotiating Committee (INC) was established by UNGA 1992 Earth Summit in Rio de Janeiro: The UNFCCC was signed 1994 UNFCCC has entered into force 1995 1st Session of the Conference of the Parties (COP-1) to the UNFCCC Yayasan Pelangi Indonesia PELANGI 1997 Kyoto Protocol was adopted 2005 Kyoto Protocol has entered into force 2005 11th Session of the Conference of the Parties to the UNFCCC, Serving as the 1st Meeting of the Parties to the Kyoto Protocol (COP11/MOP-1) Yayasan Pelangi Indonesia PELANGI United Nations Framework Convention on Climate Change [UNFCCC] Yayasan Pelangi Indonesia PELANGI The Ultimate Objective … is to achieve, in accordance with the relevant provisions of the Convention, stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. Such a level should be achieved within a time-frame sufficient to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened and to enable economic development to proceed in a sustainable manner. Yayasan Pelangi Indonesia PELANGI Parties under the UNFCCC Annex I Countries – industrialized and countries with economy in transition. Commit to limit and to reduce their GHG emissions. Non-Annex 1 Countries (Developing Countries) – voluntarily limiting and reducing their GHG emissions while developing the countries in a sustainable manner. Yayasan Pelangi Indonesia PELANGI Entered into force in 1994 after ratified by 50 countries Number of ratifying countries: 189 COP-1 to COP-10: Berlin Mandate (COP-1) Kyoto Protocol (COP-3) Buenos Aires Plan of Actions (COP-4) Deadlocked (COP-6) COP-6bis Marrakech Accord (COP-7) The Delhi Ministerial Declaration on Climate Change and Sustainable Development (COP-8) Yayasan Pelangi Indonesia PELANGI KYOTO PROTOCOL Yayasan Pelangi Indonesia PELANGI The Target of Kyoto Protocol The Parties included in Annex I shall, individually or jointly, ensure that their aggregate anthropogenic carbon dioxide equivalent emissions of the greenhouse gases listed in Annex A do not exceed their assigned amounts, calculated pursuant to their quantified emission limitation and reduction commitments inscribed in Annex B and in accordance with the provisions of this Article, with a view to reducing their overall emissions of such gases by at least 5 per cent below 1990 levels in the commitment period 2008 to 2012. Yayasan Pelangi Indonesia PELANGI Flexibility Mechanisms To assist Annex I to fulfill their commitment Between Annex I: Joint Implementation Emission Trading With Non-Annex I: Clean Development Mechanism However, Annex I has to undertake ‘Domestic Action’ Yayasan Pelangi Indonesia PELANGI Entered into force: 16 Februari 2005 after ratified by 141 countries Ratifying countries: 156 1st Meeting of the Parties to the KP during the 11th COP to the UNFCCC in Montreal, end of 2005 Yayasan Pelangi Indonesia PELANGI CLEAN DEVELOPMENT MECHANISMS Yayasan Pelangi Indonesia PELANGI Objectives of the CDM To assist developing countries to support sustainable development and to contribute to the objective of the UNFCCC; To assist industrialized countries to fulfill their emissions limitation and reduction commitments; Yayasan Pelangi Indonesia PELANGI How does CDM work? Emissions Reduction Industrialized countries Developing countries Targeted Emissions Reduction Certified Emissions Reduction (CERs) Yayasan Pelangi Indonesia PELANGI Buyers Governments – Annex I: Netherlands, Denmark, Canada, Austria, etc. Commercial funds – Natsource, EcoSecurities, etc. Public private funds – World Bank CF, KfW CF, Japanese CF, etc. Large companies – Shell, Mitsui, etc. Traders – RWE Trading, Shell Trading, etc. Yayasan Pelangi Indonesia PELANGI Sellers – CDM Developers Consultants and developers – DPSolusi, PEACE, etc. Technology providers Utilities Large industries – Indocement Municipalities Companies Yayasan Pelangi Indonesia PELANGI Institutional setting of CDM Conference of the Parties serving as Meeting of the Parties (COP/MOP) Secretariat (Accredited) Operational Entities: Verification Countries / Parties CDM Executive Board (Accredited) Operational Entities: Validation Designated National Authority (DNA) Project Proponents Yayasan Pelangi Indonesia PELANGI CDM Executive Board Members: Representing: 10 members 10 alternate members Annex I countries Non- Annex I countries 5 UN region SIDs (small islands developing states) Supported by: CDM Secretariat CDM Methodologies Panel CDM Accreditation Panel CDM Afforestation and Reforestation Working Group CDM Small-Scale Projects Working Group Yayasan Pelangi Indonesia PELANGI Designated Operational Entity (DOE) Validate the proposed CDM project activities Verify and certify the reduction of GHGs Complies with host country laws Demonstrate that has no potential conflict of interest Maintain publicly available list of CDM it works on Submit annual report to EB Make information from CDM project participants publicly available Yayasan Pelangi Indonesia PELANGI Designated Operational Entity (DOE) Up to 24 January 2006: 12 OEs accredited and provisionally designated for validation 3 OEs (of those 12) also accredited for verification and certification 24 Accredited Entities with indicative letter Yayasan Pelangi Indonesia PELANGI Sectors under CDM* Sectoral Scope Approved methodologies 1. Energy industries (renewable/nonrenewable sources) Large scale, small scale, consolidated 2. Energy distribution Small scale 3. Energy demand Large scale, small scale 4. Manufacturing industries Large scale, small scale, consolidated 5. Chemical industries Large scale 6. Construction -none- 7. Transport Small scale 8. Mining/mineral production Consolidated Yayasan Pelangi Indonesia PELANGI Sectors under CDM* Sectoral Scope Approved methodologies 9. Metal production -none- 10. Fugitive emissions from fuels (solid, oil and gas) Large scale, small scale, consolidated 11. Fugitive emissions from production and consumption of halocarbons and sulphur hexafluoride Large scale 12. Solvent use -none- 13. Waste handling and disposal Large scale, small scale, consolidated 14. Afforestation and reforestation Large scale 15. Agriculture Large scale, small scale * As per 24 January 2006 Yayasan Pelangi Indonesia PELANGI 2 Methodological approval 1 Feasibility & Due Diligence 2 Documentation 3 Public consultation 5 Approval by National Authority 4 Validation by Operational Entity 6 Registration by Executive Board 7 Implementation & Monitoring 8 Verification & Certification by OE 9 Issuance of CERs by EB 10 Transaction of CERs Steps to develop a CDM project Yayasan Pelangi Indonesia PELANGI Methodology To define baseline and/or monitoring methods Up to 24 January 2006: 25 methodologies for large scale projects 14 simplified small scale methodologies 8 consolidated methodologies Yayasan Pelangi Indonesia PELANGI Additionality To show that the proposed CDM project will reduce the GHG emissions compared to the baseline – to ensure that the proposed project is not (part of) the baseline scenario Yayasan Pelangi Indonesia PELANGI Validation The process of independent evaluation of the project activity by a Designated Operational Entity: Requirement of CDM Annexes and relevant decision of COP/MOP Based on Project Design Document Up to 24 January 2006: 84 project activities are open for public comments under validation process Yayasan Pelangi Indonesia PELANGI Host Country Approval Host country Designated National Authority to endorse and approve the CDM project: The project is voluntary Support achievement of the national sustainable development goal The letter of approval to be attached to the PDD for registration to the EB Yayasan Pelangi Indonesia PELANGI Registration The formal acceptance of by the Executive Board of a validated project as a CDM project activity Is a prerequisite for the verification, certification and issuance of CERs Up to 24 January 2006: 77 project activities are registered 62 project activities are submitted for registration Yayasan Pelangi Indonesia PELANGI Project Implementation and Monitoring Implementation of CDM projects after registration – some projects can start before the registration Monitoring of project performance in reducing GHG emissions – based on the Monitoring Plan Up to 24 January 2006: 9 projects have published their monitoring report Yayasan Pelangi Indonesia PELANGI Certification/Verification of CDM project Verification is the periodic independent review and ex post determination by the DOE of the monitored reductions during the verification period Verification of CDM project activity based on the monitoring report Verification report will be submitted by the Designated Operational Entity to the CDM-EB Certification is the written assurance by the DOE that, during a specified time period, a project activity achieved the reductions as verified. Yayasan Pelangi Indonesia PELANGI Issuance & Transaction of CERs The certification report shall constitute a request for issuance to the CDM-EB of CERs equal to the verified amount Up to 24 January 2006: 5 project activities (issued) – 646,561 CERs 2 project activities (request for issuance) – 1,674,763 CERs Yayasan Pelangi Indonesia PELANGI Price of CERs Risks: Project risks Project partner risks Registration risks Delivery risks Transfer and issuance risks Co-benefits: Social benefit Environmental benefit Yayasan Pelangi Indonesia PELANGI THANK YOU Pelangi Jalan Pangeran Antasari 10 Kebayoran Baru, Jakarta 12150 Indonesia Tel: +62 (21) 7280-1172 Fax: +62 (21) 7280-1174 www.pelangi.or.id [email protected] Yayasan Pelangi Indonesia