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Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
1
Proceedings
WARMING UP SEMINAR:
CLIMATE CHANGE
FINANCING NEED
AND OPPORTUNITIES
Jakarta, 19 February 2009
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Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
Foreword
Climate change has awakened many elements of the country sovereignty, where to
some extent there are needs to change the way of life towards sustainable
development.
In order to achieve this goal, there are some pre conditions that need to be prepared,
including the institutional and capacity building of the personnel in all level, as well as
the financing needs to support the efforts taken.
The proceedings summarized the seminar process that attempted to achieve the goal
above, where some alternative solutions and potential actions were identified. The
results would then be followed up further to be taken to the board of governors of
ADB meeting in May 2009.
Sincere thanks addressed to all sponsors for their support and fruitful collaboration.
Jakarta, February 2009
Head of Fiscal Policy Office
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
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Acronyms
ADB
APEC
A/R
ASEAN
BAPPENAS
BAPEPAM
CC
CCX
CDM
CEO
CER
CIF
COP
CTF
DG
DNPI
ENSO
ERPA
ESDM
FCPF
FGD
FPO
GDP
GHG
GOI
GTZ
IPB
ITB
MoFR
MW
NGO
PT PLN
REDD
REDDI
RPJPN
SCF
UNDIP
UNFCCC
UNILA
U.S.
WGCC
WTO
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Asian Development Bank
Asia Pacific Economic Cooperation
Aforestation/Reforestation
Association of South East Asian Nations
Badan Perencanaan dan Pembangunan Nasional , National Development
Planning Agency
Badan Pengawas Pasar Modal
Carbon Conservation
Chicago Climate Exchange
Clean Development Mechanism
Chief Executive Officer
Certified Emissions Reductions
Climate Investment Fund
Conference of Parties
Clean Technology Fund
Directorate General
Dewan Nasional Perubahan Iklim, National Council on Climate Change
El Nino Southern oscilation
Emissions Reduction Purchase Agreement
Energi Sumber Daya Mineral, Energy and Mineral Resources Ministry
Forest Carbon Partnership Facility
Focus Group Discussion
Fiscal Policy Office
Gross Domestic Product
Green House Gas
Government of Indonesia
Gesellschaft fuer Technische Zusammenarbeit, German Agency for Technical
Cooperation
Institut Pertanian Bogor, Bogor Institute of Agriculture
Institute Teknologi Bandung, Bandung Insitute of Technology
Ministry of Forestry
Mega Watt
Non Government Organization
Perusahaan Terbatas Perusahaan Listrik Negara, State Electricity Company
Reduced Emissions from Deforestation and Degradation
Reduced Emissions from Deforestation and Degradation in Indonesia
Rencana Pembangunan Jangka Panjang Nasional, National Long-term
Development Plan
Strategic Climate Fund
University Diponegoro
United Nations Framework Convention on Climate Change
Universitas Lampung, University of Lampung
United States
Working Group on Climate Change
World Trade Organization
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
Contents
Foreword
3
Acronyms
4
Contents
5
Terms of Reference
6
Program Agenda
13
Opening Speech
14
Keynote Speech
18
Speech of the National Council on Climate Change
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Overview Remarks
21
Session 1
Presentation 1
Presentation 2
Session 4
Presentation 7
Presentation 8
24
24
30
36
36
40
46
46
50
55
55
57
Closing Remarks
63
List of Attendance
64
Session 2
Presentation 3
Presentation 4
Session 3
Presentation 5
Presentation 6
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
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Terms of Reference
Working Team for Annual General Assembly ADB Board of Governors 2009
Fiscal Policy Office - Working Group on Climate Change
Seminar Concept: Climate Change Financing Needs and Opportunities
Purpose: Develop information on needs and opportunities for climate change financing
and investment as a development issue. Contribute to understanding of the role/position of
the Ministry of Finance on climate change policy and financing. Contribute to
understanding of key issues in advance of ADB Annual Meeting (May 2009).
Theme/Focus: Adding value to ongoing climate change discussions, Fiscal Policy Office
(FPO) at the Ministry of Finance is hosting an event focused on financing needs and
opportunities, aiming at domestic participants from the fields of finance, banking, policy and
governance. The seminar will bring together representatives from key sectors affected by
climate change (water, agriculture, forestry, energy) with representatives from the finance,
investment and fiscal policy arena to share issues, challenges, and opportunities for
improving Indonesia’s understanding and access to the full range of climate change financing
opportunities. In a summary/wrap up session, the Minister of Finance will reflect on
learning from the sessions and offer forward steps for the coming year.
Date: February 19, 2008, Full Day
Location: Hotel Borobudur, Central Jakarta
Audience: 150-200 opinion leaders, policy makers, investors, insurers
Invitees: Bankers, investors, carbon buyers, Corporations and SOEs, Academics, NGOs,
Regional Government, GOI stakeholders as represented in FPO’s FGD process
Background: Climate change is a development challenge facing Indonesia, putting at risk
past gains. Indonesia is highly vulnerable to climate change impacts – sea level rise, changing
weather patterns, and increased uncertainty – but there will also be some opportunities in
terms of financing, efficiency, and competitiveness. Adaptation needs and planning will
focus on water resources management; water supply and sanitation; agriculture, irrigation,
and farmer education; spatial planning and co-benefits; and disaster risk management and
early warning systems. The Government response to climate change as a key development
and planning issue includes the formation of the National Council on Climate Change and
the development of the Yellow Book on development planning for climate change.
Indonesia emits significant levels of green house gases, mainly from deforestation and land
use change (including peatland degradation and intermittent fires). However, fossil fuel
emissions are growing rapidly and represent the larger concern for the long term. Expansion
of biofuels and plantations may increase emissions, especially on peat land, if not carefully
planned. Recognizing this issue, the Government is developing an initiative on Reduced
Emissions from Deforestation and Degradation, an important potential source of carbon
finance payments.
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Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
Emissions from fossil fuel combustion are growing faster than GDP – even faster than
energy use, implying both inefficiency and a shift to more carbon intensive fuels. Emissions
from oil are currently the largest fossil fuel contributor, but emissions from use of coal have
been the fastest growing for the last decade. Indonesia has significant alternative and
renewable energy resources, including geothermal, hydro, and biomass, as well as
opportunities to save energy through improved efficiency. Controlling emissions and
switching to low carbon power sources are both potential sources of carbon financing that
can help offset development costs and new technologies. The global carbon market value
reached $64 billion in 2007, of which $7 billion was in CDM transactions base in World
Bank estimate. However, the local investment character remains an issue, impeding private
sector development of alternative energy resources and carbon market opportunities.
Indonesia has been a leading advocate of a strong role for Ministers of Finance in
responding to the challenge of climate change. Climate change will affect macro-economic
management approaches, fiscal policy choices, revenue raising alternatives, insurance
markets, and long term investment options. Fiscal and financial policy instruments will be
needed to influence incentives, investments, development paths, and the distributional
impacts on the poor.
Studies have shown that cost of adaptation and mitigation in response to climate change is
high – but the cost of not responding is higher. Expected costs are high relative to
development spending, but not as high as a percentage of GDP or total investment.
Indonesia will face significant adaptation risks and costs, as well as the costs of adjusting the
energy and fossil fuel a future lower carbon development trajectory. These additional needs
will come on top of existing efforts to finance improvements in health, education,
infrastructure, and poverty alleviation. These are far more than the levels of investment seen
in recent years. To mobilize the financing needed to address climate change, Indonesia will
need a mix of mechanisms and sources, paired with consistent and integrated national
policies, together with the right enabling framework and long term incentives to attract the
private sector. The Ministry of Finance has the term of office on the investment ambiance,
fiscal policies, direct spending, and risk and financial markets. This seminar is designed to
sharpen the focus on the key sectors, opportunities and instruments for financing climate
change needs.
Organization of the Seminar: The seminar will have three main parts.
An opening session will provide the context and rationale for the seminar, focusing on the roles
and rationales for focusing on climate change investment and financing needs. These
presentations will focus on Indonesia’s position and perspective on climate change issues
and financing needs and opportunities. This session will provide the background that
frames the panel discussions that follow.
The middle session will consist of panel discussions focused on the four main climate challenges
facing Indonesia: Adaptation, Mitigation in the forestry/land use sector, Mitigation in the
energy sectors, and the role of financial sector in Funding climate change. Sectoral
presenters will discuss opportunities and challenges for Indonesia to accelerate its response
to climate change adaptation and mitigation needs. Fiscal and financial sector panelists will
reflect on the practical opportunities for bringing fiscal and financial sector policy
instruments to bear on the challenges of climate change.
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Climate Change Financing Need and Opportunities
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The closing session will provide an opportunity for the Fiscal Policy Office (FPO) to comment
on the main issues and findings of the day and lay out a path forward for the coming year.
In this session, participants will have the chance to understand the perspective and priorities
of the Ministry of Finance, the key agency engaged in fiscal policy and budget priorities.
Program: the following table provides an overview of the agenda for the day.
MINISTRY OF FINANCE - WARMING UP SEMINAR:
CLIMATE CHANGE FINANCING NEEDS AND OPPORTUNITIES
Main Speakers/ Sessions
Purpose of Session/Key Topics
Time
8:15-8:45
Registration and Coffee
Introduction and Overview
8:45-9:00
Head Fiscal Policy Office
Opening Remarks: welcome, key objectives
Rationale for Min Finance Role in Climate Policy.
Provide overview of FPO Policy Paper and plans for
coming year, outline aims and partnerships, introduce
seminar structure
Context: Focus Who, Why and How Much aspects of the climate change financing debate.
9:00-9:10
Minister of Environment / Head DNPI
Overview: Rationale for focus on low carbon
development; financing mitigation and adaptation
9:10-9:30
Presidential Advisor – Prof. Emil Salim
Overview: Estimate costs of CC Mitigation and
Adaptation, based on Indonesia CC Action Plan,
UNFCCC, ADB RRECC
9:30-9:45
Coffee Break
Panel Discussions:
Focusing on financing needs, opportunities, policies and instruments needed or recommended in Indonesian
context.
Focus of Panel
Sectoral Presenters
Panelists
Discussion
(key issues/opportunities)
(key challenges, steps)
A. Adaptation
Water
DG for Water Resources –
Bustanul Arifin - UNILA
Ministry for Civil Works
Ministry of Environment, Deputy Conservation and
Agriculture
DG Food Crops - Ministry of
Control of Environmental Destruction
Agriculture
Moderator:
Mr. Brahmantio
B.1. Mitigation
Forestry /
Min Forestry – Expert Staff for
Rizaldi Boer - IPB
Land Use
Coop
BAPPENAS, Deputy Natural Resources
CEO Sinar Mas Forestry
Moderator:
Prof. Singgih Riphat
Time
9:4511:00
11:0012:15
Lunch
12:1513:30
13:3014:45
14:4516:00
B.2. Mitigation
CEO PT PLN
Renewable
Energy Sector
Head Association of Geothermal
Producer
Moderator:
C. Cross
Reference
Banking and
Financial Sector
Moderator:
Mr. Makmun
16:00-16:15
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CEO Bank Danamon
CEO Asia Carbon Market
DG Geothermal ESDM
Head Geothermal ITB
BAPEPAM
BAPPENAS, Deputy Financing
Mr. Noeroso L. Wahyudi
Head Fiscal Policy Office
Closing and Summary Session
Wrap up of issues and lessons
Closing Speech
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
Terms of Discussion: Each Session features presentations from key sectoral
representatives with commentary by sector policy maker and/or independent academic
representatives. The Indonesia Responses to Climate Change documented by BAPPENAS
serves as a base document for sectoral and cross-sectoral issues that are vulnerable to climate
change impacts for their influences to the national development. This document integrates
climate change perspectives into the existing Long Term National Development Planning/
Rencana Pembangunan Jangka Panjang Nasional (RPJPN) 2005-2025 (Law No. 17 year
2005) and National Mid-term Development Plan (Rencana Pembangunan Jangka Menengah
Nasional/ RPJMN) 2004-2009 and be part of the coming 2010-2014 plan drafting. The
Long-Term National Development Plan, or RPJP 2005-2025, has identified climate change
as a critical challenge to Indonesia. This seminar banks on the document to explore
financing needs and opportunities in extending the programs stipulated in the documents.
Speakers are invited to raise relevant points beyond the provisions written in these terms of
discussion.
1. Panel Discussion A: Adaptation
a. Water Sector
Floods, droughts, seawater intrusion and temperature rise pose a threat to water quality
and quantity for both surface water and ground water resources. Climate change increase
vulnerability of surface water that has already under pressure from pollution as well as
groundwater resources that have been depleted mostly by industry and agriculture.
Climate change will further aggravate the current water security by enhancing the
frequency of extreme climatic events.
Water management has been a key development issue in Indonesia. Current issues for
the sector include challenges in ensuring access to good quality and sufficient quantity of
water for Indonesia’s increasing economic demands and growing population.
Environmental degradation impeded by climate change is forcing a newer paradigm shift
in water management like the effort to mitigate fires and reverse land degradation in peat
land areas, whereas water tables must be kept close to the surface level. Capacity building
of the local stakeholders is inevitable in implanting the shift into actions.
Points to ponder: Water sector policy objective of the Government of Indonesia is to
enhance the effectiveness of water management including its key ecological functions
through establishment of climate proof watershed and water basin management,
increasing climate change resilience for water infrastructure, and developing and
improving flood management. Points to rise include: 1) what are the optimal financing
instruments?; 2) how to strike a balance in fiscal decentralization for this financing?; and
3) the constitution states water as a public good administered by the government for the
people welfare, how financing options might alter this statement?
b. Agriculture Sector
Agriculture is among the most vulnerable sectors to climate change and will face major
challenges adjusting to shifts to seasons and rainfall patterns, increasing climate
variability, more floods and droughts, higher temperatures, more storms and high winds,
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
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sea-level rise, and coastal erosion. Most threats are linked to the El Nino Southern
Oscillation (ENSO) and its related climate patterns, a cycle that is expected to shorten
and thus enhance the probability of extreme climatic events. Increasing pressure on
agricultural production is putting the livelihoods of the farmer communities at stake as it
becomes harder to get food and earn sufficient income. In areas and communities that
are particularly vulnerable, increasing levels of malnutrition can be expected as a result of
increasing food shortages. At the national level, these pressures pose a risk to Indonesia’s
objective of being self sufficient in food production.
The agriculture sector includes food crops, horticulture, estate crops and livestock. It has
a key responsibility to fulfill the people’s right to food. Food prices largely influence the
rate of inflation and poverty, thus domestic food production should be increased and
maintained in a sustainable manner. The agriculture sector also has important ecological
functions such as biodiversity conservation, water supply and quality, and mitigation of
GHG emissions. Agriculture sector development also faces significant human threats
such as agricultural land conversion to nonagricultural uses with unfriendlyenvironmentally practices.
Points to ponder: Agriculture sector adaptation policy objectives of the governments
among others are to: 1) improve knowledge and capacity of stakeholders in agriculture
sector; 2) develop and implement agriculture related to adaptation measures including
environmentally friendly technology; and 3) strengthen food security. A thorough
strategic financing plan and strategy raise questions for: 1) optimal financing instruments;
2) how any government financing affect agriculture prices?; and 3) how to strike a
balance fiscal responsibility between national and regional financing?
2. Panel Discussion B: Mitigation
a. Forestry Sector
Indonesia’s forests has been degraded on a massive scale as results of unsustainable
forest management, forest fires, unsustainable activities within forest areas, illegal logging
and forest conversion. The rate of forest degradation was about one million hectares per
year between 2004 and 2007. The Ministry of Forestry recently developed the document
“Reducing Emissions from Deforestation and Degradation in Indonesia (REDDI)” that
summarizes a set of ongoing studies and the first steps in a longer process of analysis,
policy development and site-based testing to reduce national emissions. One of
REDDI’s key priorities is to reduce carbon emissions on targeted peatlands. Under
natural circumstances peatlands act as carbon sinks, slowly lowering the amount of
GHGs in the atmosphere by storing – either long-term or permanently – organic
materials.
Points to ponder: Forestry sector policy objectives of the Governments are to: 1)
support forest and land rehabilitation programs through National Movement For Forest
and Land Rehabilitation; 2) reduce emissions from deforestation and degradation
through the development of effective REDD schemes; and 3) accelerate rehabilitation
and revitalization of peat land area. Should carbon sequestration projects through landuse, land-use change and forestry be a potential solution to mobilize carbon financing,
how to manage grants and revenues from carbon finance and A/R Clean Development
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Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
Mechanism projects? What is the appropriate fiscal decentralization scheme? Should
budget financing complement carbon finance? What is the appropriate fiscal regime?
2. Panel Discussion B: Mitigation
b. Renewable Energy Sector
Indonesia needs to properly address it’s heavily reliance on fossil-based fuel such as oil
(54%)5, coal (14%) and gas (29%) that are major contributors to GHG emissions. A
recent study indicates that in 2004, the annual emissions in the energy sector accounts
for about 9% of the country’s total CO2 emission, and they have grown considerably in
the subsequent years. Currently, energy elasticity of demand is greater than 1, i.e., energy
demand is growing faster than the Gross Domestic Product (GDP) growth (averaging
6% per annum).
Diversity and reserves of non-fossil fuel-based energies are significant and present an
opportunity for Indonesia to develop environmentally-friendly energy in the future.
Presidential Decree No 5/2006 on National Energy Policy specifies that the elasticity of
energy usage of less than one percent and a desirable energy mix are going to be attained
by 2025. Ministry of Energy and Mineral Resources based on the same decree, set a
target of national energy mix by 2025 as follows: (i) oil based energy < 20 percent, (ii)
natural gas based energy > 30 percent, (iii) coal based energy, not included liquified coal,
> 33 percent, (iv) biofuels > 5 percent, (v) geothermal > 5 percent, (vi) other new and
renewable energy > 5 percent, and (vii) liquified coal > 2 percent.
One of the champions for renewable energy in Indonesia is geothermal power. As the
world’s largest geothermal power development potential, estimated to be about 27,000
MW, Indonesia is planning to achieve 6,000 MW of installed geothermal power capacity
by 2020, up from about 970 MW in 2007. The main barrier that deters the development
of geothermal power is the lack of an adequate policy framework that incorporates the
environmental benefits of geothermal energy and provides sufficient economic
incentives. In 2003, the Geothermal Law (Law 27/2003) was promulgated.
Points to ponder: Energy sector policy objectives of the government are to: 1)
implement energy savings with clear direction and targets; 2) optimize national energy
mix to reduce dependency on oil-based energy and shift to environmentally-friendly
sources, such as natural gas or other renewable energy; 3) improve energy elasticity.
Financing priority activities in this sector requires funding for improving efficiency of
energy use in industry, households, and transportation sectors, and increasing share of
non oil-based energy in domestic market including new and renewable energy sources.
What is the optimal funding scheme? What are the appropriate fiscal instruments? How
funding options might remove non-financial barrier to renewable energy development?
2. Panel Discussion C: Cross Reference
Financial sector is at the heart of climate change. Given its funding resources, it affects
climate change mitigation and adaption programs. Most of the climate change projects
are not bankable by current standards, be it not cost effective or simply not classified for
funding and insurance. One example is geothermal project which is risky and high cost
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
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but very ecologically friendly. It is important to have the financial sectors incorporated
climate change into its business model to ease mitigation and adaptation programs.
Without proper risk modeling into the financial sector, inarguably the cost of financing
as well as cost of insuring might be increasing exponentially should disaster impact from
climate change become un-manageable.
The Kyoto Protocol has turned the carbon credit into a mainstream term that is
recognized all around the globe. With so many people involved in the buying and selling
of these abstract allowances, governments and institutions are developing strict
regulations that separate quality credits from phony ones. Laws in annex-1 countries
should prevent companies from meeting reduction goals through the purchase of offsets
alone. Although the U.S. does not participate in the Kyoto Protocol, it is profiteering on
the climate change thru the Chicago Climate Exchange (CCX). It is an organization that
imparts legally binding allowances to American companies wishing to reduce their
carbon emissions on voluntary bases. Since there are so many types of carbon offset
projects, criteria for registration with the CCX vary. All projects must first obtain initial
verification from an independent, CCX-approved third party, and once registered,
annual reports are required for the duration of the project. Being one of the largest
carbon sink holder and an integral part of Kyoto Protocol and Conference of Parties
UNFCCC, Indonesia has all potential to administer a Global Climate Exchange for
carbon credits.
Points to ponder: Unlike any other key sectors anticipation to climate change, there has
not been any policy addressing climate change in domestic financial sector. How should
the sector initiate such policy? What are the appropriate policy instruments? How to
make climate change development project bankable and insurable? Let it be as ambitious
as potential it could be, how the carbon market player envisage a proposal for
Indonesian run Global Climate Exchange? What key instruments are required? Would
any fiscal or monetary initiative be efficient in addressing carbon credit establishment?
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Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
Program Agenda
08.15-08.45
08.45-09.00
09.00-09.15
09.15-09.30
09.45-11.00
11.00-12.15
12.15-13.00
13.00-14.15
14.15-16.00
16.00-16.15
Proceedings Warming Up Seminar:
Registration
Opening Speech:
Mr. Askolani on behalf of Dr. Anggito Abimanyu
Head of Fiscal Policy Office, Ministry of Finance
Keynote Speaker:
Prof. Dr. Emil Salim
President’s Advisory Board
National Council on Climate Change
Agus Purnomo
Panel Discussion:
Session 1
Climate Change Financing Needs and Opportunities
for Adaptation:
Water and Agriculture Sectors:
- Directorate General of Water Resource,
Ministry of Public Works
- Directorate General of food Crops, Ministry
of Agriculture
Session 2
Climate Change Financing Needs and Opportunities for
Mitigation:
Forestry Sector:
- Senior Advisor to the Minister of Forestry on
Partnership
- Indonesian Forestry Business Association
Lunch break
Session 3
Climate Change Financing Needs and Opportunities for
Mitigation:
Renewable Energy Sector:
- State Electricity Company
- Indonesian Geothermal Association
Session 4
The Role of Financial Institutions in Climate Change
Mitigation and Adaptation Programs
- Bank Danamon
- PT Asia Carbon Indonesia
Closing
Prof. Dr. Singgih Riphat
Climate Change Financing Need and Opportunities
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Opening Speech
Dr. Anggito Abimayu
Mr. Chairman, Distinguished Guests and Colleagues,
Let me start by welcoming you to today’s Seminar on “Climate Change Needs and Financing
Opportunities.” This seminar is an important part of a series of activities leading up to the
ADB Annual Conference, which the Government of Indonesia and the Ministry of Finance
is very fortunate to host in Bali, on the 1st and 2nd May, 2009.
One of the key issues to be discussed in Bali will be the economic challenge posed by climate
change. As we all know now, climate change poses a serious threat to the development
objectives of each country, especially in Asia. Looking to balance the economic and social
aspirations of our economies with the long – term sustainability of our natural environment
will be the key challenge of the 21st century.
This is particularly true for Indonesia. On the one hand, our country is vulnerable to climate
change threats due to our unique geographical situation, for instance with our coasts facing
rising sea levels. On the other hand, like all countries we have also a responsibility to cut our
carbon emissions, and especially to safeguard our remaining rainforests.
In short, we face the double challenge of reducing carbon emissions while seeking to achieve
high economic growth rates. In order to do so, a large amount of investment finance needs
to be mobilized to fund the necessary innovation and latest technologies to make our
economic infrastructure less carbon intensive.
Today’s seminar will bring together various representatives from the government and the
private sector to hear about the financing needs across different sectors of the economy. The
proceedings of this seminar will provide important inputs for us to get a first picture on the
financial challenge to mitigate and adapt to climate change. This will also help us to discuss
this important issue in a focused manner at the ADB Annual Meeting in May.
Distinguished Colleagues,
The Ministry of Finance has for some time engaged on climate change policies. Since
December 2007, when the Ministry of Finance hosted the High Level of Event on Climate
Change for Finance Ministers at the COP 13 in Bali, we have continued to contribute to the
international and national climate change agenda.
On the international stage, Minister Sri Mulyani has continued to lead the debate among
finance ministers in global meetings like the G 8, G20, APEC and ASEAN, the Annual
Meeting of Finance Ministers and the World Bank Spring Meetings. In these wider venues,
the Ministry of Finance will continue to advocate for bolder approaches on development
and climate financing needs
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Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
The Ministry of Finance also supports the Indonesian Delegation to the UNFCCC COP
process. At the COP 14 in Poznan in last December, parties agreed to shape an ambitious
and effective international response to climate change, to be reached in Copenhagen at the
end of 2009. A number of important ongoing issues that are particularly important for
developing countries like Indonesia such as adaptation, financing technology, reducing
emissions from deforestation and forest degradation (REDD) and disaster management.
On the domestic front, the Fiscal Policy Office has worked to improve its analytical and
institutional capacity and conducted a series of focus group discussions on economic policy
responses to climate change. We concentrated on several key policy areas related to climate
change. First, we are looking at developing a coherent fiscal policy framework to find the
optimal mix of policy instruments to support climate change action and investment,
especially in key sectors such as renewable energy.
Second, we specifically explore ways to improve the existing domestic carbon finance and
CDM framework to facilitate larger and scaled up mitigation projects.
Third, we want to accelerate geothermal energy production in Indonesia, as our country has
a large endowment of geothermal resources that have not yet been developed to their full
potential. One promising way to foster geothermal energy production would be to make use
of the global climate investment funds to offset the generally high up-front investment costs.
On this, a little bit later.
Lastly, we consider forestry to be a key sector carbon and climate finance opportunity for
Indonesia. Reduced Emissions from Deforestation and Degradation (REDD) is a proposed
approach to create a new carbon market to allow payments to countries that can reduce the
rate of deforestation. If UNFCCC negotiations are successful, REDD could be
implemented after 2012. Indonesia as a country well-endowed with rainforests would benefit
through a system of international payments. The Fiscal Policy Office is studying this issue
seriously, as this will have significant fiscal and environmental impacts.
Ultimately, the Ministry of Finance will have to set up an own climate unit to address the
complex issues of formulating adequate fiscal and financial responses to mitigation and
adaptation issues. This unit would have to undertake several major tasks.
First, it should provide financial, macro-economic, and employment perspectives in the
evolving climate policy framework.
Second, it must contribute to international strategies toward accelerating funding to meet
development challenges.
Third, it should enhance climate change policy decision processes through inter-ministerial
and regulatory frameworks.
Fourth, it should develop financial management and investment guidelines for climate
change issues and private sector involvement.
The Fiscal Policy Office is studying different options to set up and appropriate architecture
and institutional setting for this climate unit.
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Climate Change Financing Need and Opportunities
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Distinguished colleagues,
Allow me now to turn your attention to climate financing, the core issue of today’s seminar.
At the Warsaw meeting, the Ministry of Finance contributed to the view that there is a need
to find innovative ways to provide incentives for the development and diffusion of low
carbon approaches. This is especially true against the backdrop of the current global financial
crisis, which makes funding for mitigation and adaptation a more challenging issue.
That is the reason why the Ministry of Finance and the Fiscal Policy Office have closely
followed the development of international carbon finance mechanisms. Currently, several
global climate investment funds worth several billion US $ are being set up to fund largescale mitigation and adaptation efforts in developing countries, particularly in the renewable
energy sector. Donors have so far pledged 6 billion US $ to the CIFs, specifically the Clean
Technology Fund (CTF) and the Strategic Climate Fund (SCF).
In addition, the Forest Carbon Partnership Facility (FCPF) provides funds specifically to
mitigation projects under the REDD schemes. Our colleagues from the forestry sector are
certainly heavily engaged in this.
All these Climate Investment Funds represent a huge opportunity for Indonesia to receive
financial support for mitigation programs. The Fiscal Policy Office has sent a team to
meetings in Washington to ensure that Indonesia is represented in the process of setting up
the Strategic Climate Fund and the Clean Technology Fund.
To explain briefly the objectives of the two funds: The SCF focuses on financing pilot
projects which have the potential to support scaled-up or sector-wide climate change
mitigation policies. The CTF focuses on financing projects addressing the power and
transport sectors and energy efficiency issues. These funds will be managed by trust fund
committees consisting of donor and recipient countries. Projects from Indonesia are eligible
for funding from both funds. In addition, Indonesia is a member of the Trust Fund
Committee of the Strategic Climate Fund. The Fiscal Policy Office is pleased to announce
that Dr. Singgih is the focal point person for these climate investment funds in the
government.
However, in order to access these funds, we must ensure that any projects from Indonesia
have large-scale mitigation or adaptation impacts. This means that projects must address
sector – wide or cross-sector policy issues. As mentioned briefly, financing the expansion of
geothermal energy supply is an ideal example. This will have a transformative effect on the
energy sector, because it will significantly reduce the carbon content of electricity
production. Another example would be to address energy efficiency issues across whole
industries. A last example is the REDD scheme, which addresses the whole forestry sector.
All this requires inter-ministerial coordination for the government to formulate effective
project proposals. Today’s seminar is a first important step in this direction, as one major
objective is to get a preliminary analysis from various line ministries and representatives from
industry sectors on what the most urgent sector challenges and financing needs are. In
addition, we would also like to know about key regulatory issues that need to be addressed in
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Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
the various sectors. Hopefully, today’s discussion about these issues will shed some light on
how best to set up an institutional and regulatory framework which is conducive to tap into
carbon finance flows, including financial support from the Climate Investment Funds.
Of course, we cannot come up with a complete picture at today’s seminar. To be able to do
so, would require a thorough and accurate study, incorporating short, medium and long term
projections of emission scenarios and subsequent economic and financial policy responses.
The Fiscal Policy Office is currently developing a possible framework for such a low carbon
development options study.
Distinguished Colleagues,
Attracting financial support from these global climate finance mechanisms is an important
first step to get serious with our national efforts to make our economy less carbon –
intensive and thus strengthen environmental sustainability. That is why today’s seminar is
important, as this will also be an opportunity for all of us to disseminate information on
these climate investment funds to all interested stakeholders within the government, private
sector and industry representatives. We hope that by the end of the seminar, all participants
will have a good picture on how best to access these climate investment funds.
Undoubtedly, the ADB and other multilateral and bilateral donor agencies will have to play
an important role in assisting developing countries like Indonesia to access these climate
investment funds.
In conclusion, let me take the opportunity to thank the sponsors of this seminar.
We hope that we will have constructive discussions in the day ahead.
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
17
Keynote Speech
Prof. Emil Salim

Environmental issues are usually discussed only among environmentalists and most of
the times there is no linkage to the issue of how to finance the initiatives. However,
today the Ministry of Finance discusses environmental issues in connection to the
potential sources of funds.

Climate change requires a greener economy or widely known as sustainable development
that should be seriously taken into account.

The environment is very close with the network of life which consists firstly, of an
economic network of supply and demand, of producers and consumers. Secondly, there
is a social network, interlinking between people, creating interdependency. Thirdly, there
is an environmental network. Financial and fiscal policies will affect these networks.

Development, so far, has neglected these networks and even destroyed them. An
example is the over exploitation of the natural resources and the drying out of the nonrenewable ones, while the renewable ones are also declining. Harvesting methods do not
adjust to the sustainability of the resources, e.g. there is no selected cutting in the forest
utilization.

Therefore the economy develops by destroying the nature.

As the logic of nature always search for equilibrium, there is need to move to a higher
and sophisticated equilibrium following the path of sustainable development.

Equilibrium equals balance, e.g. between expenditure and revenue; export and import.
Equilibrium in the way that we are developing should be equilibrium within and
equilibrium between those networks.

Climate change cannot be seen as independent from other sectors, therefore there is a
need to develop the economic, social and environmental linkages. This is similar to a
pool game where one ball hit will affect many others.

Financial policies can co-benefit those networks in the mainstreaming the development
on regional and sectoral levels.

Some of examples that could be done are:
o Extractive industry transparency initiative to reduce corruption as well as
considering the carrying capacity of the resources by utilizing and complying
with spatial planning policies.
o Market intervention to correct the prices in attempt to abate the market
failure.
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Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
PENANGANAN
PEROBAHAN IKLIM
1. Manajemen perobahan iklim tidak bisa dilakukan
MAINSTREAMING CLIMATECLIMATECHANGE DALAM PEMBANGUNAN
Oleh Emil Salim
Anggota Akademi Ilmu Pengetahuan Indonesia
Jakarta, 19 Februari 2009
[email protected]
2.
3.
4.
terisolasi dari manajemen ekonomi dan sosial.
sosial. Maka
perlu penelurusan interinter-sektor dalam pola matrix
ekonomiekonomi-sosialsosial-lingkungan;
lingkungan;
Energi:
Energi: Rehabilitasi Daerah Aliran Sungai selamatkan
air & buka peluang bangun mikromikro-hydro bangkitkan
listrik bersih dengan penurunan emisi CO2.
Hutan dilestarikan untuk serap CO2 bersamaan dgn
pemanfaatan sumber alam hayati untuk obat,
obat,
hortikultura,
hortikultura, kosmetika dan produk nonnon-kayu;
kayu;
Pertanian untuk panganpangan-organik dgn pupukpupuk-organik
sekaligus selamatkan ekoeko-sistem utk serap CO2;
Pembangunan sektoral dilaksanakan dengan “manfaat
ganda”
ganda” meraih hasil dan turunkan emisi CO2;
TIGA
TANTANGAN PEBANGUNAN
1. Krisis finansial global bermula dari Amerika Serikat
kini masuk ekonomi Indonesia memicu keperluan
restrukturisasi memperkuat ekonomi dalam negeri;
negeri;
2. Pemilihan Umum akan datang mendesak keperluan
lebih mematangkan demokrasi kita;
kita;
3.Krisis lingkungan dengan perobahan iklim sebagai
puncaknya menuntut tumbuhnya green economy ;
Lahir Sustainabilitas Pembangunan memuat usaha untuk
mencapai tiga sasaran ekonomi,
ekonomi, sosialsosial-politik dan
lingkungan sekaligus.
sekaligus.
ORIENTASI
KEBIJAKAN KEUANGAN
1. Kebijakan fiskal,
fiskal, anggaran dan moneter perper-
bankan tertuju pada sasaran kegiatan ekoekosossos-ling yg raih “manfaatmanfaat-ganda”
ganda” menurunkan
kemiskinan yang sekaligus berdampak pd
penurunan emisi CO2, naiknya daya serap
CO2, berkurangnya ancaman probahan iklim;
iklim;
2. Pola “manfaat ganda”
ganda” harus masuk arus tetengah pembanguan sektor & daerah dengan
matrixmatrix-interdependensi perhitungkan dampak
pada penciptaan dan pengurangan emisi CO2;
JEJARING KEHIDUPAN
1. KetigaKetiga-tiga sasaran pembangunan ini memiliki
2.
3.
persamaan,
persamaan, yakni semua memuat jejaringjejaring-kekehidupan mengkaitkan satu unsur dgn lain;
Jejaring ekonomi hubungkan pelaku ekonomi
sesamanya;
sesamanya; jejaring sosial dgn pelaku sosialsosial-nya dan
jejaring lingkungan dgn komponen alam satu
interdependen dengan yang lain;
Antara jejaring ekonomi dengan sosial dan
lingkungan juga terdapat hubungan timbaltimbal-balik
menuju ke titik ekuilibrium lanjut dlm evolusi
perobahan;
perobahan;
Pembangunan berusaha tidak merobek jejaring ini;
ini;
PERUSAKAN
JEJARING KEHIDUPAN
DEPKEU & PEROBAHAN IKLIM
Depkeu di tingkat nasional dan Asian Develop
ment Bank di tingkat regional perlu berprakarsa:
berprakarsa:
1. Terapkan Extractive Industry Transparency
Initiative dalam model kerja perusahaan;
perusahaan;
2. Fokus pada kegiatan sektoral yg bermanfaatbermanfaatganda pada penurunan CO2 dan kemiskinan;
kemiskinan;
3. ArusArus-tengahkan pertimbangan ekoeko-sossos-ling
berdampak ganda ini dlm arus besar
sustainabilitas pembangunan yg mengacu pada
TataTata-Ruang sesuai dayadaya-dukungdukung-lingkungan;
lingkungan;
1. Pembangunan konvensional ciptakan
“lingkungan buatan”
buatan” (kota,
kota, industri,
industri, energi)
energi)
dengan merobek jejaring lingkungan alami,
alami,
sosial dan ekonomi,
ekonomi, sehingga tak sustainable;
2. Pembangunan mengeksploitasi SDA dgn
tranformai zat ke produk dengan melepaskan
limbah gas, cair,
cair, padat yg mencemarkan;
mencemarkan;
3. SDA tak terbarukan dikuras habis,
habis, SDA
terbarukan menciut ketika ambang batas
dilampaui.
dilampaui. Pembangunan mengancam alam;
alam;
JEJARING CARI EKUILIBRIUM
1. Sustainabilitas pembangunan = beranjaknya
2.
3.
4.
5.
jejaring kehidupan ekonomi,
ekonomi, sosial & lingkulingkungan dari tingkat satu ke tingkat keseimbangkeseimbangan baru yg lebih maju,
maju, tinggi,
tinggi, kaya & canggih;
canggih;
Proses ini berlangsung menurut logika alami
mencari ekuilibrium antar komponennya;
komponennya;
Maka ekonomi cari keseimbangan pengeluarpengeluaran dgn pendapatan,
pendapatan, expor dgn impor,
impor, cipta
lapangan kerja dgn tawaran tenaga kerja dll;
dll;
Alam cari keseimbangan predatorpredator-mangsa dll
Sosial cari ekuilibrium antar interest groups;
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
DEPKEU & PEROBAHAN IKLIM
4. Intervensi dalam pasar dgn insentif/disinsentif
koreksi harga menginternalisasi biasabiasa-manfaat
sosial dan lingkungan masuk struktur biaya;
biaya;
5. Melalui pendidikan/latihan,
pendidikan/latihan, pajakpajak-subsidi,
subsidi,
penaltipenalti-hukum,
hukum, persuasi moral, tekanan publik
mengajak masyarakat menghasrati usahausaha-kerja
berpola “manfaat ganda”
ganda”;
6.Bangun “island of sustainability”
sustainability” sebagai pilot
proyek pembangunan ekoeko-sossos-ling yg berdamberdampak positif pd penurunan kemiskinan bersama
penurunan CO2 mencegah perobahan iklim;
iklim;
19
Speech of the National Council on Climate Change
Agus Purnomo

The science of climate change is already abundant and evidence, but still misery for
people in the planet.

Developing countries and remote islands are the vulnerable parties that are hard hit by
the climate change and Indonesia is particularly vulnerable.

Indonesia also has to follow up its commitment to reduce emission by December 2009
in the next summit in Copenhagen.

Sustainable development idea has been heard for two decades, this is the time to solidify
the position and harmonize all efforts by different sectors. Then maintain the track of
Indonesian sustainable development version.

Indonesia is looking for financing mechanism and solidarity to adapt and mitigate the
climate change impact. . Financing for capacity building and adaptation would not be
coming from loans.

Indonesia is not a banana republic that asking for mercy but trying to play its role in the
climate changes international fora.
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Overview Remarks
Agus Purnomo
Mr. Anggito Abimanyu, the Head of Fiscal Policy Office of the Ministry of Finance
Mr. Emil Salim, from the Presidential Advisory Council
Distinguished ladies and gentlemen,
Good morning and welcome to today’s seminar that will discuss “Climate Change Financing
Needs and Opportunities” in the run up to the 42nd annual meeting of Board of Governors
of the Asian Development Bank to be held in Bali in May 2009.
As many of us have been aware, the increase in average global temperature has brought
about more erratic weather events and more extreme seasonal temperature. These worrying
phenomena have been felt worldwide on an unprecedented scale. Countries in tropical as
well temperate regions have increasingly seen adverse impacts of such chage both on their
natural environment and economic and social well-being. To address these problems, we all
have to engage in different thinking and approach to renew our commitment to sustainable
development. If we choose to do business as usual, not doing anything to mitigate these
climate change problems, we will likely end up overwhelmed by a multitude of disasters and
consequently paying much higher price in the future to reverse our degraded environment
and to sustain a healthy economy.
During the Bali meeting in late 2007, Parties to the United Framework Convention on
Climate Change (UNFCCC) were committed to overcome climate challenges through four
intertwined measures: mitigation, adaptation, finance, and technology cooperation.
Following this agreement, Indonesia has done quite a lot to prepare its institutions and
policy for expeditious actions. One of the milestones is the establishment of the National
Council of Climate Change in July last year to serve as the ultimate body for interdepartmental and multi-stakeholder policy coordination of all sorts of climate change
programs. The Council is led by the President himself and has 17 ministers and one head of
agency as members. It is charged with a responsibility to improve and expand working
relations among government agencies and between government institutions and nongovernment entities in order to foster strategy and focus of climate change measures in
Indonesia. Furthermore, as the focal point of UNFCCC in Indonesia, the Council represents
the national government in international negotiations to ensure our country get a fair deal
from global climate agreements for the benefits of national development.
In the context of UNFCCC, Indonesia is not part of Annex 1 countries or rich industrialized
nations that are mandated to reduce greenhouse gasses emission. Nevertheless, for our own
interest, we have to take sustainable pathways of our economic development. This will mean,
among other things, we need to advance energy efficiency and explore renewable energy in
the implementation of all sectors development. The objective is twofold: to optimize our
limited resources and to protect our environment. We also need to manage our land and
forest more effectively to minimize carbon emission potentials from deforestation and land
use change while at the same time safeguard biodiversity, maintain economic and ecological
benefits from forest services and improve livelihoods of poor rural communities. These
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
21
efforts are currently associated with low carbon development, a development perspective
that principally seeks to promote a vigorous economic development through resources
conservation and optimization such that a country can ensure the likely similar benefits of its
resources in the future.
Low carbon development requires many adjustments and improvements, especially in
relations to inter-agency coordination which admittedly remains a weak point in our country.
Furthermore, low carbon development needs robust technical competence and technological
development both of which are also far from adequate. To address these shortcomings, I
believe Indonesia has to forge strong cooperation links with foreign development partners,
government and non-government. Equally importantly, we have to be able to pull sizeable
funding from different kinds of sources, domestic and overseas.
Indeed, there are no easy ways to pursue the above-mentioned targets. The challenges have
become even greater with the global financial crisis that started in the United States and has
impacted countries all over the world including our developed partner countries. On this
note, I would like to take this opportunity to remind all of us not to use the financial crisis as
the reason for scaling down low carbon development efforts and climate change measures.
While financial crisis is a temporary cyclical phenomenon which is expected to recover in 2-3
years, climate change is more of structural problem with huge destructive capacity to last
over much longer time span. Hence, if we delay our actions today, we will pose multiplied
risks to our next generations.
In light of these challenges, how are we going to finance mitigation, adaptation and
technological development measures? Public money, both from national budget and donor
agencies, is an important resource to finance institutional development, strategy and plan
making, and capacity building for climate programs. But the funds are largely insufficient to
cover execution of a wide range of mitigation and technological development activities
especially for a country as big as Indonesia. Hence, we need to encourage private
participation and make necessary changes in our regulatory and policy frameworks to allow
private investment to thrive. Private investment is especially needed to develop and adopt
mitigation technologies for small-scale projects such as hydropower and for much bigger
scale projects including geothermal. At the present time, existing policy and regulations are
not at their best to link the needs of climate change measures and private investment
potentials. For instance, our energy pricing policy is still discouraging development of
renewable energy and hence private involvement in this sector. We need to do more to
improve these situations.
On the other hand, we also need to identify economic consequences of climate change
mitigation, adaptation, and technological development. What kind of economic policy or
strategy do we need to reform to enable us taking concrete actions? Business as usual is
definitely not an option as this will increase our vulnerability to the dangerous impacts of
climate change. In-depth analyses are therefore needed to provide us with viable solutions of
how best we can use economic incentives as well as potential public and private funds to
deal with climate change and to develop a low carbon economy. The National Council on
Climate Change and the Fiscal Policy Office of the Ministry of Finance have been engaged
in these kinds of analysis. We expect the results of these analyses will lead to quick policy
uptake to be implemented under stronger institutional arrangements.
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Proceedings Warming Up Seminar:
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I personally hope the discussions of today’s seminar will offer intellectual contribution to the
ongoing analysis and improvement to our inter-agency coordination. The problems we are
facing today are too complex to be left to the government. I have faith that more active
participation of all climate change stakeholders will be beneficial to accelerate the realization
of our climate change plans and strategy.
I hope this brief overview will stimulate an engaged and productive discussion for the rest of
the day.
Thank you for your attention.
Rachmat Witoelar
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Climate Change Financing Need and Opportunities
23
Session 1
Moderator: Prof. Singgih Riphat
Presentation 1: Sugiyanto
Directorate General of Water Resource
Ministry of Public Works

Indonesia is vulnerable of the climate change.

There is a trend of the climate change and its impacts to several sectors.

There is a need to focus research on efficient water resource management, coastal
protection and developing drought indicators

The presentation suggested a short-term financing need of around 2 million US $,
most of it allocated to coastal protection in Padang.
24
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
Supporting Facts
1. Continuing decrease of paddy production due to
floods (annual lost : 374,500 ha,
or equivalent : 919,300 tons of paddy)
2. Continuing decrease of paddy production due to
droughts (annual lost : 350,000 ha
or equivalent : 700,000 tons of paddy)
3. Continuing decrease of hydropower productions
during the last ten years
4. Increasing the number of critical river basin from
22 areas in 1984 to 62 areas in 2007
5. Increasing the number of flood occurrences
6. Increasing the number of coastal abrasions
7. Damages to properties due to coastal flood caused
by sea level rise
6
Presented by:
Ir. Iwan Nursyirwan, Dipl.HE
Director General of Water Resources
The ADB Warm-Up Seminar
Jakarta, February 19, 2009
DIRECTORATE GENERAL OF WATER RESOURCES
MINISTRY OF PUBLIC WORKS
1
NUMBER OF FLOOD OCCURRENCE
NUMBER OF FLOODS OCCURRED IN INDONESIA
Number of flood events
Background

Indonesia is one of vulnerable nations to climate change
related hazards
 Floods, droughts, landslides, forest fires are the common
types of climate change related hazards in Indonesia
 Climate changes cause several problems, such as :
1. Temperature warming
2. Precipitation pattern change
3. Sea level rise
4. Intensified extreme events
700
607
600
500
399
400
297
300
200
430
150
186
191
100
0
2001/2002 2002/2003 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008
Year
3
Temperature warming
7
Increased Forest Fire
Drought
Precipitation change
Increased Critical
River Basin
Sea level rise
Intensified
extreme events
Deforestation
Extreme rainfall
Extreme flood
Drought
Heat waves
Tropical cyclones
Coastal Abrasions
Increase of sea intrusion
Queue for clean water
4
8
Measure
Dried Rice Fields Area
Due to Climate
change
Impact of
climate
change
Normal condition
1850
1980
1995
2000
Time
Trend of Climate Change Measure
5
Proceedings Warming Up Seminar:
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9
25
Mitigation and Adaptation Strategy In Water
Resources Sector … (cont’d)
Flood

Adaptation, covering :
Enhancing river basin capacity as water absorption
2. Controlling the seasonal discharge fluctuation by
constructing and/or maintaining the existing major
dams and reservoir
3. Construction/rehabilitation on irrigation system to
support the national food security policy
4. Technology development for new irrigation system for
agriculture intensification (sprinkle or drip irrigation
system and support water efficiency)
1.
Flood Situation
10
14
Mitigation and Adaptation Strategy In Water
Resources Sector … (cont’d)
Coastal Abrasion

Adaptation, covering :
Constructing on flood protection structures
6. Disaster risk management (early warning system,
river flows control)
7. Construction and maintenance of the coastal
protection (Revetments, breakwaters, groins, beach
nourishment, dune restoration etc) and sea water
control
8. Conservation of ponds and water harvesting
9. Save water Campaign
5.
Coastal Abrasions in
Sanih beach, Bali
Coastal Abrasions in
Muara Karang, Jakarta
11
15
Mitigation and Adaptation Strategy In Water
Resources Sector … (cont’d)
Coastal Abrasion

Mitigation, covering :
Water maintenance on peat land area to reduce fire
risk and to control green house effect
2. Supporting the reforestation along the critical river
basins and Marshland area
1.
Coastal Abrasions in
Coastal Abrasions in
Coastal Abrasions in Padang
beach,
Muara Karang, Jakarta
Sanih beach, Bali
West Sumatera
12
Mitigation and Adaptation Program in
Water Resources Sector
Mitigation and Adaptation Strategy In Water
Resources Sector
Mitigation and Adaptation in Public Works Facing Climate Change
Water Resources Sector
o Legal Framework :


•
•
•
•
•
Law No. 26 year 2007 regarding Spatial Planning
Law No. 7 year 2004 regarding Water Resources
(comprises : Conservation, Utilization, and Water
Damaged Control)
Government Act No. 20 year 2006 (Irrigation)
Government Act No. 16 year 2005 (Drinking wat.sup.syst)
Government Act No. 42 year 2008 (WRM)
Government Act No. 43 year 2008 (Ground Water)
Other Proposed Government Acts which are under process
13
26
16
No Anticipation
Short Term
Long Term
I Mitigation
1 Rehabilitation of swampy infra 1 Water maintenance on peat
structure
land area
2 National Movement for Partnerships 2 Supporting of reforestation and
in Water Conservation
conservation of marshland
II Adaptation
1 Public Awareness Campaign
1 Canal Linings
2 Rehabilitation of reservoirs
2 Irrigation timing and efficiency
3 Rehabilitations of existing irrigation
(SRI)
systems
3 Integrated operation on dam in
4 Rehabilitations of existing flood
rivers flow
4 Operation and Maintenance of
control structures
existing flood control structures
5 Increase water use efficiency
6 Use conjunctive surface/ground 5 Additional reservoir/storage
water supply
6 Coastal protection
7 Rainwater harvesting measures
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Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
MITIGATION
ADAPTATION
1
Reforest/GNKPA
5
Public Awareness Campaign
2
Reforest / Women Action To Save Earth from
Global Warming
Situ Gedong
6
Canal Linings
Situ Cihuni
3
7
System Rice of Intensification (SRI)
Conservation of marshland
Reforest rizhopora mucronata
4
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
8
27
System Rice of Intensification (SRI)
River restoration
9
Watershed conservation
3
Flood Management
10
Dam Monitoring
4
Flood Management
1
Restoration and conservation on
ponds/embung/situ
Small Island Conservation
Previous Condition of Nipah
2
28
5
6
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
1.
Project Title
2.
Objectives
3.
Background
4.
Scope of Works
5.
Other Activities
6.
Estimate Costs
and Financing
Implementing
Agency
Nipah Project
Hutan Bakau
West Zona
Daratan
Unit Penelitian
Mangrove & Biota laut
Helipad
Shelter Transit
Pos Terpadu TNI
AD, AL & Polri
Prasasti
Laut
Tapak 1,2 Ha
Daratan
South Zone
7.
7
Coastal Protection in Kuta
The Influences of Climate Change on Coastal Protection Planning and Policies in
Indonesia
The expected result of this project is to offer the Government of Indonesian, either
national or regional, concepts in deciding for future coastal protection planning and
policies related to global climate change.
Indonesia has more than 17,500 islands and around 81,000 kilometers coast line,
which makes the second longest coastline country after Canada. With this condition,
coastal regions in Indonesia, for the most parts, are utilized as cultivation area.
Global climate change would cause sea level rise and increase of rainfall and river
discharge in the upland area. These will affect social, economical, environmental,
and cultural conditions on both cultivated and conservation coastal areas. Hence, it is
necessary to have a study on the influences of global climate change over the sea
level rise, the increase of rainfall and river discharge, and the impact (risk analysis)
on condition of coastal areas in Indonesia.
 Data acquisition and processing (primary and secondary data) on several coastal
areas in Indonesia (such as Jakarta, Semarang, Padang, and Bali).
 Analysis of climate change over the sea level rise and the increase of rainfall
intensity, and also the increase river discharge in the upland area of Indonesia.
 Analysis of the sea level rise impact on coastal hydrodynamics.
 Analysis of coastal hydrodynamics and its effects on social, economical,
environmental, and cultural condition in coastal area, as well as its risk.
Seminars/Workshops/Dialogs by inviting experts from professionals, government
agencies, and academics.
US$ 1.2 – 1.5 millions
Directorate of Swamp and Coast, Directorate General of Water Resources, Ministry
of Public Works.
11
Proposals
… (cont’d)
3. Study on the Impacts of Climate Change on Water
Resources in Indonesia
Estimated Costs & Financing: US$ 200, 000.00
4. Study on the Impacts of Climate Change on Sea
Water Current
Estimated Costs & Financing: US$ 100, 000.00
3. Study on the Drought Indicators as a Tool for Risk
Reduction
Estimated Costs & Financing: US$ 150, 000.00
8
12
Coastal Protection in Padang
Thank you
For Your Kind Attention
9
13
Proposals
1. Expert Panel on Climate Change
Number of Engineer(s)
with at least 10 years of
Professional Experiences
Monthly
Salary
(US $ / person)
Number of
Month(s)
Total Salaries
(US $)
5
15,000.00
24
1,800,000.00
2. The Influences of Climate Change on Coastal
Protection Planning and Policies in Indonesia
10
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
29
Presentation 2: Sutanto
Directorate General of Food Crops
Ministry of Agriculture

Food crops contribute to climate change, especially from the utilization of fertilizers,
pesticides, machineries, and transportations.

The impacts of climate change to food crops among others are: the shifting of
cultivation time, floods and droughts, pests and diseases, and water supplies.

The key issues for the agricultural sector are: increasing productivity, expansion of
planting areas, restricting loss of harvest and planted areas, enhancing rural agricultural
infrastructure, increasing access to finance for agricultural farming activities

Investment into agricultural programs are projected to increase from 1.3 trillion IDR in
2010 to 8.5 trillion IDR in 2014, in line with the RPJM
30
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
FINANCING NEEDS FOR THE
ADAPTATION OF FOOD CROPS
PRODUCTION TO CLIMATE CHANGE
- It may be said that agricultural practices
conducted until today still contribute to
global warming, hence causing climate
change, through the use of production
inputs that can produce green house
gases/GHG (inorganic fertilizer,
pesticide), farm mechanization that uses
fossil fuel, and inefficient water usage.
- However, efforts to adapt to climate
change have been initiated.
Sutarto Alimoeso
Director General of Food Crops
MINISTRY OF AGRICULTURE
DIRECTORATE GENERAL OF FOOD CROP
Jakarta, 19 February 2009
Food Crops Production
in Indonesia
IMPACT OF CLIMATE
CHANGE
Food Crops Production in Indonesia
Impact of Climate Change
(Million ton)
No Commodity
2004
2005
2006
2007
2008**
Growth
(%)
1
Rice*)
54,09
54,15
54,45
57,16
60,28
2,78
2
Corn
11,23
12,52
11,61
13,29
15,86
9,69
3
Soybean
0,72
0,81
0,75
0,59
0,76
3,15
4
Peanut
0,84
0,84
0,84
0,79
0,77
(2,24)
5
Mungbean
(0,62)
6
Cassava
7
Sweet
potato
0,31
0,32
0,32
0,32
0,30
19,43
19,32
19,99
19,98
20,83
1,78
1,90
1,86
1,85
1,89
1,82
(1,03)
1. Changing in onset of seasons, such
as earlier dry season.
2. Increase in frequency and intensity
of extreme climate events, such as
increase drought intensity causing
loss of soil organic matters, and
increase rainfall intensity causing
severe flood.
3. Emerging new pest and diseases.
4. Decreasing land capability to hold
water.
Note: * Unhusked Rice
**BPS Third Forecasting Figures
STRATEGY USED TO INCREASE FOOD
CROP PRODUCTION
FLOODED AND DROUGHT IN RICE AREA (1998-2008*)
900000
1. Increasing Productivity
3. Losses Reduction
4. Empowering Agricultural
Institution in Rural Area
and Strengthening
Financing Capacity for
Farming Activities.
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
700000
Ha
600000
500000
Ha
2. Expansion of Planting Area
800000
400000
300000
200000
100000
0
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008*
Flooded
143344
190466
243931
196164
219580
263181
311246
245504
329826
329475
331905
Flooded (Tot ally Damage)
33152
42275
58651
32765
63459
66838
84588
80384
138227
99039
Drought
180701
104539
91105
151390
348512
568619
163923
283660
338261
454059
319310
Drought (Tot ally Damage)
32557
12631
5116
12434
41690
117006
26384
44829
73045
58641
103762
95394
31
Adaptation and Mitigation of Climate Change
Impact in Food Crops Production
RICE AREA AFFECTED BY PEST AND DIASEASES
(1998-2008)
•
•
600000
Balanced fertilizer with the use of organic fertilizer.
Reducing pesticide usage through the application of Integrated Pest
Management (IPM).
Use of adaptive varieties (drought tolerance, short growing period,
low carbon emitters).
Efficient water usage through intermittent watering in sawah/rice
field.
Water harvesting using canal reservoir and farm pond.
Land and water preservation through alley cropping.
Minimum tillage to reduce fossil fuel consumption by tractors
Increasing farmers’ capability to adapt to climate change through
climate field school/Sekolah Lapangan Iklim (SLI).
•
400000
•
200000
•
•
•
•
Ha
Ha
0
Year
Affected
1
2
3
4
5
6
7
8
9
10
11
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
474,284 501,081 339,037 299,238 229,830 214,597 217,782 340,577 336,126 417,003 366,632
Totally Damaged 19,544
24,796
7,985
4,509
2,046
1,527
2,982
7,571
2,050
2,269
2,396
BUDGETING
SUSTAINED FOOD PRODUCTION
FOR FOOD SECURITY
Budget Related to Climate Change Adaptation
for the Last Two Years (2008-2009)
mill IDR
Component
2008
Organic Fertilizer
Composting Equipment
IPM Field School (SL-PHT)
ESTIMATION OF RICE
CONSUMPTION
Climate Field School (SLI)
Total
2009
592.500
805.000*
38.680
(932 units)
9.680
(605 units)
20.250
(450 units)
9.872
(617 units)
2.000
( 100 units)
2.000
( 100 units)
621.860
1.273.122
Note : * Covering 1.200.000 ha of rice planting area
YEAR
POPULATION
NATIONAL RICE
CONSUMPTION (TON)
2008
228,500,000
31,875,750
2009
231,584,750
32,306,073
2010
234,711,144
32,742,205
2011
237,879,745
33,184,224
2012
241,091,121
33,632,211
2013
2014
244,345,851
247,644,520
34,086,246
34,546,411
Target for Adaptation and Mitigation of Climate
Change for the Next Five Years (2010-2014)
1.
2.
3.
4.
5.
6.
Note : - Population Growth = 1,35%/year
- Rice Consumption = 139,5 kg/person/year
7.
- Based on the production growth rate achieved in
the last five years, the target of rice production to
secure food availability for the next five years
could be optimistically achieved.
- Nevertheless, to sustain our agricultural system,
concerns to the impact of climate change should
be intensively addressed.
Increasing semi organic fertilizer usage in 5.000.000
ha planting area.
Decreasing 25% pesticide usage (5% per year).
Planting adaptive varieties in 5.000.000 ha.
Integrated Pest Management Field School for 25.000
units / farmers’ groups.
Climate Field School for 10.000 units / farmers’
groups.
Constructing 5.000 canal reservoir and 5.000 farm
ponds.
Establishing 125.000 ha alley cropping.
Estimation of budget needed for activities related to
climate change adaptation for the next five years
billion IDR
Component
2011
2012
2013
2014
Organic Fertilizer
2.000
(1.75 mill ha)
3.000
(2.5 mill ha)
4.000
(3.25 mill ha)
5.000
(4 mill ha)
6.000
(5 mill ha)
Composting
Equipment
100
(1.000 units)
110
(1.000 units)
121
(1.000 units)
132
(1.000 units)
145
(1.000 units)
IPM Field School
(SL-PHT)
100
(5.000 units)
110
(5.000 units)
121
(5.000 units)
132
(5.000 units)
145
(5.000 units)
Climate Field
School (SLI)
125
(5.000 units)
138
(5.000 units)
152
(5.000 units)
166
(5.000 units)
183
(5.000 units)
Seed of adaptive
varieties
150
(1 million ha)
165
(1 million ha)
182
(1 million ha)
200
(1 million ha)
220
(1 million ha)
Canal Reservoir,
Farm Pond
100
(2.000 units)
110
(2.000 units)
121
(2.000 units)
132
(2.000 units)
145
(2.000 units)
125
(25.000 ha)
138
(25.000 ha)
152
(25.000 ha)
166
(25.000 ha)
183
(25.000 ha)
2.700
3.771
4.849
5.928
7.021
Alley Cropping
Total
32
2010
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
Discussion of the presentations:
Discussant 1
Prof. Bustanul Arifin, Lampung University

The presentation is ok and on the right track.

The threats from floods and droughts are serious and there are still many difficulties to
perform adaptation and mitigation, henceforth the impacts should be mitigated without
compromising the agriculture production trend. There is a possibility of other factor that
can increase production.

How is the role of civil society?

How are the programs of Ministry of Public Works and Ministry of Agriculture to
mobilize the communities in adaption and mitigation? There is a need to have resilience
strategy within the communities through considering the local specific.

How is the role of research and development to support the adaptation and mitigation
programs, such as the draw tolerant varieties (gogo rancah or up land rice), even though
only produce 1.3 ton per ha compare to wetland rice field that produce 5-8 ton per ha.

What are the roles of government where central persuades local governments to be
convinced that all are ok in the field? As if the central cannot fully control the local
governments, the program introduced would not work.

What is capacity building program to empower local governments, civil societies, and
universities?

How is the link or role of central government to partner, with private sectors to
implement the adaptation and mitigation programs? Whereas the Ministry of Finance
could mobilize private sectors to support them.

Comment: the trade offs between adaptation and mitigation are usually conflicting
among budgets, priorities, human resources, etc.
Discussant 2
Listyowati, Ministry of Environment

How is the budget for water resource recovery?

How is the strategy for water resource availability?

How are the medium and long terms plans to maintain water resource, such as
mitigation efforts?

The MoE already enacted Minister Decree for Green Building that is voluntary and
mandatory.
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
33

The food crops trend data are not all decreasing; there are some with positive growth.
The presentation did not mention regarding food diversification for the people.

The land use change strategy, for instance peatland to palm oil plantation should be
reconsidered as this practice will increase significantly the green house gasses emission.

Suggestion: there is a need for national movement to support the sustainability and
availability of water resource, such as supporting biopores and diffusion wells as water is
everyone’s necessity.

Suggestion: as one of climate change mitigations, there is a potential to utilize the
abundant cattle waste into biogas.

Suggestion: national movement for climate change mitigation with communities’
involvement that are self supported, such as planting coastal vegetation.
Presenters’ responses:

Floods and droughts related to climate change would be mitigated, however, even
without climate change; there would be the construction of water infrastructures, such as
sea wall for high tide, etc.

Climate change is significantly affects food security; therefore there should be synergy
efforts horizontally and vertically to all members of the state, as well as strategic supports
from all.

The Ministry of Agriculture conducts researches through Research and Development
Board.

There is already available outreach and guideline for food diversification.

Land use change, related to legal aspect, there is a law to protect the sustainable land,
such as for peatland.

Cattle wastes already been utilized for energy, compost, organic fertilizer through
communities involvement.
Questions:
Dr. Salip: Agency for Training and Education
 Climate change is impacting gradually, there are some signs, and therefore, the mitigation
could be done at once, for example on how to retain the water while the rains are still
sufficient.

What are the adaptation measures between different institutions to make maximum
water utilization?
Haryo Suwahyo, Fiscal Policy Office
 Flooding problems: Jakarta and Semarang can be designed as pilot projects for
mitigation on how to overcome the problem.
34
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities

In the presentation, there is a huge amount of budget for consultants’ salaries, where is
the standard from, what are the outputs, and where is the source of funds? It will be
better to allocate the budget to construct the infrastructure for adaptation through the
prediction of the flooding events.
Presenters’ responses:


Water resource: the mitigation should be integrated.
The pilot project already been implemented in Padang, where there is flood control
working successfully.

Ministry of Agriculture: the mitigations should be comprehensive and integrated; there is
a need to fill in the gaps among sectors.

The current phenomenon is that when there is rain, flood, and where no rain, drought is.

There is a need for commitment on social, technical, and integrity.
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
35
Session 2
Moderator: Prof. Singgih Riphat
Presentation 3: Wandojo Siswanto
Senior Advisor to the Minister of Forestry on Partnership

The presentation focused on the potential of the REDD scheme to generate the
necessary financial flows to reduce emissions from deforestation.

Total costs of implementing the REDD scheme could be in the order of 45 million US $
over 5 years in terms of implementing the necessary policy, monitoring and evaluation
infrastructure.

Most of these costs should be covered by grants provided by international donor
agencies and bilateral agreements.

The government is also devising a financial strategy to support reduction of
deforestation consisting of tapping into government budgets, grants, state agency
resources and trust fund mechanisms.
36
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
RATE OF DEFORESTATION AND DEFORESTATION
BETWEEN 1980 – 2005
CLIMATE CHANGE MITIGATION
IN FORESTRY SECTOR: FINANCIAL
NEED AND OPPORTUNITIES
3
2.83
2.5
2
By :
1.8
1.5
WANDOJO SISWANTO
1
SENIOR ADVISOR TO THE MINISTER OF FORESTRY ON PARTNERSHIP
Prepared for Warming-Up Seminar
“Climate Change Financing Needs and Opportunities”
Borobudur Hotel , Jakarta, February 19 , 2008
1.08
0.9
0.5
0
1982-1990
1990-1997
1997-2000
2000-2005
Calculated based on satellite imageries
5
CHALLENGES OF FOREST RESOURCES EXISITENCE
INDONESIA FOREST RESOURCE
a. Un-ballanced of
timber supply and
demand (Illegal
logging)
b. Forest encroachment
c. Forest fire
d. Forest Conversion :
Agriculture (food),
Agribusiness (food and
bio-fuel), Urban
development
57. 53 M ha
(47 %)
Sumber : Badan Planologi, Dephut (2006)
Unplanned
deforestation
CO2
emission
Planned
deforestation
2
6
EFFORTS TO MAINTAIN THE EXISTENCE
OF FOREST RESOURCES (SFM)
FOREST MANAGEMENT IN INDONESIA
 Based on :
UU No. 41/1999 : Forestry
UU No. 5/1990 : Conservation on Biodiversity
Good Practice
Silviculture (TPTI,
TJTI, mixed
Silviculture dll)
•Law Enforcement
 Accomodating Sustainable Foret Management
(SFM) and Sustainable Development
•Forest certification
•Social Forestry
(CBFM, Agroforestry,
PMDH dll.)
Less
Satisfying
result
Need to
be
supported
by other
incentive
scheme
FOREST
CARBON
SCHEME
(A/R CDM,
REDD etc).
3
FOREST AND FORESTRY ROLE IN INDONESIA
1. The existence is a life support system
2. Support community’s livelihood for ±10,2 million of
the poors
3. Source of wood and non wood products.
4. Carbon sink/sequestration as well as carbon
emitter:
• Carbon stock in forest carbon pools as much as ~
4500 Gt CO2 (> CO2 in atm.)
• If deforestation is part of 18 % global emission, it
could potentially be 18 % of solution  REDD
opportunity.
7
MITIGATION STRATEGIES TO REDUCE
NEGATIVE IMPACT FROM CC IN FORESTRY
SECTOR
1. Increasing forest capacity in carbon sequestrationAfforestation /Reforestation A/R CDM Kyoto Protocol(difficult to be implemented due to complexity
requirements)
2. Maintaining carbon stock: forest conservation (Voluntary
Market Scheme)
3. Carbon enhancement : Ecosystem restoration
(preliminary discussion in UNFCCC)
4. Emission Reduction from Deforestation and forest
Degradation (REDD): Sector priority
4
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
37
FIVE PRIORITIES POLICIES THAT SUPPORT
CC MITIGATION (2004-2009)
REDD
COP-13 Decision on REDD:
Bali Action Plan: Status of REDD as a national/ an
international issue need to be strengthened
•
1. Combating illegal logging
2. Forestry Sector Revitalization
3. Forest Rehabilitation and Forest Resources
Conservation
4. Empowering forest dependent community
5. Securing the State of Forestlands
• Policy approach and positive incentive for REDD :
 Demonstration activities (DA-REDD)
 Capacity building & technology transfer,
 Indicative guidance for demonstration activities.
• The Effectiveness of REDD is entirely depend on annex 1
countries’ commitment to agree on how deep the emission
will be reduced.
• It is expected that REDD will be adopted at COP 15 in
Copenhagen 2009 and operational post 2012
9
13
NON-CLIMATE POLICY INSTRUMEN
POLICY PRIORITIES
1. Combating Illegal Logging
and Illegal Trade
CONTRIBUTION ON CC
Emission Reduction (ER)
2. Forestry Sector Revitalization • ER
• Carbon Sink (CS)
3. Forest Rehabilitation and
Forest Resources
Conservation
• CS,
• ER
•carbon conservation
4. Empowering forest
dependent community
• ER
• CS
5. Securing the State
Forestlands
Enabling conditions
CHALLENGES AT NATIONAL LEVEL
•
•
•
•
•
FINANCING MITIGATION IN
FORESTRY SECTOR IN INDONESIA
Technological Aspects and Methodologies
Funding, need significant investment on forest
resources monitoring system,
Capacity building at all levels of government and
other stakeholders.
Gaps: stakeholders perception and awareness
toward REDD
Integrating into policy and programmes at
national and sub-national (province and district)
levels, as well as relevant sectors.
STAKEHOLDER COMMUNICATION
Through IFCA forum (Indonesia Forest Climate Alliance)
1. FOREST PLANTATION
2. REDD
IFCA Secretariat :
Ministry of Forestry
FORDA
15
INFRASTRUCTURE FOR REDD
FOREST PLANTATION
• Although it contributes to carbon sequestration,
for the time being, it can not be considered for A/R
CDM scheme (due to the complexity of eligibility),
• Need to re-negotiate for post 2012
implementation.
• Cost to develop 1 ha plantation: US $ 400 – 500
National approach,
Sub-national
implementation
Historical emissions
/future scenario
1
Reference
Emission Level
CO2
2
Strategi
$
3
4
Monitoring
5
Pasar/
dana
Distribusi
R ecommenda tion (IF CA 2007) :
R E DD S tra teg y on 5 la nds ca pes
: P roduction F ores t,
Cons erva tion F ores t, P la nta tion
F ores t, P ea t la nd, a nd Oil P a lm
P la nta tion (fores tla nd us e
cha ng es )
Developed from IFCA (2007)
38
Forest cover and Carbon
stock changes
Responsibilities
Competitiveness? and benefits ?
16
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
REDD FINANCING
A. Study from Hoare et al, 2008, for estimating Cost Readiness
REDD (R-REDD) :
1. Covering 25 countries that have significant tropical forest size
(Africa, America and Asia, including Indonesia),
2. Cost of R-REDD are divided into three big categories (and 18
cost activities) :
• Developing a strategy for REDD: the various drivers of
deforestation and forest degradation and identifying the
approaches to reduce them
• Establishment of a REDD infrastructure : baselines,
inventories, and monitoring.
• Implementation of the REDD strategy: related to the policy
improvements for implementing REDD
B. Indonesia will need at least US $ 45,05 million for 5 years
(from Grant)
FINANCIAL STRATEGY
• Government Budget (APBN): Developing
enabling conditions
• Grants
under discussion
• Badan Layanan Umum (BLU)
(to accommodate
• Trust Fund
benefits from forest
carbon trading)
Continued....
AVERAGE COST ESTIMATION FOR READINESS –REDD
(FOR 5 YEARS )
ACTIVITIES
LOWER
ESTIMATE (X
US $ 1000)
1
UPPER
ESTIMATE (X
INDONESIA
US $ 1000)
2
3
4
Development of REDD Strategy
200
1.000
1.000
Establishment of REDD Infrastructure
700
1.500
1.500
Stakeholder consultation
150
150
150
Demonstration Activities
Establishment of baseline, monitoring system
and inventory
250
500
2.500
1.000
7.000
7.000
Land Tenure reform
4.000
4.000
Land use planning & zoning
Dev’t of capacity to provide support service for
implementation activities e.g. RIL, agriculture
intensification
1.750
10.000
1.750
10.000
10.000
5.000
GRANT
Multilateral and Bilateral cooperation :
1. Indonesia – World Bank :
IFCA study for COP 13 preparation
2. Indonesia-Australia :
• Indonesia-Australia Forest Carbon Partnership
(Concept and Methodology REDD),
• Lead partner for Forest Resource Information System
(FRIS) and National Carbon Accounting System (NCAS)
3. Indonesia – Germany :
Developing DA- REDD in Kalimantan region
4. UN-REDD, EU, JICA, Korea (under discussion)
21
Continued ....
Cost estimation ...
2
3
4
Forest Policy and legislation reform
1
300
1.000
1.000
Tax reform
300
1.000
300
Standard and guidelines
Enforcement of planning & environmental
requirement & forest laws
50
1.000
500
500
2.000
2.000
Independent monitoring
1.000
1.000
1.000
NGO capacity building
100
1.000
100
Effective judicial review
Institutional reform, clarification of roles and
responsibilities, capacity building
500
5.000
500
600
14.000
10.000
Treasury reform
Establishment of ability to process and manage
payment to project beneficiaries
500
5.000
500
100
5.000
2.000
13.750
70.150
45.050
Total
TERIMA KASIH ...
Source : Hoare et.al, 2008 (Column 1,2 and 3); Column 4-adjustment based on Indonesian Condition)
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
39
Presentation 4: Nanang Rofandi Ahmad
Head of Indonesian Forestry Business Association

Optimalization of forest functions in term of social, economical and environmental
aspects in forestry businesses towards sustainability.

Sustainable forest management, SFM, deserves to have incentives, however, until
presently, there is no such scheme for this activity.

From a business perspective, it is desirable that sustainable forest management should
enter carbon markets.

Carbon markets represent additional funding sources for business to further invest in
measures to improve quality of forest management.

Opportunity cost of carbon finance projects should be in the range of 10-20 US$/ton.

A historical approach should be applied to estimate lost opportunity costs

But the size of these costs will vary substantially across sites owing to site specific issues
and problems.
40
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
Kegiatan Kelola Lingkungan Y ang S elama Ini
Dilaksanakan IU PHHK Hutan A lam:
Warming up S eminar :
C L IM A TE C HA N G E F IN A N C IN G N E E DS
A N D O PPO RTU N ITIE S
Perspektif Bisnis Sektor Kehutanan
•
•
•
Lanscaping
Penetapan Areal Plasma Nutfah
Tidak menebang kawasan sekitar mata air, sempadan sungai dan
kawasan sungai
Perlindungan di tempat-tempat yang mempunyai topografi curam
Melaksanakan tebang pilih dengan teknik Reduce/Low Impact Logging
Sarana dan prasarana penanggulangan kebakaran hutan
Penanaman kiri kanan jalan, bekas jalan sarad, bekas TPn dan TPK serta
tanah kosong
Penunjukkan Areal Tegakan Benih
Pemantauan dan pengukuran dampak penebangan terhadap tanah dan
air
Penerapan teknik budidaya intensif untuk menaikan produktivitas hutan,
penyerapan CO2 dan suplai kayu.
•
•
•
•
•
•
Asosiasi Pengusaha Hutan Indonesia
Hotel Borobudur, 19 Februari 2009
Peran Hutan Dalam Perubahan Iklim

LULUCF di negara berkembang yang sedang membangun
menyumbang 20 % emisi CO2 dan 80 % disumbang oleh
negara-negara maju (Annex 1)

Hutan adalah penyedia material, energi, dan jasa-jasa
lingkungan

A/R CDM di bawah Kyoto Protokol tidak memberikan
manfaat bagi sektor kehutanan karena baseline yang
digunakan tidak reasonable dan applicable.

Adanya Alternatif Financing Mechanism akan menjadi insentif
bagi usaha kehutananyang melaksanakan Pengelolaan Hutan
Lestari
•
Kegiatan Kelola Lingkungan Y ang S elama Ini
Dilaksanakan IU PHHK Hutan Tanaman:
• Pengaturan tata ruang hutan tanaman (landscaping) : 70%
untuk tanaman pokok, 10% tanaman unggulan, 5%
tanaman kehidupan, 10% areal perlindungan, 5% sarana
dan prasarana
• Penerapan teknik konservasi tanah dan air baik secara
teknis maupun vegetatif serta pengedalian hama dan
penyakit dan kebakaran hutan
• Penerapan teknik intensif untuk menaikan produktivitas
dan penyerapan CO2, serta suplai kayu
J enis U saha Pemanfaatan J asa Lingkungan
Pada Hutan Produksi
Jenis Izin Usaha Pemanfaatan Jasa Lingkungan
(Forest Environmental Services ) pada Hutan
Produksi :




Jasa pengaturan tata air
Jasa Perlindungan dan penyediaan keiandahan bentang
alam
Jasa perlindungan dan penyediaan keanekaragaman
hayati
Jasa penyerapan karbon (Carbon sequestration) dan
penyimpanan karbon (Carbon stock)
Kegiatan Pemberdayaan M asyarakat Y ang
Dilaksanakan IU PHHK
 Maksud pemberdayaan masyarakat di dalam dan di sekitar hutan
adalah untuk membangun keharmonisan dalam hidup
berdampingan, dan saling menguntungkan bagi kedua belah pihak.
 Pemberdayaan masyarakat yang dilakukan perusahaan mengacu
pada program Community Development yang meliputi a.l:
Pengelolaan hutan lestari dapat dikategorisasikan
sebagai avoiding deforestation and forest
degradation & reducing emmision

Kajian oleh Fakultas Kehutanan IPB, ternyata
menghasilkan additionality

SFM telah menginternalisasikan 2 (dua) aspek
eksternalitas yaitu kelola lingkungan dan kelola
sosial
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
Pemberdayaan dalam rangka mendukung kegiatan sosial budaya
masyarakat
•
Pemberdayaan dalam rangka berkontribusi menyediakan
infrastruktur dan fasilitas umum
•
Pemberdayaan dalam upaya meningkatkan ekonomi masyarakat
menuju kemandirian
•
Kemitraan masyarakat-bisnis
PRIN S IP - PRIN S IP Y A N G M E N J A DI PE G A N G A N DA L A M
PE M BA Y A R A N J A S A L IN G KU N G A N (PA Y M E N T F O R
E N V IRO N M E N T S E RV IC E S /PE S )
Pengelolaan Hutan S ecara L estari
(S F M )

•

Prinsip Polluter Pays : dalam prinsip ini siapa yang membuat polusi
diwajibkan untuk membayar kompensasi yang hasilnya akan dipergunakan
untuk menunjang pembangunan yang berwawasan lingkungan. Kewajiban
tersebut tidak menghilangkan kewajiban industri untuk membatasi limbah.

Prinsip Service Againt Money (beneficiaries pay) :
penerima jasa harus membayar kepada pemberi jasa.

Government pay

Prinsip Negosiasi (voluntary) : pembayaran harus bersifat sukarela yang
didorong oleh keinginan yang kuat (willingness to pay and or to sale).

Prinsip to cover the opportunity cost/loss.

Prinsip internalisasi eksternalitas

Pembayaran jasa lingkungan disesuaikan dengan peraturan perundangan
yang berlaku (pajak jasa atau provisi)

Pembayaran jasa lingkungan bukan tiket pihak pembayar untuk mencemari
lingkungan.
dalam hal ini
41
C ontoh di C osta Rica
J asa L ingkungan Terkait Karbon
 Saat ini jasa lingkungan hutan terkait karbon,
khususnya Rosot Karbon sedang menjadi isu yang
panas.
Dunia
sedang
didorong
untuk
mereorientasikan rencana pembangunannya kearah
low carbon growth, disertai inovasi mekanisme
pendanaan yang kondusif.
 Produsen Jasa : Pemilik dan atau pengelola hutan
 Konsumen/penerima Jasa adalah : Negara industri
Annex I, Industri terkait bahan bakar fosil,
transportasi penggunaan bahan bakar fosil.
Pernyataan Prince W ales Pengeran C harles
(Kompas, 4 N ov ember 2008) dalam kunjungan kerja
ke Indonesia (Pidato Kepresidenan)
”Pembayaran ini harus bersifat transaksi komersial,
seperti kita membayar layanan listrik, air dan gas.
Pembayaran itu tidak boleh bersifat bantuan. Sebagai
imbangannya negara-negara berhutan tropis akan
menyediakan layanan lingkungan (ecoservices)”.
Sebuah pernyataan yang menunjukkan
komitmen tinggi disertai pemahaman yang
baik tentang PJL.

Trust fund terbesar bersumber dari dana yang disisihkan dari anggaran
belanja Negara terbesar dari pajak BBM Fosil, dikelola oleh sebuah
lembaga keuangan alternatif yang khusus dibangun oleh Pemerintah, akan
tetapi dikelola secara swasta.

Sumber dana berasal dari tiga generasi yaitu : (a) Pajak atas penjualan hasil
kayu dari hutan sebesar 10%, (b) Penyisihan sebagian dari Pajak bahan
bakar fosil, (c) Dari pembayaran jasa lingkungan.

Dalam hal ini peran lembaga keuangan alternatif sangat besar terutama
dalam menjembatani antara pihak-pihak produsen jasa lingkungan dengan
pengguna jasa lingkungan, baik ditingkat lokal, nasional, maupun global.

PJL 70-87,5% diberikan kepada pengelola dan pemilik lahan/hutan sebagai
penghasil/pemberi jasa dan hanya 12,5-30% dipergunakan untuk
membiayai jasa pendamping.

PJL bukan obyek pajak
Harapan Bisnis U saha Kehutanan
1. Pengelolaan Hutan Lestari pada Hutan Alam dan Hutan
Tanaman layak/dapat diterima untuk memasuki pasar
karbon.
2. Bisnis Kehutanan mendapat tambahan sumber dana
untuk meningkatkan kualitas manajemen hutannya.
3. Untuk mengcover opportunity cost : 10-20 USD/Ton
4. Penggantian opportunity lost : menggunakan
pendekatan historis
5. Besaran akan bervariasi sesuai dengan site spesifik
6. Transaksi PJL dalam kawasan hutan yang dikelola bisnis
bukan penerimaan Negara
M ekanisme Pembayaran J asa Lingkungan (PJ L)

Langsung antara pengguna jasa kepada produsen
jasa.

Melalui fasilitas Pemerintah dan atau LSM.

Melalui mekanisme yang komplek yang melibatkan
lembaga keuangan alternatif.

Transaksi perdagangan jasa lingkungan tidak
terbatas secara lokal, akan tetapi juga secara
nasional dan global.
Terima kasih
Dis tribus i Pembayaran J as a Lingkungan
(Karbon)


Apabila JLH datang dari Kawasan Hutan Negara yang dikelola pihak ketiga
sebagai investor, serta adanya kewajiban investor untuk bekerjasama dengan
masyarakat setempat (didalam dan sekitar hutan) maka PJL (gross) perlu
didistribusikan secara adil dan proporsional, yaitu :
-
minimal 70% untuk kompensasi pengelola sebagai penghasil/pemberi jasa
-
maksimal 20% untuk membiayai kelola sosial masyarakat
-
maksimal 10% untuk pungutan Pemerintah.
Pungutan Pemerintah sebesar 10%, disebabkan :
- Di luar itu Pemerintah masih memungut pajak, PNBP dan pungutan lain
dari kegiatan usaha kehutanan (Dana Reboisasi, PSDH, license fee, PBB,
PPh Badan/Perorangan
-
Provisi seperti PSDH (10% sebagai PNBP)
-
Kalau landasan pungutan Pemerintah adalah pajak, maka besaran pajak
jasa PPh pasal 23 (UU No. 38/2008) besarnya 2%
42
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
Discussion of the presentations:
Discussant 1
Daniel Murdiyarso, CIFOR

General comment: this seminar is interesting where usually the forestry or energy issues
are only discussed among those that have concerns in these sectors, however, today the
discussions from different angle namely financing to implement the mitigations of
climate change impacts.

The adaptation should also cover the actions to change behavior to mitigate climate
change impacts. Generally, adaptation issues are not treated as equally important as
mitigation issues. But ultimately adaptation is about development issues.

Mitigation: all direct efforts to reduce the green house gasses emission by attacking its
sources to have better view of both sources and impacts.

It is important to mainstream climate change adaptation, for instance to increase the
level of sea wall.

Specific comment: LULUCF is one sector in adaptation and mitigation that sometimes
mixed with national development.

There is a need to talk about REDD with all relevant stakeholders, not only
governments and private sectors without the representative from civil society.

What and when the policy clarity regarding REDD, as so many parties are waiting this
matter.

How is the structure of carbon central bank, NCAS?

There is a misleading regarding oxygen in the atmosphere, where some people think that
Indonesia should get compensation for producing oxygen from the forest. This issue is
not for discussion in term of supply and demand, as oxygen is abundant. More or less
80% of the earth atmosphere is oxygen. This is different with carbon in the atmosphere
that about 550-700 billion tones, where there is change will affect its stability. The world
will not be disrupted due to the oxygen from the forest.
Questions:
Arfan Kalo Johan, Lecturer Fiscal Balance, Ministry of Finance
 Is the forest as state asses as in Japan? How the nation’s view and paradigm to the
forest?

Carbon trading issue is a philanthropy. For example: a company in Lampung already
implements Kyoto Protocol that utilizes the wastes from cassava processing for energy
generation.

We should have a comprehensive national law on State’s wealth and financial assets that
includes forestry sector assets.
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
43
Isa Siahaan, Ministry of Finance
 There are some speakers that did not cover the financing needs and opportunities issues.

What are the link between carbon credit and stock market?
Purwoko, Ministry of Finance
 There are some demonstration act already implemented in the regional level, however,
there are still some confusion as no clear regulation from the Ministry of Forestry, such
as the revenue sharing from REDD. It is necessary to have it soon, to anticipate the fund
availability without clear mechanism.

The preparation is 5 years, when is the beginning date?

Needs to establish REDD regulation soon.

The revenue sharing would be 70% - 20% - 10%, as example from syaria economy. This
is the government important home work that needs to be done soon.
Presenters’ responses:
Wandojo
 The graph shown is the total figure of deforestation and degradation.

REDD: the regulation is under preparation as it is the Ministry of Forestry domain,
probably in the Ministerial decree form that applies for all.

NCAS: the National Council for Climate Change should coordinate this matter. The
fiscal policy in term of provision or tax will be discussed in later stage.

Production forest is managed by private sector, so as its carbon. The carbon of
conservation forest should be state asset.

Permits: is under the Ministry of Forestry authority, the proposal is from the district
government for protection forest. Then the local government forms management unit or
business entity.

There is still no clear category as tax revenue or non tax revenue.

The time period is 2008 to 2012.

Revenue sharing: where there is a state asset under management, there should be
revenue, while the sharing scheme is regulated under consultation with Ministry of
Finance.
Nanang
 APHI already change its behavior, from timber management to forest based
management.

44
Profitability – there is balance. Prosper ability – social aspect. Sustainability – forest
ecosystem management.
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities

There is a need to have 7 enabling conditions that build by the government, financing is
one of them.

There is no exact time frame of carbon payment; therefore, it is important to optimal
local and national sources of fund.

State forest is state asset, and forest plantation is the private sector asset.

The environmental services tax is presumably 2% as other services tax.

There is a need to have financing mechanism to internalize two externalities as the
compensation of management improvements, namely social and environmental.

There are some carbon cowboys did the demonstration to local governments, however,
no results so far.

The key question is whether carbon in forests constitutes national assets?
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
45
Session 3
Moderator: Noeroso L. Wahyudi
Presentation 5: I Made Ro Sakya
Deputy Director Technology, Perusahaan Listrik Negara

The presentation highlighted Indonesia’s need to increase geothermal energy
development.

Electricity generation capacity needed will be 57,442 MW, which consists of 35,274 MW
owned by PLN and 22,168 MW produced by independent power producers (IPPs).

Geothermal additional capacity will be 5006 MW, which comprises of 1015 MW owned
by PLN and 3991 MW produced by IPPs.
46
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
GEOTHERMAL DEVELOPMENT PLAN in INDONESIA
Presented by :
I MADE RO SAKYA
Deputy Director of Technology
Seminar of
Climate Change Financing Needs and Opportunities
February 19, 2008
Sahabat setia untuk kemajuan
Fuel Mix & Fuel Cost PLN
100%
General Condition
90%
21%
22%
11%
12%
3%
3%
70%
FUEL MIX
Generation installed capacity : 29.705 MW (PLN&IPP)
Electrification Ratio 64 %
Average energy sales growth : 6.8 % (yr 20022002-2007)
Basic Electricity Tariff (regulated by Govt.) hasn’
hasn’t been increased
since Q3Q3-2003.
Input cost, especially fuel cost, increases following global market
market
High dependency on oil power plants
Because of the economic crisis in ‘9797-’98, PLN lost the investment
momentum to expand it’
it’s capacity, so that decreasing the
affordability of PLN in responding to the increase of energy need
need in
Indonesia.
Electricity crisis in some area.
•
30%
27%
8%
6%
6%
5%
9%
5%
9%
3%
26%
18%
19%
19%
14%
38%
41%
40%
40%
41%
2003
2004
2006
2007
33%
50%
30%
29%
35%
34%
26%
40%
30%
20%
33%
10%
0%
2000
2001
Coal
2002
Gas
Geothermal
2005
Hydro
Oil
100%
90%
25%
80%
FUEL COST
•
•
•
27%
8%
4%
10%
4%
60%
•
•
•
•
24%
27%
80%
70%
31%
52%
6%
60%
6%
65%
74%
60%
73%
78%
50%
49%
40%
5%
42%
4%
5%
26%
30%
19%
10%
20%
20%
17%
2001
2002
4%
4%
10%
10%
2%
6%
15%
12%
13%
14%
2004
2005
2006
2007
15%
20%
17%
0%
2000
Coal
2003
Gas
5
Oil setia untuk kemajuan
Sahabat
Geothermal
Sahabat setia untuk kemajuan
PLN Operation Figure on
Sale; Production Cost and Fuel Cost
Generation And Transmission (2007)
THAILAND
LAOS
Manila
Bangkok
CAMBODIA
Phnom
Penh
South
VIETNAM
China
Ho Chi
Minh City
Sea
Erawan
Khanon
Songkhla
1000
West
Natuna
WEST Kerteh Duyong
Mogpu
MALAYSI
A
Port Klang
800
934.45
919.70
628.14
629.20
Pacific Ocean
601.06
617.83
Manado
Kuchin
Kalimantan
:
g
• Gen : 1.000 MW
• 150 kV: 1.264
kms
KALIMANTAN
• 70 kV: 123 kms
S
U
M
A
T
R
A
Jambi
Ternate
Sulawesi :
• Gen : 1.130 MW
• 150 kV: 1.769 kms
• Ujung
70 kV: 962 kms
Banjarmasin
Palembang
0
131.07
2000
SERAM
590.91
629.50
563.02
540.74
2006
2007
349.01
279.67
Jayapur
a
Papua :
• Gen : 170 MW
IRIAN JAYA
BURU
581.76
448.03
334.55
200
Maluku :
• Gen : 197 MW
550.74
377.89
HALMAHERA
Sorong
Attaka
Tunu
Bekapai
Balikpapan
SULAWESI
Grissik
343.79
Bontang
Samarinda
596.53
600
400
899.15
710.29
Bintul
SINGAPORE
Duri
Padang
Bandara Seri
Begawan
EASTu
MALAYSIA
Batam Bintan
Sumatera :
• Gen : 4.634 MW
• 150 kV: 8.521 kms
• 70 kV: 310 kms
BRUNEI
Alpha
Natuna
Kuala
Lumpur
Port
Dickson
Dumai
Rp/KWh
Kota
Kinibalu
Guntong
Medan
Production Cost
Fuel cost
Jerneh
Penang
Lhokseumawe
1,318.47
Sales
1200
Bangkot
Lawit
Banda Aceh
1400
TOTAL
• Install Cap : 29.705 MW
• Trans Lines :
- 500 KV : 4.983 kms
- 150 KV : 23.106 kms
- 70 KV : 5.052 kms
Philipines
Ban
Mabtapud
165.73
2001
206.19
2002
237.48
244.67
2003
2004
2005
2008 (Est)
Pandang
Jakarta
Semarang
JAVA
I NPagerungan
D O N E S I A
Bangkalan
6
MADURA
Surabaya
Jamali :
• Gen : 22.302 MW
• 500 kV: 4.983
kmsOcean
Indian
• 150 kV: 11.552 kms
• 70 kV: 3.657 kms
BALI
Merauke
SUMBAWA
Sahabat setia untuk kemajuan
FLORES
Nusa Tenggara:
• Gen : 273 MW
LOMBOK
TIMOR
SUMBA
AUSTRALIA
Sahabat setia untuk kemajuan
CURRE NT STATUS O F PO W E R
G E N E R A T IO N IN IN D O N E S IA (2 007 )
Gas Turbine
6%
OUTSIDE OF Jamali (5,573 MW)
Diesel
12%
Diesel
44%
Hydro
15%
Hydro
13%
2. Development Plan of Geothermal in
Combine Cycle
Gas
16%
CCPP Nat Gas
20%
Geothermal
2%
Indonesia
SPP Fuel Oil
6%
Gas Turbine
11%
Geothermal
2%
Geothermal
0%
Gas Turbine
4%
Diesel
1%
SPP Coal
10%
Hydro
16%
SPP Coal
27%
SPP Coal
23%
SPP Fuel Oil
5%
SPP Nat Gas
4%
CCPP Nat Gas
21%
CCPP Fuel Oil
13%
Indonesia (25,222 MW)
SPP Fuel Oil
SPP Nat Gas
5%
6%
Sourcee: PLN (2008)
CCPP Fuel Oil
18%
7
Jamali (19,649 MW)
4
4
Sahabat setia untuk kemajuan
4
Sahabat setia untuk kemajuan
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
47
Crash Program - Phase II
INDONESIA ENERGY MIX TARGETTARGET- 2025
SUMATERA
•
•
•
•
Oil, 20.0%
PLTA : 174 MW
PLTP : 2285 MW
PLTU : 1100 MW
PLTGU : 120 MW
KALIMANTAN
SULAWESI
• PLTU : 840 MW
• PLTGU : 120 MW
Biofuel, 5.0%
• PLTP : 195 MW
• PLTU : 418 MW
Geothermal, 5.0%
Liquefied Coal, 2.0%
Hydro Power, 3.5%
Natural Gas, 30.0%
Other, 5.0%
Solar Cell, 0.1%
Wind Energy, 0.1%
Nuclear, 1.3%
MALUKU
NTT
• PLTP : 46 MW
• PLTU : 30 MW
•
•
•
•
Source : PERPRES No. 5 - 2006
PLTP : 2.137 MW
PLTU :
0 MW
PLTGU : 1.200 MW
PLTA : 1.000 MW
• PLTU : 114 MW
TOTAL
JAMALI
Coal, 33.0%
PAPUA
• PLTP : 40 MW
• PLTU : 44 MW
• PLTA
• PLTP
• PLTU
• PLTGU
TOTAL
NTB
• PLTP :30 MW
• PLTU :70 MW
8
Sahabat setia untuk kemajuan
:
:
:
:
:
1174
4733
2616
1440
9963
MW
MW
MW
MW
MW
Sahabat setia untuk kemajuan
PLN INVESTMENT REQUIREMENT
INDONESIA 2008-2018
POWER DEVELOPMENT PLAN 2008 - 2018
8000
1.
Average electricity demand growth is estimated 9.7%/year.
2.
Based on asumption of GDP 6.2%/year, with elasticity = 1.56.
Electricity demand will be 325 Twh in year 2018.
Electricity Rastio will be 95.5% at the end of 2018.
Juta USD
3.
6000
Additional generation capacity will be 57,442 MW, which comprise
of 35,274 MW PLN owned, and 22,168 MW IPP.
4.
Penyaluran
Pembangkit
2000
Total Investment needed for the development : USD 55.63 miliar;
Generation = USD 37.56 miliar; Transmission
= USD
9.52
miliar ; Distribution = USD 8.55 miliar.
4.
Distribusi
4000
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Tahun
Geothermal additional capacity will be 5006 MW, which
comprise of 1015 MW PLN owned, and 3991 MW IPP.
Total = USD 58.49 miliar
 Generation
= USD 31.67 miliar
 Transmission
= USD 14.44 miliar
 Distribution
= USD 12.38 miliar
9
12
Sahabat setia untuk kemajuan
Additional Generation Capacity
2008 - 2018
2008
2009
115
40
170
325
2,020
1,000
40
48
9
3,117
50
60
110
-
165
60
40
170
435
2010
2011
2012
2013
2014
POWER INVESTMENT REQUIREMENT
INDONESIA 2008-2018 ( PLN & IPP )
2015
6,293
28
918
439
60
2
7,740
1,544
228
236
5
20
29
10
2,071
1,671
367
1,050
100
10
8
280
3,486
2,548
231
15
8
13
11
2,825
356
155
7
9
1,026
1,552
1,000
750
1,400
11
128
3,289
120
230
350
306
220
208
3
18
180
934
2,896
60
92
145
3,192
3,069
390
13
3,472
1,358
685
45
2,088
2,760
685
45
3,490
2,020
120
1,000
270
48
9
3,467
6,599
28
1,138
647
63
20
180
8,674
4,440
288
236
5
20
121
155
5,264
4,740
757
1,050
100
10
20
280
6,957
3,906
916
15
8
13
56
4,913
3,116
840
7
9
1,071
5,042
2016
2017
6
-
-
2018
2,250
245
3
0
459
2,963
6
750
1,520
3
1
922
3,202
2,200
1,500
5
1,000
4,705
1,340
95
1,435
2,228
250
3
380
2,861
2,068
701
110
2,879
413
945
1,358
2,340
95
750
1,400
11
128
4,724
2,234
250
2,250
245
6
0
839
5,824
2,068
707
750
1,520
3
1
1,032
6,080
2,613
945
1,500
5
1,000
6,063
Total
12000
17,753
1,015
8,494
3,934
173
70
3,835
35,274
16,487
3,991
220
438
6
122
905
22,168
34,240
5,006
8,714
4,372
179
192
4,740
57,442
10000
8000
Juta USD
Tahun
PLN
PLTU
PLTN
PLTP
PLTGU
PLTG
PLTD
PLTM
PLTA
Total
IPP
PLTU
PLTN
PLTP
PLTGU
PLTG
PLTD
PLTM
PLTA
Total
PLN+IPP
PLTU
PLTN
PLTP
PLTGU
PLTG
PLTD
PLTM
PLTA
Total
Sahabat setia untuk kemajuan
Distribusi
6000
Penyaluran
Pembangkit
4000
2000
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Tahun
Total = USD 83.69 billion
 Generation
= USD 56.57 billion
 Trasnmission
= USD 14.10 billion
 Distribution
= USD 12.38 billion
10
13
Sahabat setia untuk kemajuan
Projection Fuel Mix PLN
Sahabat setia untuk kemajuan
Accelerated Power Project – Phase II
2009 -2018
WILAYAH
• Renewable Energy have Competitive Advantage in the Future
• Geothermal Energy will be increased in the Future
2%
100%
90%
5%
19%
7%
5%
80%
7%
70%
5%
60%
21%
21%
1%
1%
1%
JAWA
1%
1%
1%
6%
6%
6%
7%
7%
6%
6%
8%
9%
11%
11%
10%
11%
12%
19%
19%
18%
17%
18%
17%
17%
65%
64%
64%
65%
64%
64%
63%
2014
2015
2017
2018
7%
50%
40%
62%
30%
66%
PLTGU
(MW)
-
PLTP
(MW)
1,200
2,137
PLTA
(MW)
Total
(MW)
1,000
4.337
2%
19%
7%
PLTU
(MW)
48%
20%
LUAR JAWA
2,616
240
2.596
174
5.626
TOTAL
2,616
(26%)
1.440
(14%)
4.733
(48%)
1.174
(12%)
9.963
(100%)
•
•
•
Priority on Renewable Energy .
Geothermal : 48%; Hydro : 12 %
Investment Requirement for Geothermal : 11,112 million USD which
comprise of PLN 917 million USD , IPP : 10,195 million USD
10%
0%
2009
2010
2011
2012
COAL
Source: Draft RUPTL 20092018
48
2013
GAS
GEOTHERMAL
2016
HYDRO
OIL
11
Sahabat setia untuk kemajuan
Sahabat setia untuk kemajuan
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
“USULAN” PROSES PENGEMBANGAN GEOTHERMAL
DI INDONESIA
Indonesia’s Geothermal Status January 2009
Ready for Exploitation
SEULAWAH AGAM
160 MW
SIBAYAK
12 MW
SARULA
330 MW
Production Stage
Planned to be Tendered
Capacity is initial indication
JAILOLO
75 MW
LUMUTBALAI
LUMUT
BALAI
(UNOCAL)
110 MW
DIENG
60 MW
KARAHA
400 MW
LAHENDONG I, II,III
60 MW
KAMOJANG
150 MW
TAMPOMAS
50 MW
UNGARAN
50 MW
ULUBELU
110 MW
BEDUGUL
175 MW
Evaluasi Lelang WKP
Survei
- Administratif
Pendahuluan
- Teknik / Rencana
- Financial
Explorasi 2 tahun - Pricing
NGEBEL
120 MW
CISOLOK
45 MW
SALAK
375 MW
PATUHA
400 MW
WAY. WINDU I
110 MW
DARAJAT
255 MW
WAY. WINDU II
110 MW
Tangkuban
Perahu
55 MW
MATALOKO
2.5 MW
Total Installed Capacity January 2009 : 1072 MW
Sahabat setia untuk kemajuan
15
Domain DIRJEN LPE & PLN
Domain DIRJEN MINERBA PABUM
ULUMBU
10 MW
NORC
21
Penetapan
WKP
Exploitasi
Power Plant
Construction
NOID
COD
2 tahun
PPA
Lelang WKP
1. Harga mengacu kepada Harga Patokan
tertinggi PLTP
3. Lokasi PLTP telah masuk dalam RUPTL
4. Negosiasi ESC/PPA (Pemegang WKP dng PLN)
FS
1 tahun
Note : NORC (Notice of Resource Confirmation)
NOID (Notice of Intention to Develop)
Sahabat setia untuk kemajuan
Geothermal Project Risk Distribution
COD OF GEOTHERMAL PP
Government
AREA
TAHUN (MW)
TOTAL
2009
2010
2011
2012
2013
2014
JAWA BALI
2137
117
5
-
330
445
1240
OUTER JAWA BALI
2596
-
65
158
698
295
1380
INDONESIA
4733
117
70
158
1028
740
2620
PROJECT
Developer
LENDER
OFF TAKER
(PLN)
Sahabat setia untuk kemajuan
17
Sahabat setia untuk kemajuan
22
DISTRIBUTION OF GEOTHERMAL
IN INDONESIA
MAJOR OF RISK COMPONENT
INVESTOR
Maluku
at
m
Su
Sulawesi
a
er
Kalimantan
Irian Jaya
Jawa
Bali
GOVERNMENT
LENDER
- Pricing Energy
- Regulation
- Pricing Energy
- Drilling Success Ratio
- AF Power Plant
- Pricing Energy
- Capital Cost
- Well Capacity
- CF Power Plant
- Investment Security
- Energy Production
- Well Decline
- System Capacity
- Force majeure
- off taker Capability
- Steam Quality
- Financing
- COD
- Gov. Guarantee
- AF Power Plant
- Quality Supply
- Environmental
- CF Power Plant
- Force Majeure
- Equipment Quality
- Capital Cost
- Fluctuation USD
Exchange Rate
- Force Majeure
- Financing
- COD
- COD
Alor
Flores
Timor
Total Location : 256 Schemes
Total Potential : 27 GWe
OFF TAKER
- Reservoir Capacity
- Pricing Energy
Non Volcanic
- Force Majeure
Location : 53 Schemes
Potential :1. 15 GWe
Sahabat setia untuk kemajuan
- COD
Sahabat setia untuk kemajuan
23
3. Geothermal Development
Procedure in Indonesia
Terima Kasih
19
Sahabat setia untuk kemajuan
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
24
Sahabat setia untuk kemajuan
49
Presentation 6: Surya Dharma
Head of Indonesian Geothermal Association

Geothermal is associated as volcano.

There are numbers of location in Indonesia that have geothermal potency, but overlap
with forest areas, especially protection forests.

It needs 5-7 years to construct one geothermal facility.

The development of geothermal is very slow, in 1973 installed 200 MW and until 2004
only reached 300 MW.
50
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
Installed Capacity 2004
GEOTHERMAL
GEOTHERMAL ::
THE
THE PRIORITY
PRIORITY ENERGY
ENERGY TO
TO DEVELOP
DEVELOP IN
IN
INDONESIA
INDONESIA
By:
Dr. Surya Darma, MBA.
President of Indonesia Geothermal Association
WARMING UP SEMINAR SIDANG TAHUNAN ADB - DEPKEU
HOTEL BOROBUDUR – JAKARTA, 19 FEBRUARI 2009
Total : 807 MW ~ 35.000 BOEPD,
( 4 % Total Resources)
Comprehensive Geothermal Network 2008
Outline
Geothermal
Geothermal operations
operations in
in 15
15 regions
regions in
in Indonesia
Indonesia by
by PGE
PGE && its
its partners
partners
N
THAILAND
Sibayak
Sibayak
12MW
MW
12
Reserves : 13,070 MWe
Resources : 14,070 MWe
Sumatera
Sumatera
Res
Reserves
erves :: 5,837
5,837 MW
MWee
Res
Resources
ources :: 7,983
7,983 MW
MWee
Sulawes
Sulawesii
Res
Reserves
erves :: 896
896 MW
MWee
Res
Resources
ources :: 1050
1050 MW
MWee
Medan
Manado
Tanjung Karang
Semarang
Bandung
Others
Others
Res
Reserves
erves :: 1,707MW
1,707MWee
Res
Resources
ources :: 2,059
2,059 MW
MWee
JJ awa
awa –– Bali
Bali
Res
Reserves
erves :: 5,526
5,526 MW
MWee
Res
Resources
ources :: 4,179
4,179 MW
MWee
500 Km
Sibayak
Sarulla
Sarulla
2 MW
BRUNEI
Medan
40MW
MW
40
Ulubelu
Ulubelu
1,565 MWe
SINGAPORE
Tanjung Karang
Bandung
Semarang
JAVA
Patuha
Patuha
Joint Operating Contract
Kotamobago
Kotamobago
KALIMANTAN
Salak
Salak
377MW
MW
377
Own Operations
Joint Venture
Manado
9,562 MWe
Hululais
Hululais
Lumut
Lumut
Balai
Balai
Lahendong
Lahendong
MALAYSIA
Darajat
Darajat
255MW
MW
255
INDONESIA GEOTHERMAL RESOURCES
(Ministry of Energy and Mineral Resources-2004)
PHILIPPINES
CAMBODIA
SU
MA
TE
RA
Overview on geothermal Resources
Overview on geothermal installed capacity
Overview on energy crisis & demand
Geothermal development : barriers to
entry & its opportunities
Conclusion
SULAWESI
MALUKU
IRIAN
JAYA
Dieng60
60
Dieng
MW
350
MWe
MW
2,850 MWe
PAPUA
NEW GUINEA
BALI
Kamojan
5,331 MWe
Kamojang200
200
Kamojang
MW
MW
Karaha
Karaha
Wy.
Wy.
Bodas
Bodas
Windu
Windu
110MW
MW
110
Bedugul
Bedugul
TIMOR
NUSATENGGARA
Total Install Capacity : 1052 MW ( 4 % )
Development Challenges
Electricity demand increase rapidly
from year to year
Government fund is limited
Private Power Producers seems
the future answer
The Energy Law No.30 Year 2007;
Government Regulation No. 3 Year
2005:
renewable
energy
is
prioritized
Growth Determination
WORLD GEOTHERMAL POTENTIAL
EUROPE
YR 1997 2002 2007
MW 871 1058 1208
NORTH AMERICA
YR 1997 2002 2007
MW 2940 2629 2535
ASIA
YR
MW
1997
2849
2002 2007
3977 5327
INDONESIA
WORLD
AFRICA
YR
MW
1997
46
2002 2007
46
46
YR
1997
2002
2007
MW
8,055
9,802
12,093
AUSTRALIA / NZ
Prospects
Developed Fields
YR
MW
1997 2002 2007
358
519 699
LATIN AMERICA
YR 1997 2002 2007
1573 2278
MW 991
Development to 4700 MW Plan as part of
10,000MW electricity accelerating project.
 Existing
project should confirm and
establish without
changing
contract
substance
 Clear guidelines need.
Development toward 2025.
 Need
the
proper
and
integrated
information system of national geothermal
plan.
Map of the world showing installed and forecasted geothermal capacity in 1997, in 2002 and
2007. In 2007, because of its large resource base, Indonesia could have approximately 20%
of the world’s installed capacity
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
51
Road Map of
Geothermal Development of 27 GW
“NEP - Energy-Mix
Policy”:
5% are Renewable
Energy
Increasing Installed capacity to 9500 MW
from 2004 - 2025
2004
2008
2012
2016
2020
807 MW
(install
capacity)
2000 MW
3442 MW
4600 MW
6000 MW
(target)
1193 MW
(Existing
fields)
1442 MW
(Existing
fields)
1158 MW
(Existing + New
fields)
THE OPPORTUNITIES TO
DEVELOP: RECENT STATUS
1400 MW
(New Fields)
Resources potential= 27.000 MW
Installed capacity = 1199 MW
2025
9500 MW
(target)
3500 MW
(New Fields)
Recent Status:
18 existing areas developed: 15 operated by Pertamina, 1 by private
company, 1 Cooperative body and 1 by PLN (Ready to develop >2000 MW
within 4 years)
NEW AREAS:


3 Areas have been offered through bidding procedure
12 New Areas with 1,050 MW total capacity are waiting for bidding
process (Ref. PP59/2007),
CER REVENUE:

Long Term Development of 21 GW and non volcanic:
2004
2012
2020

1 Project has fully success through Emission Reduction Purchase
Agreement with the amount of USD127 Millions until 2012
3 Others projects are under assessed for CER with the amount of USD30
millions until 2012.
Geothermal Road-map
(MEMR, 2006)
National Energy Policy
The vision of the policy is guaranteeing
the sustainable energy supply to support
national interest .
The missions are:



(1) guaranteeing domestic energy supply;
(2) improving the added value of energy sources;
(3) managing energy ethically and sustainable
way and considering preservation of environment
function;
(4) providing affordable energy for the poor; and
(5) developing national capability.
National Energy Policy
The targets of NEP are:
(1) improving the role of energy business;
(2) achieving electrification ratio of 90% by
the year 2020;
(3) reaching renewable energy shares in
energy mix at least 5% by 2025;
(4) realizing energy infrastructure,;
(5) increasing strategic partnership;
(6) decreasing energy intensity by 1% per
year; and
(7) increasing the local contents
WHY GEOTHERMAL :
THE ENERGY PRIORITY TO
DEVELOP?
Environment friendly
The best liabilities power plant
Energy Sustainability
To increase the local economy
Close mining
Mutual support with forestry policy
Lower Carbon Emission
CDM Project
To reduce global warming
Stable Price
52
GEOTHERMAL ACTIVITIES
BASE
2003
18 EXISITNG
AREAS, Based on
Presidential Decree
No.22/1981; PD
45/1991; PD
49/1991
NEW WORKING
AREAS, Base on
Geothermal Law
No.27/2003 &
PP 59/2007
Fiscal insentif
based on
government policy;
pricing policy &
tariff
INDONSIAN EXPERIENCE
Regulation tend to change
Technonology has been adopted
Time frame achievement tend to be
neglected
Limited Domestic funding
Bankability of Single Buyer?
Energy price is in-compete
The Opportunities to
Develop
Regulation:
 Geothermal Law No.27/2003
 Energy Law No.30/2007
 Govt Regulation No.3/2005 and PR No.5/2006






Priority to develop the local primary energy
Direct Negotiation of RE
Energy price should economically viable
GR No.59/2007 (Geothermal Business activities)
GR No.1/2007 investment incentives
Ministry of Finance Reg 177/2007 & 178/2007
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
The Opportunities to
Develop
Pricing Policy:




The energy price should have an economically return
The economic viable of geothermal are varies at price of
7 -9.5 cent/kWH
Geothermal energy price is now base on Min. Energy
Decree No.14 Year 2008)
GOI re-evaluate the tariff in order to attract the
investment
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
The Opportunities to
Develop
Fiscal:

Fiscal facilities should be consistence with pricing policy
Research & Development & HRD


Need some R&D for accelerating development of
geothermal
Human Resources is limited
53
Comments from the audience:

Investors need certainty of the rules of the game before committing to geothermal
development

The government needs to facilitate the regulatory framework between PLN and the
private sector

Since 20 years there is no clear regulatory framework behind pricing policies.
Ir. Nanang Ahmad, APHI

There is a demand pressure on PLN to decrease fossil fuel use in electricity production

The forestry sector sees a huge opportunity to develop bio-fuel

But forestry businesses need good pricing policy to develop biofuels.
54
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
Session 4
Presentation 7: Jos Luhukay
CEO, Bank Danamon

The presentation focused on Bank Danamon’s engagement in CDM finance projects to
date.

Projects can be found in a variety of industries, with the biggest ones in mining, oil and
gas and metal industries.

Bank Danamon is providing trade and structure financing facilities for CDM related
projects and facilities

CDM facilities are also targeted at SMEs

Benefits have to be seen as long-term. CERs generate future revenues, but there will be
gains in energy efficiency.
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
55
CDM Financing
(CLEAN DEVELOPMENT MECHANISM FINANCING)
Type of Industries Bank Danamon see as an opportunity in CDM financing
CDM Financing
(CLEAN DEVELOPMENT MECHANISM FINANCING)
Jakarta, 19 February 2009
•
Energy Industries
•
Energy Distribution
•
Energy Demand
•
Manufacturing Industries
•
Construction Industries
•
Transport Industries
•
Mining/Mineral Industries
•
Metal productions
•
Solvent use
•
Waste handling and disposal
•
Agriculture
We care and enable millions to prosper
4
Strictly Private & Confidential – for Discussion Purpose Only
CDM Financing
CDM Financing
(CLEAN DEVELOPMENT MECHANISM FINANCING)
(CLEAN DEVELOPMENT MECHANISM FINANCING)
Existing industries as corporate client in Bank Danamon
Contents :
Percentage
Where are Bank Danamon in term of CDM
Financing
Type of Industries Bank Danamon see as an
opportunity
How we see CDM in relation to the financing
How we bridge the global carbon Trader
We care and enable millions to prosper
1.
Energy Industries
=3%
2.
Manufacturing Industries
=5%
3.
Construction Industries
=5%
4.
Mining/Mineral Industries
= 10 %
5.
Metal productions
= 12 %
6.
Oil & gas
= 11 %
7.
Agriculture
=3%
8.
Others
= 51 %
1
Strictly Private & Confidential – for Discussion Purpose Only
We care and enable millions to prosper
5
Strictly Private & Confidential – for Discussion Purpose Only
CDM Financing
Danamon Activities
(CLEAN DEVELOPMENT MECHANISM FINANCING)
Danamon Go Green Project – (Nationwide
Where are Bank Danamon in term of CDM financing?
program)
PT Bank Danamon Indonesia, Tbk:
-
•Was established in 1956
•Second largest private national bank and fifth largest commercial
bank in Indonesia.
•Asia financial Indonesia Pte, Ltd (AFI) owns 67.87% share and
remaining 32.13% owned by public.
•S&P BB•Moodys BA2
•Fitch BB
•Pefindo AA
•The first National Bank that provides CDM related trade facility
-
Traditional Market Revitalization projects
Organic Fertilizer production through composting
projects – targeting to reach 115 regencies by 2011
Danamon CDM Financing
-
We care and enable millions to prosper
Providing Trade & Structure financing facility for
CDM related equipments and projects
Providing structured financing to SME and Micro
CDM projects
2
We care and enable millions to prosper
6
Strictly Private & Confidential – for Discussion Purpose Only
NETWORK INFORMATION
CDM Financing
CDM Financing
(CLEAN DEVELOPMENT MECHANISM FINANCING)
(CLEAN DEVELOPMENT MECHANISM FINANCING)
How we see CDM in relation to the financing?
Q: What is the unique value of our scheme?
A: The unique value of our scheme is that we could give total trade finance
solution to all parties, from supplier, customer, the Trader which at the end it will
benefiting to all partite
Provinces
Branches
Provinces
Branch
es
Kalimantan
Jawa, Bali, NTT
Provinces
Branches
Sulawesi
Provinces
238
Kalimantan Selatan
25
Sulawesi Selatan
38
Sumatra Utara
74
Jawa Timur
202
Kalimantan Timur
20
Sulawesi Tenggara
26
Sumatra Selatan
42
Jawa Barat
138
Kalimantan Barat
13
Sulawesi Utara
19
Sumatra Barat
26
DKI Jakarta
125
Kalimantan Tengah
3
Sulawesi Tengah
Kepulauan Riau
37
Bali
30
Lampung
22
Nusa Tenggara Timur
4
9
10
Papua
Irian Jaya Barat
4
Jambi
14
Maluku
2
Bengkulu
14
1
Aceh
Maluku Utara
Kepulauan Nias
Total
737
Total
61
Total
110
56
What are the benefits for clients?
•Additional Income in the long run– through CER productions
•Cost efficiency – less waste management through composting
•Becoming an Eco-Friendly companies by efficiently manage the waste into
energy
•Efficient energy consumption
10
2
Total
240
Total Branches
1148
We care and enable millions to prosper
Strictly Private & Confidential – for Discussion Purpose Only
Q: Why financing has to go to Bank Danamon and not to others?
A: Bank Danamon is ready with the product and the financing scheme
Branche
s
Sumatra
Jawa Tengah + Yogyakarta
3
We care and enable millions to prosper
7
Strictly Private & Confidential – for Discussion Purpose Only
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
Presentation 8: Architrandi Priambodo
PT. Asia Carbon Indonesia

The presentation provided an overview of international carbon financing mechanisms
focusing on the development of the carbon markets under the Kyoto Protocol
mechanisms.

Carbon finance under the Kyoto mechanism presents only one option of many for the
government. There is also the voluntary carbon market.

Government should focus its regulatory and policy framework on sectors rather on
detailed CDM and carbon-specific regulations.

There is a need to formulate sector and strategic policies like diversification of energy
sectors from fossil fuel to renewables, forestry sector and municipal solid waste.

Focus should be on low hanging fruits in Indonesia: geothermal electricity production,
flare reduction in oil and gas sectors, hydro, biomass.

Need clear guidelines and policies on all these sectors.
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
57


Architrandi Priambodo

PT Asia Carbon Indonesia
19 February 2009

Unit of Measurement of Emission reduction = 1 ton of
CO2 equivalent
One ton of CO2 emission reduction, when certified by
an accredited agency, is known as one CER (Certified
Emission Reduction)
Present value of one CER = € 7(early stage) - € 10
(issued)
Present Value of one EUA = € 9.50
Asia Carbon Global 2008
Clean Development Mechanism
defines quantified GHG* emission reductions for Annex 1
countries as a reduction from their CO2 emission level by at
least by 5.2% over 1990 base level, by the end of first
commitment period (2008 – 2012)
Introduces three flexible market mechanisms which can be
used by parties and private firms to fulfill their reduction
obligations –
•
•
CERs
Developed countries
Developing countries
Resources
Low cost of emission
reduction
Joint Implementation , or JI (Article 6)
Clean Development Mechanism, or CDM (Article 12)
International Emissions Trading (Article 17)
•
•
•
•
Project based mechanism
Adopted at 1997 UNFCCC’
UNFCCC’s Conference of Parties 3
(COP3) in Kyoto, Japan, the Protocol –
•
High cost of domestic
emission reduction
Guiding principles
Achieve SD, TT,
Investment
Meet ER targets in a
cost effective way
Entered into force in February 16, 2005
Asia Carbon Global 2008
Annex I Countries
Kyoto Mechanisms
Joint
implementation
http://www.orbeo.com/local/cachevignettes/L400xH217/greenhouse-gases-0c3d8.jpg
Overall target - at least
5.2% reduction below
1990 levels in net
anthropogenic
emissions* of Annex I
countries by 20082008-2012.
No
targets
for
developing countries
Asia Carbon Global 2008
* CO2, CH4, Nitrous Oxide, Sulphur
Hexafloride, Hydro fluorocarbons,
Perfluorocarbons
Asia Carbon Global 2008
•
Project implemented in developing nations – NonNon-Annex 1
countries
•
Project should result in net CO2 Emission Reduction
•
Contribute towards sustainable development of the nation
•
Concept of CDM, Carbon reduction and Carbon revenue
should be incorporated in the Planning stage of the project
•
Carbon Reduction must be measurable
•
Measurement must be verifiable
Asia Carbon Global 2008
The “Flexible Mechanisms”
Mechanisms”
marketmarket-based mechanisms to enable GHG reductions
•
•
Emissions trading (among Annex I countries)
Assigned Amount Units (AAUs)
PP : Project Promoter
•
Joint Implementation (between Annex I countries)
•
Emission Reduction Units (ERUs)
•
DOE : Designated Operational Entity
EB : Executive Board
COP/MOP : Conference of Parties /
Meeting of Parties
Clean Development Mechanism – CDM
(between Annex 1 and nonnon-Annex 1 countries)
•
DNA : Designated Operational Entity
CER : Certified Emission Reductions
Certified Emission Reductions (CERs)
Asia Carbon Global 2008
Asia Carbon Global 2008
58
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
PIN
Source: www.cdmpipeline.org
Asia Carbon Global 2008
ERPA
Project owner
CER
broker/trader
9
-CER brokers/traders ask
for FOCAL POINT Right
-Project participants:
Project owner, CER
broker/trader
ECX CER Futures Contracts: Price and Volume
Dec09 Sett
VOLUME (tonnes CO2)
UNFCCC
Revenue from
project
Total Volume
DOE
Rights for
CERs
9,000,000
€ 25.00
8,000,000
€ 23.00
7,000,000
€ 21.00
6,000,000
5,000,000
4,000,000
3,000,000
Price per tonne
Source : GTZ CDM newsletter
€ 19.00
€ 17.00
€ 15.00
€ 13.00
2,000,000
€ 11.00
1,000,000
Project
owner
CER
broker/trader
/2
/03
14
Revenue
from
CERs
Asia Carbon Global 200
€ 9.00
0
8
00
/2
/04
15
8
00
/2
/05
14
8
00
/2
/06
11
8
00
/2
/07
09
8
00
/2
/08
06
8
00
/2
/09
03
8
00
/2
/10
01
8
00
/2
/10
29
8
00
/2
/11
26
8
00
/2
/12
24
8
00
/2
/01
26
9
00
10
Point Carbon Secondary CER OTC assessment
 Different size of energy and manufacturing sectors!
 No HFC decomposition projects possible in Indonesia
 less energy intensive industry compared to China and India
State-of-the-art of the energy intensive industry in Indonesia
State-owned companies are more aware of the opportunities
More consultants
Regulatory/Policy on CDM
China is highly regulated while it is not the case in India
China
Source :UNEP Risø Centre 1Sept 08
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
India
Price setting by DNA
No price setting
Bilateral/Annex I country
participant required
No certain rules but mostly
unilateral
Applicable taxes for certain
None
Asia Carbon Global 2008
project types
16
59
Fungibility of CERs will be limited by EU-LD,
expressed in % of EU allowances, and
differentiated in each EU country
Market Area
Carbon Credit Shortage
(in tons CO2) - (2008(2008-12)
Japan
800,000,000
Canada
1,350,000,000
Europe
1,600,000,000
Total Short
3,750,000,000
Source: Natsource, 2006 & ACX
Source: EU
Comparison of proposed vs. approved caps for 2008 to 2012
Asia Carbon Global 2008
17
Asia Carbon Global 2008
19
Market
Up to 2012
(Million tons CO2)
Up to 2020 (Million
tons CO2)
CDM
2,540
5,706
JI
(2008-2012)
240
-
Source :UNEP Risø Centre Mar 2008
Asia Carbon Global 2008
60
20
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
Discussion of the presentations:
Discussant 1
Lukita, BAPPENAS

Carbon trading is commercial by its nature; the non-voluntary trading should be pushed
by the government.

In 2007, only 24 CDM projects that were processed due to lengthy bureaucracy, in 20082012 the processes should be speeded up.

A number of private sectors are not familiar and understand CDM, hence socialization is
important.

Some of the private sectors that know CDM don’t have enough financial support, where
banking sector could support.

Whereas banking sectors are not interested in funding CDM, there is a need to regulate
to give clarity on:
o Financial factors and regulations.
o Technological aspects, research and development.
o Banking regulations.

Those are interested but without financial supports need the role of parties as follow:
o Government: clear incentive and fiscal policy targets.
o Private sectors: banking sector should have active roles and being the pushing
factor through the development of green banking. The central bank should be
more open with clear regulations, especially on the risks.
o Multilateral institutions: World Bank, Asia Development Bank. This needs good
communication where DNPI can be coordinator in low carbon development
fund.
Questions:
Damayanti, Ministry of Environment
 So far, those involve are large investors, there are small and medium enterprises (SME)
that interested in CDM projects, biogas for instance.

Ministry of Environment has financing program for SMEs.

Banks can support financially, however the requirements are very hard to fulfill by SMEs
as these are applied for large enterprises as regulated by the central bank’s policies.

Can Danamon Bank fund SMEs with back up by third party, such as ERPA?
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
61
Herman, Ministry of Forestry
 How is the banking mechanism with regard to CDM?

How is the realization of internalization of CDM to national medium term planning?
Presenters’ responses
Citra
 Under UNFCCC, only one project in forestry sector that is good to go, as the
verification process is measurable; this is the main discrepancy in CDM.

In fact there are many projects under processing within voluntary emission reduction,
VER, although the carbon price is far below the compulsory emission reduction.

Most banks do not accept ERPA as there are rejections; hence they are reluctant to
accept it.
Jos Luhukay
 There are some difficulties to finance SMEs due to these factors:
o Legal aspect: SMEs do not have legal basis of its organization, therefore cannot
be bailed out.
o They do not have financial accounting system, so cannot be audited, therefore
the credit scheme from the bank considered as personal loan with high interest
rates and shorter repayment period as applies to credit card holders. This is hard
for SMEs.
o Collateral: SMEs do not have fixed asset as collateral for the loan.

In order to reduce the risks, banks can provide the loads with small amount of funds
with short repayment period, 2 months for instance. This does not meet the need of the
SMEs.

The risks management of the SMEs is not developed yet.

ERPA cannot be implemented as there are many players and authorities, i.e.: Ministry of
Finance, Central Bank Indonesia, and Parliament.

In the forestry sector, Bank Danamon does not have any expertise, therefore none of the
loans for this sector. Bank Danamon only focuses in the sectors where expertise
sufficient.
62
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
Closing Remarks
Prof. Singgih Riphat
Ladies and Gentlemen:
Indonesia is one of the countries that highly vulnerable to climate change impacts. On the
other hand, Indonesia with the second largest forest area in the world can also benefit from
financing opportunities to combat climate change impacts.
Climate change issues are economic development issues, therefore the mitigation and
adaptation measures should be internalize in the development decision making processes.
These efforts should have sufficient financial supports in the implementation therefore the
measures would work properly and the risk and vulnerability would reduce.
Indonesia could and would tap in the available global climate change funds as well as
regional and local from private banking system. The regulations and scheme for the
management of the funds are under establishment with the involvement of multi sectoral
government institutions with inputs from different stakeholders.
Ladies and Gentlemen:
The results of this seminar would be the inputs for the board governors meeting of the
Asian Development Bank held in Bali in May 2009 where climate change will be one of the
issues covered.
Finally I would like to thank all participants for their active roles in this fruitful seminar.
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
63
List of Attendance
Climate Change Financing and Opportunities Workshop
Sumba Room, Hotel Borobudur, Jakarta
No
Nama
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
A. Ardhitya K.
Aditya Wirawan
Adrian Wells
Adrianus Dwi
Agunan
Agus B. Jamil
Agus Sari
Agus SK.
Alim Afifi
Amizan Ulfa
Amnu Fuady
Anang Budi G.
Anastasia L.
Ancha Srivanisan
Ani Handayani
Annine
Anton Wahjo
Sudibjo
Ari Saragih
Arvan C.
Djohansjah
Assisna Sen
Atchitrandi
Priambodo
Bambang Budhianto
Bambang Prihartono
Barbara Pearson
Barid Manna
Binsar Siregar
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
64
Bowo suhardjo
Budi Pranoto
Bustanul Arifin
Charzi N.
Damayanti
Danamon Team
Unit Kerja
BPPK-DepKeu
BKF
BKF
BPPK DepKeu
Ecosecurities
Ditjen SDA PU
Dit.
PKPN-BKF
ADB Mamla
BNI
API/MKI
British Embassy
BPPK Pusdiklat
KNPK
PLN
Asia Carbon
DitJenTan.
BKF DepKeu
Telepon/HP
08179568910
Email
[email protected]
[email protected]
[email protected]
081558969813
2505707
081310660317
0817363022
08129459452
63 2 6324786
0811829565
5253794
[email protected]
[email protected]
087881285759
71420437
08111660307
[email protected]
[email protected]
0818962952
081523758999
Ecosecurities
(PEACE
Consultant)
UNILA
DepKes
KLH
0816102696,
0816881138
5704250
08129401150
0811946041
57991142
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
No
Nama
Unit Kerja
33
34
35
36
Danang Surowilopo
Daniel Murdiya
Devi Nurmalasari
Dharsono Hartono
Pelangi Indonesia
081320455547
085691804087
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
Diik Dudenhoeffer
Diva Oktariani
Djoko Waluyo
Eddy Sugito
Edi Setianto
Eistiningsih
Erwin Silaen
Fajar Kuriawan
Febrina
Fria H
H. Lubis
Hadi Merdiyani
Hanafi
Hari Poerna S.
Harya K. Sidharta
Heimer von Luepve
Hendy Prasetya
Herman Prayudi
Hidayat Edhy L.
Hinsa Siahaan
I Made Rosalmi
Ida Maharani
Ihyarulfahmi
Ika Anindya Putri
Indira
Irawan
Irfa
Irma Nurhayati
Istiqlal Amlen
Joseph B. Goodwin
Juanisa B.
Kindy
ItJen-DepKeu
PT. RMU
Ernest and Young
- Ind
CCROM
122 Kitty Hanrissa
123 Kuki Soejahmoen
124 Kunya Roesad
Telepon/HP
Email
[email protected]
[email protected]
[email protected]
081319322386
BEI
DJA
Itjen DepKeu
Komunitas Hijau
DepKeu
384379
08111551059
[email protected]
08258181019
DepKeu
3813323
081380339355
GTZ
GreenLineCare
APHJ
PAM Jaya
PKPN-BKF
PLN
DepKeu BPPK
Indosolution
ITJEN
Pelangi Indonesia
99116966
0811830558
08129088357
[email protected]
0811960705
081931737169
08158098233
[email protected]
[email protected]
[email protected]
ICRAF
DepTan
BKF
Depperind
ILMTA
Pelangi Indonesia
WB
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
[email protected]
[email protected]
3441484
081808305742
65
No
Nama
125
126
127
128
129
130
131
132
Kusumaningtyas
Laksmmi Dhewanthi
Lokotzein Nasution
Lukman Harahap
M. Edy Yusuf
M. Jafar
Machut Shishak
Makmun
133
134
135
136
Maria Latumahina
Matanih Sunaryan
Maurin Sitorus
Melissa wijaya
137
138
139
140
141
142
143
144
145
146
147
148
149
150
151
152
153
154
155
156
157
158
159
160
Millenia A.S.
Mira
Nanang RA
Nila Puspita
Noeroso
Norgare Leterrier
Novita Sari
Puji Wibowo
Purwoko
Puwiyanto
Ragil K.
Ragimun
Ratna N. Sari
Ria Butarbutar
Ridho Yusmari
Ridwan Fachroe
Rieza R.
Rio Ismawan
Riza Azmi
Romulus
Rudy Dj.
S. Haryo
S.L. Rahayyu
Salip
Samudra
161 Gunadharma
162 Sani Pradipto
66
Unit Kerja
BPPK
KLH
BKF
BKF
Telepon/HP
Email
08128236269
8517161
0818933803
[email protected]
Pusdiklat BL
US Embassy
BKF
Papua
Government
Office
BPLHD Jak-Ut
DPU
US Embassy
PPRF DepKeu
BKF
Walhi
ABN
Hanns Seidd Ford
08135750719
AFD
PAKLIM-GTZ
081585836011
8517186
DepKeu
DJA DepKEu
BKF
BKF
0818968224
[email protected]
081388329879
[email protected]
[email protected]
081318938922
5256619
PEACE
BPPK
DepKeu
PAM Jaya
[email protected]
[email protected]
[email protected]
08568656470
31908173
BKF
PAM JAYA
PK APBN
Bapepam-LK
DepKeu
Ernest and Young
3857822
0817772401
Proceedings Warming Up Seminar:
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Nama
Unit Kerja
Telepon/HP
Email
- Ind
163 Singgih Riphat
164 Siti Nissa Mardiah
165
166
167
168
Soefiansyah S.
Soekartono
Soemakline
Sugiri
169
170
171
172
173
174
175
176
177
178
179
180
181
182
183
Sugiyanto
Sukianto
Sulistyowati
Sunaryo
Suparman M
Surono
Suryadarma
Susy M.S
Sutara M.
Suzanty Sitorus
Taswin Munier
Ted Saeger
Tim Brown
Tiyas
Tjahjo Sasmojo
184
185
186
187
Tricia Caeg
Triwibowo
Verena Streitferdt
Vicky Erwin
188
189
190
191
192
193
194
195
196
197
198
199
Vina Hutapea
Virza Sasmitawidjaja
Waliadi
Wandoio S.
Wilhem
Winarto
Yayan
Yogan
Yudi Harianto
Yulia Sungark
Yusnadi
Zahrul Bawadi
BKK
KLH
Ernest and Young
- Ind
S.P.
S.P.
BPPK
DitJen Sumber
Daya Air
PT. Restoan
0811167120
081288228466
[email protected]
081808846390
[email protected]
08129247892
0811255274
0251 8357222
PKKSI
API
PT. Asia Cargon
081510308579
0811865453
5256619
[email protected]
[email protected]
US Embassy
WB
Rokap
08118115849
0811149705
[email protected]
Ernest and Young
- Ind
BKF
GTZ
DJPU.SPU
Ernest and Young
- Ind
[email protected]
081317429211
[email protected]
081808485453
[email protected]
ETF
DepHut
PKKSI
Walhi
ItJen
Setjen
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities
67
Working Group on Fiscal Policy for Climate Change
Fiscal Policy Office
Ministry of Finance
Jalan Dr. Wahidin No.1, 1st floor
Jakarta, Republic of Indonesia
Tel/Fax: +62 21 384 0059 (direct)
Internal: 7004
www.depkeu.go.id
68
Proceedings Warming Up Seminar:
Climate Change Financing Need and Opportunities