Climate Change and Indonesia

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Climate Change and Indonesia

• By Charlie Reed

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Background

• Physical
• 735,000sq mi
• 17,000 islands
• Social Indicators
• Population 211,700,000 (4th Largest in the
  World)
• Growth 1.3, Replacement Rate 2.3
• Urban 43
• Poverty 16
• Income Per Capita 810 (GNI 2003)
• Life Expectancy 67
• .6 of GDP on health, 1.2 of GNI on education
  (Low)
• Net Primary Enrolment 93 Illiteracy 12
• Indonesia is better off then other low income
  countries.

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• Economic indicators
• GDP growth 3.4 per capita GDP growth 2.3 Was
  around 6 until Asian financial crisis
• Economic make up (Value Added of GDP)
• 16.6 Agriculture (40 of labor force)
• 43.3 Industry
• 39.9 Services
• Export 31.2 of GDP, Import 25.7
• Investment Climate
• Lost share in world export market
• Major issues Investors macroeconomic
  instability, policy uncertainty, and corruption
• Indonesia must improve investment laws and
  increase confidence in the government
• Survey shows that it takes 151 days to start a
  business (Thailand 33, Malaysia 30, China 41)
• Terrorism affects investment
• After 2002 Bali and 2003 Marriot bombing
  investment approvals declined
• Future Economic Outlook
• GDP growth to be 5 in 2005 and should remain
  high
• Investment Climate to improve

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Carbon Emissions

• Indonesia is responsible for 1 of global total.

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Climate Change Impacts on Indonesia

• More than 17,000 islands, 81 thousand km
  coastlines- Estimated cost of about 10 GDP
• Health
• Like other developing countries- Increase
  transmission of vector born diseases
• Heat stress
• Impacts due to sea level change
• 1990- 110 of 170 million live on near the Ocean.
• Loss of marsh land and other agricultural land
  costing 11.3 billion annually (60cm)
• Tsunami is example of how sea level rise can
  devastate the poor ocean side population.
• Forestry
• Forestry will benefit because of increased
  growth- Studies show that 2 times CO2 causes
  tropical biomass growth of 12
• Agricultural Impacts
• Agricultural production will decline due to
  flooding, erosion, loss of arable land, and
  accelerated evapotranspiration during dry seasons
• Crop yields will fall
• Soybean production would decline by 20 to 40
  and rice by 2.5
• Estimated that soil erosion and land loss has
  cost 6 billion annually

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Developments/Agencies

• Indonesia signed UNFCCC in June 1992 and ratified
  it in August 1994
• Set up a monitoring system for CO2 emissions and
  sinks.
• Set up the National Committee on Climate Change
  (NCCC) to address climate issues
• Consist of representatives from various
  government agencies, NGOs, academic and business
  communities.
• Strengthen the coordination between government
  institutions.
• Develop national institutions to anticipate
  climate change.
• Evaluate the implementation of UNFCCC and KP.
• Develop global cooperation and partnership in
  dealing with CC issues.
• Represent Indonesia in the COPs meetings and
  high level summits related to the convention and
  the protocol.
• Encourage active participation of all
  stakeholders in dealing with CC.
• Encourage and guide RD in related sectors.
• Encourage and guide technology transfers in order
  to reduce GHG in all sectors.
• Indonesia signed the Kyoto Protocol in 1998
• Approved its ratification on June, 28 2004

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Agencies

• Ministry of Environment
• Oversee all environmental affairs
• NCCC
• Consist of representatives from various
  government agencies, NGOs, academic and business
  communities.
• Strengthen the coordination between government
  institutions.
• Develop national institutions to anticipate
  climate change.
• Evaluate the implementation of UNFCCC and KP.
• Develop global cooperation and partnership in
  dealing with CC issues.
• Represent Indonesia in the COPs meetings and
  high level summits related to the convention and
  the protocol.
• Encourage active participation of all
  stakeholders in dealing with CC.
• Encourage and guide RD in related sectors.
• Encourage and guide technology transfers in order
  to reduce GHG in all sectors.

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The National Committee on Climate Change
Chair Minister of Environment
Secretary Deputy Min. for Env. Conservation of
MOE Vice Secretary Head of AMG
Secretariat /Support. Unit Climate Atmospheric
Affairs, MOE
NDPA
DOFA
DOFO
DOHRI
DEMR
DIT
DOT
DOA
DOH
DOHA
DOFI
MORT
DMF
NISA
MOE Ministry of the Environment AMG Agency
for Meteorology and Geophysics NDPA National
Development Planning Agency DOFA Department
of Foreign Affairs DOFO Department of
Forestry DOHRI Department of Housing and
Regional Infrastructure DEMR Department of
Energy and Mineral Resources DIT Department of
Industry and Trade
DOT Department of Transportation DOA
Department of Agriculture DOH Department of
Health DOHA Department of Home Affairs DOFI
Department of Finance MORT Ministry of
Research and Technology DMF Department of
Maritime and Fisheries NISA National
Institute for Space Aeronautics
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CDM

• Under Article 12 the objective is to assist Annex
  1 countries to meet there target, and assist Non
  Annex 1 countries to achieve Sustainable
  Development
• Since 1996 Indonesia has actively supported the
  Activities Implemented Jointly (AIJ) mechanism
• Indonesia will be looking to attract CDM projects
• Indonesia has the potential of hosting CDM
  projects that reduce a total of 125 MT of carbon
• Revenues of 50m/yr, profits of 25m/yr
• Indication of a countrys preparedness for CDM
  Projects
• Ratification of Kyoto protocol
• Appointment on a Designated National Authority
  (DNA)
• Approved Criteria for National approval of CDM
  projects
• Number of projects approved

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CDM

• Ministry of the Environment established
  Indonesias Designated National Authority (NDA)
  in April 2004
• The DNA would act as a National Focal Point for
  communication between parties.

COP
SBSTA, SBI
UNFCCC Secr.
NFP
National Committee
Stakeholders
CER
CER
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• Currently there are several components that need
  capacity building
• DNA
• Project proponents
• Local authorities
• Local communities and other local stakeholders
• Potential operational entity
• Legal consultant
• Financial institutions

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CDM

• CDM should only be accepted if they fulfill these
  Criteria to develop Sustainable Development.
• No adverse environmental impact
• Environmentally sound technology transfer
• Stakeholder participation
• Respect of Customary Right (land tenure)
• Increased employment
• Community development program
• Capacity building improvement
• Local economic benefits
• Equitable distribution of benefits
• No net increase in external debt burden
• See notes for more explanation

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Posible CDM Projects

• Wayang Windu Unit 2,
• 110MW geothermal project in Java. Potential
  reduction for a crediting period of 7 years
  around 750,000 tCO2e for 5.2 euro a ton
• Utilization of Combined Solar, Wind and Biomass
  for a small agro-processing unit
• Potential emission reduction of 9,600 tCO2e over
  10 years
• Bandarjaya Rice Husk Power Plant
• Rice husk to be used to generate electricity .
  Potential of emission reduction is 139,390 over
  10 years.
• Inducement efficiency project
• Use alternative fuels and various process
  optimization techniques to reduce CO2 emissions
  from cement producer. Reduction of one million
  tCO2e/year
• Countries that have shown the most interest are
  Netherlands, Japan, Denmark, Austria and Canada
• "We'll offer more qualified projects that reduce
  more carbon, a guarantee that the projects will
  be sustainable and of course, a more negotiable
  price of carbon,"
• Sudariyono, the deputy for environmental
  conservation at the Office of the State Minister
  of Environment.

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Sinks (Forestry)

• Forest considered second to only Brazil as the
  most important world heritage of tropical forest
• The inclusion of sinks can be very profitable for
  Indonesia
• If Indonesia were to control 10 of the market
  for sinks they would produce 1.8 mtCO2e/year,
  causing revenues of an extra 80 million.
• Indonesia has recently had a startling decline in
  forest cover
• Despite a 38 increase in plantation forest
  overall has fallen by 16 from 1990 to 2000
• Fires have reduced forest cover, emitted CO2 and
  regional air pollution, and have cost billions
• Adding value to forest through sinks would reduce
  the incentive fro deforestation
• By combining carbon emission and forestry into a
  system with clear property rights, progress could
  be made in solving many of Indonesia's
  environmental issues linked to deforestation.

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Forest

• Growth of Indonesian forest provide a sink that
  sequester CO2 at a rate of 686,790 Gg annually
• The energy sector in Indonesia 170Gg annually
  (1994)

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Oil and Energy

• Indonesia is part of OPEC receives 9 billion a
  year from oil exports
• Export 1.4 million barrels of oil a day out of
  world total of 78 million barrels which is 3.8
  of OPEC in 2003
• A decreased demand for oil because of Kyoto
  protocol would decrease revenues because of
  decreased market share of OPEC.
• But Indonesia's Oil capacity is decreasing. In
  1991 they represented 6 of OPEC output and
  produced under capacity.
• Effects of a rise in Oil Prices
• On one hand it increase value of oil exports and
  generates revenue
• On the other hand higher oil prices reduce demand
  for exports.
• Increase of oil cost by 10 causes a .6 decrease
  of world GDP growth

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Oil and Energy

• Indonesia subsidizes oil prices
• As oil prices rise the cost of subsidies
  increases causing major fiscal strain
• Implications of subsidies on energy use
• Since oil is under priced in Indonesia there is a
  tendency to overuse.
• Energy use per GDP has increased slightly while
  in most countries it has decrease by
  approximately 1 a year reflecting increased
  efficiency.
• Indonesian can increase the economic incentive
  for energy efficiency reducing CO2 emission
• Side Note While OPEC is the sworn enemy of the
  Kyoto Protocol and emission reduction measures,
  yet it has probably done the most to curb climate
  change by inflating prices and making cleaner
  option viable.

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Steps to Reduce Indonesias Emissions

• Any steps measures to reduce emission must do so
  without hampering the national development
  objectives.
• Energy
• Removal of subsidies
• Promote Renewable energy
• Promote public adoption of energy conservation
• Restructure prices to include externalities
• Transportation
• Promote use of public transportation.
• Road Pricing and area traffic control systems to
  allow road users to realize the value of that
  public good
• Control vehicle emission and promote the use of
  clean fuels

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• Agriculture
• Promote improved agricultural practices that emit
  less GHG
• Staple food diversification by promotion of non
  rice food sources
• Improve technology transfer.
• Forestry
• Stronger regulations of forest management
• Revise current management policies
• Prevent the occurrence of forest fires through
  better preparation
• Replenish forest
• Costal Resources
• Promote coral reef rehabilitation and develop
  national marine resource evaluation and planning
  program
• Continue to Develop a nationwide tide gauge
  station network to monitor sea level rise
• Prepare long term adaptation strategy for
  possibility of sea level rise.

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Conclusions

• Indonesia is highly susceptible to damage from
  climate change and sea level rise.
• Have a vested interest GHG reduction
• Indonesia has just ratified the Kyoto protocol
  and is interested in CDM projects
• Successful implementation of CDM project could
  improve the investment environment as a whole and
  attract investors in all markets.
• CDM projects would help achieve the ultimate goal
  of sustainable development.
• Energy subsidies are costly and hazardous to the
  environment.
• Carbon sinks can be used to set up a clear system
  of property rights to help manage and protect the
  forest cover
• Many Steps that can be taken to reduce CO2
  emissions improve other pollution problems and
  contribute to Sustainable Development

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Thank You

• http//unfccc.int/resource/docs/natc/indonc1.pdf
• http//dna-cdm.menlh.go.id/en/
• www.menlh.go.id