Tapping tradeable emission credits<\/p>\n
Hana Anwar Makarim, Jakarta<\/p>\n
In the past decade, we have seen the destabilizing effects of
\nextreme weather patterns across the globe. The need to control
\nclimate change and mitigate global warming brought about 160
\ncountries together in 1997 to institute an international treaty
\ncalled the Kyoto Protocol.<\/p>\n
With Russia's recent ratification of the Protocol, 128
\nindustrialized countries are now legally bound to reduce their
\ncarbon emissions starting Feb. 16 this year by investing in
\ntechnologies that minimize them, especially in developing
\ncountries. This is a momentous opportunity that Indonesia must
\nseize.<\/p>\n
The Kyoto Protocol will have a tremendous economic impact on
\nIndonesia because it creates a new market for tradable emission
\ncredits called Carbon Emission Reductions (\"CER\"). CERs are
\nessentially measurable units of the amount of greenhouse gas
\nemissions reduced.<\/p>\n
One example: As a tree grows, one can scientifically measure
\nhow many tons of carbon it absorbs from the atmosphere per year.
\nThese measured tons of CERs can be sold to governments and
\ncompanies worldwide, in order to comply with their Kyoto Protocol
\nemission reduction targets. There are a variety of other methods
\nto generate CERs other than reforestation, but the concept
\nremains the same.<\/p>\n
Just as Saudi Arabia accumulates enormous revenues and
\ndominates the direction of world energy markets through its oil
\nreserves, Indonesia has the potential to become the \"Saudi
\nArabia\" of the Kyoto Protocol's CER market. Governments and
\nbusinesses are only now beginning to realize that they must
\nincorporate sustainable development strategies to secure long-
\nterm growth.<\/p>\n
In Indonesia, these strategies are largely ignored because
\nthey have always been considered too costly to adopt and
\nunfortunately, a bureaucratic nightmare to implement. However,
\nwith global demand for CERs rapidly expanding to a multi-billion
\ndollar market, Indonesia cannot afford to overlook this new
\nrevenue stream.<\/p>\n
The Indonesian government must make a strong push to publicly
\nintroduce the Kyoto Protocol's concepts and articulate the
\neconomic benefits that its mechanisms could reap, especially to
\nthe private sector. There may be many existing medium-sized to
\nlarge businesses that have invested in cleaner technology and
\ntherefore qualify for CER credits, but are unaware of it.<\/p>\n
Today, the price of CERs ranges from US$5 to $20 per ton,
\nillustrating how such market prices could add real income to the
\nbottom line of many Indonesian businesses. Of course, companies
\nmust get undergo CER certification before cashing in.<\/p>\n
Just as in the case of oil for Saudi Arabia, CERs in Indonesia
\nare in a potentially dominant position due to the country's
\nunique mix of primary industries and its location in the tropics.
\nIn terms of generating CERs through forestry, countries like
\nBrazil and Indonesia are the most obvious candidates. Even here,
\nIndonesia has an advantage because its many islands are more
\nreachable, as opposed to Brazil's one large but more inaccessible
\nmass of Amazon land.<\/p>\n
While this is a broad overview, the fact is, we should not
\njust look at the Kyoto Protocol as simply another environmental
\nissue. It is a tremendous opportunity for new job-creation and
\nrevenues of which Indonesia is best placed to take advantage. The
\nKyoto Protocol offers Indonesia the chance to \"do good\" for the
\nenvironment by mitigating global warming and \"do good\" for the
\npocketbook with more cold hard cash.<\/p>\n
The writer is Deputy Director of Byun & Co, a consulting
\nservice company that is currently developing a Biomass Renewable
\nEnergy Project in Bali, aiming to convert rice husks into
\nelectricity, under the framework of the Kyoto Protocol.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/tapping-tradeable-emission-credits-1447893297",
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"sponsor": "Okusi Associates",
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