CDM projects 'vital for Indonesia'

CDM projects 'vital for Indonesia'

Tb. Arie Rukmantara, The Jakarta Post, Jakarta

Environmentalists and economists welcomed the government's move
to establish the National Commission on the Clean Development
Mechanism (CDM), a national authority to promote Indonesian CDM
projects to the world.

Former environment minister Emil Salim said the establishment
of the commission would help push the business sector to take
into account the social and ecological aspects of their
activities aside from economic ones.

"The existence of the (CDM) projects improve the weaknesses of
market-based mechanisms by internalizing social and ecological
costs as economic costs," Emil, an expert on sustainable
development, said over the weekend.

The government launched last the CDM last week to promote
projects submitted by private businesses to help reduce their gas
emissions as part of the Kyoto Protocol.

The commission will validate private companies that are
interested in selling their reduction emission programs to
developed countries. Developed countries are obliged under the
Kyoto Protocol to reduce the world's greenhouse gas emissions by
5.2 percent from 2008 to 2018.

If approved, the firms will receive Certified Emission
Reduction (CER) credits. Each ton of carbon dioxide reduction
will be valued at between US$1.50 and $5.50.

The head of the commission, who is also a deputy to the State
Minister of the Environment, Masnellyarti Hilman, projected that
Indonesia had the potential to supply 2 percent of the global CDM
market, or equal to 125 million tCO2e (ton carbon dioxide
equivalent).

"If we assume that a ton of CER is worth US$6 in the
international market, than our economic potential is worth US$750
million," she said after the official launch of the commission
last week.

The CDM was established under State Minister of the
Environment Decree No. 206/2005 and consisted of representatives
from nine ministries.

State Minister for the Environment Rachmat Witoelar said that
developed countries like Canada, Denmark and Japan have already
expressed their interest in buying the country's CDM projects.

"But this is private to private transaction, the commission
only facilitates the validation of the projects and proposes them
to the International Executive Board of the CDM," he said.

"Anyway, the projects are good for sustaining the planet's
climate whereas the money will be useful to develop the country's
businesses."

However, economist from the Institute of Development of
Economics and Finance Iman Sugema doubted that the business
sector here would be immediately attracted to apply for the CDM
program.

"Without assistance funds available, it is difficult to
attract industries to participate in the CDM project," he said,
referring to the high cost companies needed to bear when applying
for the program.

According to data from the commission, each company applying
for CDM project would have to spend over $50,000 for validation,
registration and verification fees.

Masnellyarti argued that the costs would worth the
compensation.

"For example, Indocement (cement maker) has submitted two
projects to reduce 3 million of TCO2e. If each ton is worth $6,
it will receive $1.8 million in return," she said, adding that
asides from Indocement, two other companies had also proposed
emission reduction projects.