Tue, 16 Sep 2003

Indonesia carbon projects attract foreign buyers

Muninggar Sri Saraswati, The Jakarta Post, Jakarta

Several carbon emission reduction projects under the Clean Development Mechanism (CDM) that the Indonesian delegation offered at last week's environmental forum in the Philippines have piqued the interest of foreign buyers, an official says.

However, many developed countries doubt that Indonesia will establish a designated national authority (DNA) and set clear criterion on sustainable development in line with the 1997 Kyoto Protocol, which Indonesia has yet to ratify.

"Our 10 projects presented during the forum have attracted the interest of developed countries, although most of them raised questions over those facts," Lolo Panggabean, the director of the Environment Project Management Foundation (YBUL), said on Monday.

YBUL was the co-sponsor of the Indonesian delegation for the forum.

The 10 projects presented at the South East Asia Forum on Greenhouse Gas Mitigation, Market Mechanisms and Sustainable Development were those on geothermal, hydro, biomass waste, methane capture, energy efficiency and the Java-Bali generator project.

"The reaction of foreign buyers is understandable because they want the period of carbon trade to last for between seven to 10 years," Panggabean said.

Despite the flaws, he believes several foreign buyers were interested in Indonesia's projects.

"Carbon trade needs trust between buyers and sellers. The Netherlands, for example, has considered buying our projects," Panggabean said.

The Manila Forum was attended by Malaysia, Thailand, Vietnam, the Philippines and Indonesia as well the Netherlands, Japan, the World Bank and the Asia Development Bank, among others.

Arun Kashyap of the United Nations Development Program suggested that developing countries apply a "learning by doing" principle in a bid to gain more benefit from the CDM.

"If we wait, we could run out of time," he said during a workshop on CDM, urging developing countries to start the project as soon as possible.

CDM is aimed at achieving cost-effective greenhouse gas (GHG) mitigation for industrialized countries by promoting sustainable development in developing countries.

For investment, companies from developing countries will earn in return certified emission reductions (CERs) that developed countries may use to meet the Kyoto Protocol commitments.

Indonesia has seven million tons of carbon emission reduction potential for which developed countries can pay the government. The price for each ton of carbon is up to US$5.

However, Indonesia is focusing more on carbon trade from the energy sector despite the huge potential to "sell" CERs from the forestry sector.

Rizaldi Boer, a researcher at the Bogor Institute of Agriculture (IPB), said Indonesia has the second highest potential to reduce carbon emissions after Brazil in forestry. Brazil's forests have the capacity to reduce 24.6 million tons in carbon emissions per year.

Carbon emission reduction in forestry under the CDM program could be conducted in the form of aforestation and reforestation programs.

Aforestation is converting previously unforested land into a forest. Reforestation is reverting a formerly forested area into a forest.

Indonesia is facing serious challenges to promote CDM in the forestry sector due to rampant illegal logging, land conversion and forest fires.

"We need strong commitment and political will from local administrations and the central government to do the task as foreign buyers will not buy CERs from a country that fails to manage its forests," he said.

Indonesia has lost millions of hectares of forests over the past few years due to rampant illegal logging.