RI may annually earn $500m from carbon trade

RI may annually earn $500m from carbon trade

Moch. N. Kurniawan, The Jakarta Post, Jakarta

Indonesia could obtain at least US$500 million from the "sale" of a reduction in carbon emissions to developed countries under the Clean Development Mechanism (CDM), the head of a non-governmental organization says.

Pelangi director Agus P. Sari said on Tuesday around $50 million in carbon trading could be obtained from good forest management and $350 million from the clean energy sector.

"It would be enough to repay some of our loans from other countries if necessary," he told reporters on the sidelines of a workshop on CDM.

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

In return for investment in a sustainable development project that cuts or reduces emissions in a developing country, companies will earn certified emission reductions (CERs) that developed countries may use to meet Kyoto Protocol commitments.

Agus said Indonesia could "sell" 16 million tons of CER per year from its forests, while clean energy producers such as geothermal power plants could sell 125 million tons in carbon emission reduction annually, meaning Indonesia could enjoy a reciprocal arrangement where foreign investors invest in environmentally friendly projects here.

In forestry, Indonesia has the second highest potential to reduce carbon emissions after Brazil. Brazil's forests have the capacity to reduce 24.6 million tons in carbon emissions per year.

At present, one ton of carbon is valued at between US$3 and $5.

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

Aforestation is a direct activity to change nonforest areas into forest through seedings and regreening. Reforestation is an activity to revert former forest areas into forests.

"So we can't just maintain existing forests and get money from the CDM program," Agus said.

However, he said, the country was facing serious challenges to promote CDM in the forestry sector due to rampant illegal logging, land conversion and forest fires.

Indonesia loses Rp 30 trillion (US$3.75 billion) per year from illegal logging.

Agus also said that potential conflict between local people and the local authorities when the latter reverted the current areas into forest would also be a challenge in promoting CDM.

Institutions that are poorly prepared to promote CDM in the country would also pose a hurdle, he said, adding that South American countries had been preparing their institutions to promote CDM.

Fellow Pelangi researchers Wisnu Rusmantoro, Erdi Abidin and Imran Rachman, who conducted a study on the opportunities and challenges of forestry CDM in Jambi, West Kalimantan and Central Sulawesi, concurred.

Wisnu said most people were uninformed about CDM and the fact that the most effective way to promote CDM was through sustainable forest management.

Agus suggested that the government and local people continue to encourage forestry companies to pursue good forestry management in order to take benefit from CDM.