Foreign firms eye RI greenhouse projects

Adianto P. Simamora, The Jakarta Post, Jakarta

Many foreign investors are considering becoming involved in developing greenhouse gas emission reduction projects here in Indonesia as a result of the country's huge potential, an official says.

Prasetyadi Utomo, the secretary to Indonesia's Designated National Authority (DNA), a unit of the State Ministry for the Environment, predicts that there will be at least 10 projects under the Clean Development Mechanism (CDM) submitted by local companies for approval by the government this year.

Under the Kyoto Protocol, which Indonesia has ratified, gas emission reduction projects have to be approved by the United Nations. Project developers are entitled to receive certified emission reductions (CER) from the UN, which can later be used by developed nations to meet their Kyoto protocol targets for reducing gas emissions.

A CER unit stating a one-ton reduction in carbon dioxide is estimated to be worth between US$7 and $8.

"We are in the final stages of approving four CDM projects," Prasetyadi Utomo, the secretary of Indonesia's Designated National Authority (DNA) on CDM at the state ministry told The Jakarta Post on Wednesday.

The DNA, which was set up in 2005, is tasked with approving such projects before submitting them to the UN's Executive Board.

The four projects consist of a mini-hydro scheme, the use of coconut shells to generate electricity, limiting the use of nitrous oxide in the manufacturing of explosives, and methane extraction during tapioca-starch production.

Prasetyadi said that the mini-hydro project consisted of four small-scale power generating plants in Central Java and West Java, and would be developed by PT Indonesia Power in partnership with Japan-based Chugoku Electric Power Co. Inc.

"The project is expected to generate up to 21,139 tons of carbon reductions per year," Prasetyadi explained.

He said that so far, eight Indonesian CDM projects had been registered with the UN Executive Board. The eight projects could produce emission reductions of up to 1.5 million tons per year.

"Many of the project promoters are from Japan. We hope that more investors from the European nations will locate CDM projects in Indonesia this year," he said.

A statement from the British Embassy in Jakarta said that a delegation of 12 British investors would meet Indonesian CDM project developers during a two-day visit starting Thursday.

"The range of services available from the UK climate change companies is extensive and includes CDM project development and financing, carbon fund management, technology provision, carbon brokerage services, validation and verification, and legal services," the statement said.

The Kyoto Protocol requires developed nations to cut greenhouse gas emissions by 8 percent below 1990 levels in the period between 2008 and 2012.

By contrast, developing countries can host projects to reduce the gases. Indonesia, which ratified the protocol, is not required to reduce its emissions and thus is a potential host country.

The state ministry said that Indonesia had the potential to supply two percent of the global CDM market, or the equivalent of a 125-million-ton reduction in carbon dioxide.

It said that the energy and industrial sectors produced the largest share -- up to 60 percent -- of total emissions in Indonesia.

Fossil and coal-based fuels are believed to be the main causes of greenhouse gas emissions that lead to global climate change.