WB offering Indonesia $300 million for clean technology

Adianto P. Simamora, The Jakarta Post, Jakarta | Thu, 09/17/2009 2:32 PM

The World Bank has called on all nations to act on climate change by making a shift to green technologies, a scheme in which Indonesia could gain up to US$300 million in grants or soft loans to fund low-carbon energy projects.

The World Bank (WB) currently manages a $5 billion budget under the Clean Technology Fund (CTF).

"Indonesia could access about $300 million in grants or soft loans from the CTF for cleaner energy, including for geothermal projects and for transportation," Timothy Brown, natural resource management specialist at the World Bank told reporters at the launch of its World Development Report on Tuesday.

"However, the matter is still under discussion with the Indonesian government."

He said the World Bank pledged to provide about $3.6 million in grants for technical assistance to help Indonesia prepare for the reducing emissions from deforestation and forest degradation (REDD) initiative.

Secretary-General of the National Council for Climate Change (DNPI) Agus Purnomo said Indonesia needed between $200 million and $300 million for low-carbon technologies to help climate change.

"The discussion with the World Bank may take place in October," he told The Jakarta Post.

He said Indonesia had set up a road map for clean energy to help mitigate climate change which included exploring geothermal possibilities, but the country was still seeking donors to finance them.

Indonesia has the world's third largest geothermal capacity yet uses coal, deemed the main contributor of greenhouse gas emissions, as its main source of energy.

"Countries must act now, act together and act differently on climate change."

The World Bank said the money for low-carbon energy projects could be used as regular investment funding that could give benefits in the short run in addition to the carbon credits gained from the projects.

Timothy said Indonesia had the potential to gain billions of dollars per year from the forest carbon market in the next twenty to thirty years, once REDD was agreed in 2012.

"But, *the money would come* only if deforestation was reduced," he said. "Indonesia has to take much tougher action in terms of forest governance, such as reducing forest fires or managing the peat lands in order to qualify for the forest carbon market."

Indonesia, the world's third largest forest country with about 120 million hectares of rainforest, said it would gain billions of dollars from protecting the forest under the REDD program.

Climate expert from the Center for International Forestry Research (CIFOR) Daniel Murdiyarso said Indonesia could gain about $15 billion from the REDD mechanism.

The World Development Report 2010 from the World Bank was released Tuesday ahead of the December meeting on climate change in Copenhagen, when negotiators from 189 countries are expected to agree a new climate regime on deeper emission cuts.

The report said rich countries, which produced most of the greenhouse gas emissions of the past, must act to shape the climate in the future.

"If developed countries act now, a *climate-smart' world is feasible, and the cost of getting there will be high, but still manageable," it said.

The World Bank president, Robert B. Zoellick, said the current financial crisis should not be an excuse to put climate on the back burner.

"Countries must act now, act together and act differently on climate change," he said in the statement.

"Developing countries are disproportionately affected by climate change - a crisis that is not of their making and for which they are the least prepared. For that reason, an equitable deal in Copenhagen is vitally important."

World Bank chief economist and senior vice president of development economics Justin Lin said solving the climate problem required the transformation of energy systems toward higher energy efficiency and more low-carbon technologies.

"It is in the interests of developing countries to act now to avoid locking into a high-carbon infrastructure," Justin said.

The report found three majors areas of climate vulnerability in East Asia and the Pacific region including a large number of people living along the coasts and on low-lying islands.

Green activists, including Indonesian Environmental Forum (Walhi), have criticized the government for using the loans to mitigate climate change, saying it was the responsibility of rich nations to cut emissions.