Local banks still shy to fund green projects: UN

Adianto P. Simamora, The Jakarta Post, Jakarta | Thu, 09/02/2010 9:59 AM

Indonesian banks and financial institutions are reluctant to finance carbon trading projects — despite the government’s drive to cut emissions and fight climate change, says a UN report.

The report shows that Malaysia has 83 registered projects promoting clean development mechanisms (CDMs), surpassing 48 projects registered in Indonesia.

The Malaysian government has 176 approved CDM projects, Thailand has 133 and Indonesia has 131, the report said.

“We are very eager to see the local banking system finance CDM projects,” National Council on Climate Change (DNPI) CDM unit head Dicky Edwin Hindarto said Wednesday.

Dicky said that the investment climate was far more favorable in Malaysia, where the local banking system supported CDM projects.

Clean development mechanisms were developed under the Kyoto Protocol to allow companies in developing countries to develop emission reduction projects.

The Kyoto Protocol required rich nations to cut 5 percent of their emissions from 1997 levels and allowed rich nations to finance emission reduction projects in developing countries.

Governments in developing countries approve CDM projects before forwarding them to the UN executive board for approval, Dicky said.

The CDM executive board will issue certificates for approved projects that can be traded on the international market for US$10 per ton of emissions.

CDM projects can take the form of energy saving initiatives that promote the shift from coal-based fuels to more ecologically-friendly sources.

Countries with forests can also fund reforestation with CDM programs, but none of Indonesia’s 131 projects involve forests, Dicky said.

“It is all energy-related projects,” Dicky added.

Indonesia’s 120 million hectares of rainforests make it the world’s third largest forested country. The nation is promoting emission reduction under the UN’s defo-restation and forest degradation (REDD) scheme, which is expected to replace CDM forestry projects.

The UN executive board currently has 2,347 registered CDM projects. China and India had the most projects, recording 959 and 527 respectively. China has also several forestry-related CDM projects.

Dicky said that the UN had issued certificates to six projects with a total of 346,000 tons of emissions per year.

Tinamitra Mandiri president director Shana Fatina said there are difficulties in convincing banks to finance environmental projects.

Tinamitra Mandiri, which was created in March 2010, will develop a CDM project by shifting 571 public buses in Cirebon from diesel to natural gas, Shana said.

“We are still calculating the total emission that can be saved by shifting fuels,” she added.

The company will supply converter kits for the buses.

“It needs a lot of investment because we will replace all buses made before 2005,” said Shana, a 23-year-old recent graduate of the Bandung Institute of Technology (ITB).

She said that the company would set up its own gas stations in Cirebon to ensure the gas supply.

“We will integrate it with auto repair shops and the monitoring system,” she said.

Indonesia Gets $100 Million to Improve Java-Bali Power Distribution Systems

Asia Development Bank, 23 March 2010

MANILA, PHILIPPINES - The Asian Development Bank (ADB) and Agence Française de Développement are providing $100 million in loans to help Indonesia overhaul a key power distribution network in a bid to save energy and cut greenhouse gas emissions.

The ADB Board of Directors today approved a loan of $50 million for the Java-Bali Electricity Distribution Performance Improvement Project. The state-owned French development agency is providing a cofinancing loan of the same amount, which will be administered by ADB.

The project will rehabilitate the overburdened distribution network of the two islands, as well as supporting the introduction of energy efficient compact fluorescent lamps and light emitting diodes. The measures will help reduce peak power load demand and system losses, and contribute to sizeable cuts in greenhouse gas emissions. It will support PT Perusahaan Listrik Negara’s (State Electricity Corporation [PLN]) plan to invest about $1.2 billion in efficiency investments in the distribution sector between 2010 and 2014.

“The project will reduce the power sector’s carbon dioxide emissions by 330,000 tons per year, while the substantial energy savings and freeing up of 200 megawatts of equivalent distribution system capacity will allow the state electricity corporation to connect about 1.2 million additional customers to the Java-Bali network,” said Sohail Hasnie, Principal Energy Specialist in ADB’s Southeast Asia Department.

To make energy savings of 400 gigawatt-hours worth an estimated $60 million a year, the project will reconfigure electrical equipment, reconductor or replace old overhead distribution lines and voltage transformers, and introduce new switching stations and capacitors. The distribution of up to 500,000 quality compact fluorescent lamps and light emitting diodes in remote areas will help demonstrate the energy savings and greenhouse gas reduction benefits of efficient lights, which last far longer and consume much less energy than commonly used incandescent bulbs.

The project is expected to be eligible for carbon credits under the Clean Development Mechanism of the Kyoto Protocol, and carbon dioxide cuts could generate close to $200,000 a year in credits for the next 5-7 years, paving the way for potential nationwide distribution of the fluorescent lamps. The value of avoided carbon dioxide emissions as a result of the project is estimated to be around $3.5 million a year.

"Indonesia recently announced that it plans to reduce CO2 emissions by 26% by the year 2020 so PLN and ADB, together with the Government of Indonesia, view this project as a step towards meeting this goal," said Mr. Hasnie.

Indonesia’s energy demand has risen sharply in recent years, but investment in new capacity has not kept pace, resulting in regular power outages in Bali and Java, and up to 90 million people - or 38% of the population - still lack access to electricity. The economy relies on costly fuel oils for over 30% of its generation needs, limiting the government’s ability to fund new infrastructure, and putting Indonesia among the top 20 polluters in the world.

PLN is now planning to sharply expand the use of coal for power generation to reduce reliance on imported oil in the short term, and the project will help offset some of the new emissions. Once the conservation and efficiency benefits of the project are proven, it will be scaled up into a sector-wide initiative, funded by a multitranche financing facility.

ADB’s loan, from its ordinary capital resources, has a 25-year term, including a five-year grace period, with interest determined in accordance with its LIBOR-based lending facility. The Agence Française de Développement loan has a 15-year term, including a five-year grace period, with interest set in accordance with the Euro Interbank Offered Rate. A $1 million grant from the multidonor Clean Energy Fund under the ADB-administered Clean Energy Financing Partnership will finance the distribution of the fluorescent lamps and light emitting diodes, while the state electricity corporation will provide $19 million equivalent, for a total project cost of $120 million.

PLN is the executing agency for the project, which is due for completion by May 2012.

About ADB

PRC Gets $135 Million ADB Loan for Power Plant Using New Coal Technology

Asian Development Bank (ADB) , 8 February 2010

MANILA, PHILIPPINES - The Asian Development Bank (ADB) is supporting the construction and operation of a coal-fired integrated gasification combined cycle (IGCC) power plant in the People’s Republic of China (PRC), the first such plant in a developing nation.

The ADB Board of Directors today approved a $135 million loan to build a 250-megawatt IGCC plant in Tianjin City that can generate up to 1,470 gigawatt-hours of electricity every year.

PRC is the world’s largest coal producer and consumer. Its heavy use is causing serious pollution, including sharply lowered air quality and widespread acid rain. The large coal usage is also causing global concerns due to rising greenhouse gas (GHG) emissions. In response, PRC has launched a clean coal power generation program, GreenGen, to sharply reduce pollution as well as lower the GHG emissions, with the Tianjin project being the cornerstone of the first phase.

ADB is also providing $1.25 million in technical assistance to pave the way for the second and third phases of the program which will result in a scaled-up IGCC plant fitted with carbon capture and storage technology by 2013.

Plants using IGCC technology turn coal into a synthetic gas, removing impurities, before the gas is burned in a gas turbine. It is more efficient than other clean coal technologies and emits less GHG and only a fraction of sulphur dioxide and nitrogen oxide pollutants, but its adoption has been slow due to high costs and some perceived technology complexity and risks.

The advent of IGCC technology combined with a carbon dioxide capture and storage function, however, has provided fresh impetus for its use, with studies showing that it is now the least-cost option to cut carbon dioxide emissions from coal-fired power plants by up to 90%.

“The project will demonstrate the advantages of a technology with the potential for large greenhouse gas emission reductions. Its successful implementation will bolster the confidence of investors, project developers, and policymakers leading to scaled-up IGCC power plants and their expanded deployment,” said Ashok Bhargava, Principal Energy Specialist in ADB’s East Asia Department.

To help curb risks linked to the adoption of the new technology and to keep costs down, ADB is providing a $5 million grant from its Climate Change Fund to finance direct supervision and technical support from the component suppliers during the critical initial operation and maintenance phase. It will also be used to help strengthen project management capacity and to ensure compliance with key safeguards.

As the IGCC technology reduces coal use and GHG emissions, the project is expected to be eligible for carbon credits under the Clean Development Mechanism (CDM) of the Kyoto Protocol. ADB is providing technical support to help with the CDM registration process.

ADB’s loan from its ordinary capital resources makes up 32% of the total project cost of $419.59 million. The loan has a 26-year term, including a grace period of six years, with the interest rate determined in accordance with ADB’s LIBOR-based lending facility.

The loan component is due for completion by June 2012 and the grant component by June 2015.

The remaining costs will be funded from equity contributions of $84 million, a loan of $195.59 million from a group of local banks, and the grant from ADB’s Climate Change Fund - established in 2008 to invest in projects which address the causes and consequences of climate change.

China Huaneng Group, the managing partner of the government’s GreenGen program, is the executing agency for the project.

About ADB

Jambi, Aussie investor sign carbon trade agreement

Jon Afrizal, The Jakarta Post, Jambi | Tue, 11/18/2008 9:52 AM  

In a bid to further preserve their area’s forests and increase regional revenue, Jambi’s provincial and municipal administrations signed a carbon trade agreement with an Australian investor last week. 

Jambi Governor Zulkifli Nurdin and Mayor Bambang Priyanto signed the contract on Nov. 12 with Australian consultant Peter N. Kene of International Business Network and investor Charles Jackson of Carbon Strategic Global. 

Zulkifli said the contract would last indefinitely as long as it was mutually beneficial, in line with prevailing regulations and forests were well preserved. 

“So by preserving forests we are making money. We will use the money to improve the prosperity of communities living around the forests,” Zulkifli said. 

The contract covers the carbon value of some 200,000 hectares of forests across the province with a price set at US$10 per ton per year during the first phase, Zulkifli said. 

“The price will be reviewed periodically according to market developments,” he said. 

At the current price, Jambi expects to gain credit for some 100,000 tons of carbon per year, meaning it will earn US$1 million from the forest’s preservation, Zulkifli said. 

“Imagine if the price rises to US$20 or even US$30 per ton per year.” 

Zulkifli was confident the contract would guarantee the protection of the forests because the local community would benefit directly from it. 

He gave his word that the money would be spent to benefit the communities living around the forests, adding that they would no longer need to cut down trees to make a living but preserve them instead. 

“As long as the forests are preserved, carbon is produced. And as long as the carbon is produced, money is also earned,” he said. 

Indonesian Forum for the Environment (Walhi) executive director Arif Munandar said the contract was a step in the right direction. 

On the one hand, he said, forests and whole ecosystems will be well preserved. On the other hand the local administrations will earn rewards from their preservation efforts. 

Arif reminded the local administrations to keep their word regarding the use of money earned from the carbon trading, and to make certain it was for communities living around the forests and not other purposes. 

“It is they who contribute the most to the preservation of the forests ... So, don’t ever forget them,” Arif said. 

He further reminded the local administrations that they needed to work out what they would do with the money, especially to improve the livelihoods of communities. 

Among other means, he suggested, was the establishment an economic institution to help communities become economically independent. 

Arif said local administrations needed to change people’s perspective of forests, so that they see forests as not just a timber resource but having myriad other advantages also. 

“This way we will be able to maintain the beauty of the forests while the community also benefit economically,” he said.

RI, Japan to launch reforestation project in East Java`s National Park

Jakarta (ANTARA News) - Indonesia and Japan (Sumitomo Forestry Co.Ltd) cooperate to do reforestation in Bromo Tengger National Park, East Java, Indonesia, through Afforestation and Reforestation of Clean Development Mechanism (A/R CDM), an official stated here Tuesday in a press release. 

The cooperation had been agreed in the form of MoU which stated that Sumitomo would provide the project`s funding while Indonesia, throuh its Forestry ministry, would provide the project`s areal and funding the project through In Kind finance. 

Responding to the MoU, the project will be launched at november 12, 2008, through symbolic planting activity. The director and senior Managing Executive Officer from Sumitomo Foretry Co.Ltd, Hideki Nose, along with Indonesia`s minister of forestry MS Ka`ban, and several local authorities near the Bromo Tengger national park is scheduled to attend the launching. 

The A/R CDM reforestation project in the Bromo Tengger national park is conducted as an implementation of the ministry of forestry`s top priority policy which is rehabilitation and conservation of natural resources. 

Moreover, the joint project is also considered as concrete action in implementing the basic principle of World`s Climate Change Convention which says Common but Differentiated Responsibilities. 

Japan as the developed country has prime responsibility to overcome the global warming and world`s climate change, while Indonesia as growing country must assist the developed countries in dealing with such international problems. 

The project is expected to give benefit to both countries. Japan`s government will gain international acknowledgement for their contribution in solving global warming and climate change. Meanwhile, Indonesia will have its forest back to its function after having a degradation as life`s buffer and natural resources for people`s welfare. 

Furthermore, the international world will also mark Indonesia`s contribution in overcoming global warming and climate change. 

Estimated to end in the year of 2012, the project will reach its goal maximally if there are synergic cooperation between Bromo Tengger Semeru national park`s Reserach and Development Board, local government, entrepreneurs, and local people in the project`s implementation and its result.

Shell Eyes Geothermal Investment

Friday, 07 November, 2008 | 14:41 WIB 

TEMPO Interactive, Jakarta:Shell International BV said they are interested in investing in Indonesia's newest energy sector. "The biggest potential is in geothermal and solar energy," said Shell International's chief of Political Analyst for Global Business Environment, Cho-Oon Khong yesterday. 

According to Cho-Oon, the details of the plans cannot yet be confirmed. However, he views Indonesia as playing an important role in facing the challenges of energy sources in the future. 

These challenges include the wide gap between the demand and supply in oil fuel and issues on global warming. He said supplies in oil and gas will become more limited 20 years from now. 

This, he said, has led to an increase in oil prices. On the other hand, the increasing global demands in energy will create alternative supplies and the use of more efficient energy. "Shell will adapt to that, allowing us a bigger opportunity of investing in Indonesia, both from the upstream and the downstream sectors," he said. 

Energy and Mineral Resources minister Purnomo Yusgiantoro said Indonesia's potential in geothermal reserves are equal to 219 million barrels of oil or 27.000 megawatt. However, the capacity installed produces only 1.052 megawatt. 

According to Purnomo, the main impediment in developing this source of energy is the large investment needed and high electricity rates produced. The cost of producing electricity from this source is higher than using the conventional coal. 

The government is currently studying three areas to implement an experimental CO2 Captured and Storage (CSS) project. This technology regulates the emission of carbon dioxide in fossil fuels and produces environmentally-friendly oil and natural gas. 

SORTA TOBING

RI pushes for CCS tech to cut carbon emissions

Adianto P. Simamora, The Jakarta Post, Jakarta  

Fossil-fuel-addicted Indonesia is considering implementing carbon capture and storage (CCS) technology to cut emissions, prevent climate change and win money from rich nations under a global emissions pact. 

Energy and Mineral Resources Minister Purnomo Yusgiantoro and State Minister for the Environment Rachmat Witoelar said Thursday that CCS technology was the most practical method for containing large quantities of carbon emissions. 

"But it needs extra work to make it feasible," Purnomo told participants of a two-day workshop on CCS attended by dozens of players of the country's energy and oil and gas sectors. 

Purnomo said pilot projects were required to assess whether CCS was technologically and economically feasible. 

"International cooperation is required to resolve technical, financial and policy issues to ensure that CCS can be implemented," he said. 

CCS is a mechanism whereby carbon dioxide (CO2) emitted from industrial and energy-related plants is injected into geological formations instead of released into the atmosphere. 

Fossil fuel burning is the second-largest producer of CO2 in the country after forest fires, the government has said. 

There are currently about 70 oil and gas companies operating in the country. 

President Susilo Bambang Yudhoyono in 2006 issued a presidential decree mandating an increase in the percentage of renewable energy usage to 17 percent by 2025. 

It is estimated that CCS could cut energy sector emissions by 40 percent. 

Negotiators from 190 countries are scheduled to meet in the Polish city of Poznan in December to discuss moves to cut greenhouse gas emissions. 

It is expected the climate change conference will agree to include CCS as a flexible mechanism under the clean development mechanism (CDM). 

The CDM encourages non-obligated countries, such as Indonesia, to host emissions cutting projects. Rich countries would then provide financial assistance to the country on a tons of emissions cut basis. 

Experts have estimated that CDM project developers would pay Indonesia US$10 for every ton of CO2 it captured using CCS. 

"Therefore, we need a predictable price per carbon (captured) if we are to implement CCS. It is a carbon business," said Hardiv Situmeang, chairman of the Indonesian National Committee for the World Energy Council. 

He said CCS technology would be beneficial in Norway, as the government charged a tax of $50 per ton of carbon dioxide released. 

The State Minister for Environment estimated that rising fuel consumption could see emissions from the energy sector skyrocket to 2,878 million tons in 2050 from the 977 million tons forecast for 2008. 

Chief researcher at the Research and Development Center for Oil and Gas Technology (Lemigas) Hadi Purnomo said CCS technology could pump remaining oil in old wells in Indonesia to the surface, increasing the country's oil production by 60 percent. 

The country's oil reserves stand at an estimated 61.1 billion barrels. 

A recent study by Lemigas shows that East Kalimantan and South Sumatra could be selected as potential candidates for CCS projects since many depleted oil and gas reservoirs are located near CO2 emitting sources, including an LNG plant in Bontang. 

Natuna Island is another potential site for CCS, Hadi said.

UN issues first green certificate for RI

Adianto P. Simamora, The Jakarta Post, Jakarta | Tue, 03/25/2008 11:20 AM 

After two years, the United Nations has issued the first saleable "certificates of emissions reduction" (CERs) to Indonesia's publicly listed cement maker, PT Indocement Tunggal Prakarsa Tbk. 

The UN executive board on climate change issued a total of 17,635 CERs to Indocement's alternative fuel projects on March 14. 

"It is good news for Indonesia. Hopefully, more companies will be encouraged to switch to greener projects to tap into cash from the carbon trade scheme," Prasetyadi Utomo, secretary of Indonesia's designated national authority (DNA) on Clean Development Mechanism (CDM) told The Jakarta Post on Monday. 

Under the CDM, projects that reduce greenhouse gas emissions and contribute to sustainable development can earn saleable CERs. 

Countries with an emissions reduction or limitation commitment under the Kyoto Protocol can use the CERs to meet part of their obligations under the protocol. 

The certificates can be traded to 36 highly industrialized nations which have legally binding emissions limitation and reduction commitments. A CER currently sells for between 13 and 15 euros. 

The UN will also issue 23,474 CERs to PT Indotirta Suaka Bulan Farm on Tuesday. The company's project, located on Bulan Island near Batam, involves methane capture and combustion from swine manure and is expected to cut 166,000 tons of emissions per year. 

Prasetyahadi said the UN had informed Indonesian environmental officials of a plan to issue another 63,332 CERs to Indocement on Wednesday. 

DNA data shows PT Indocement registered two projects that reduce emissions through the use of alternative fuels such as biomass, rice husks, sawdust and used tires. 

The projects were developed in cooperation with the World Bank. 

The issued CERs are transferred electronically from the CDM Registry through an international transaction log, administered by the UN Framework Convention on Climate Change Secretariat, to national emissions registries. 

As of March 1, the UN had issued CERs to 306 projects, mostly in China and India, totaling 126.6 million CERs. 

The CDM is expected to generate more than 2.6 billion CERs by the time the first commitment period of the Kyoto Protocol ends in 2012. 

The UN has said there are currently more than 948 registered CDM projects in 50 developing countries, and another 2,000 projects in the registration pipeline. 

The government has so far approved 47 CDM projects, of which half were registered this year following the UN climate change conference in Bali. 

Among the approved projects are a fuel switching project conducted by PT Asahimas Flat Glass Tbk at its flat glass manufacturing facility in Sidoarjo, PT Gikoko Kogyo Indonesia's gas flaring project in Palembang and a waste recovery project in Ubud, Bali.

Bekasi Goes Green

Bahasa (Indonesian)

World Bank - Bekasi, March 3, 2008 – If there is any city in the island of Java that deserves to be recognized for its progressive, green-minded approach to sustainable development, that city would be Bekasi. A city of two million people just east of the capital, Bekasi has become the first city in Java Island to enter into an emission reduction purchase agreement that promises both environmental and social benefits.

The agreement entails the set-up of a gas-flaring facility at Bekasi’s Sumur Batu landfill, which generates up to seven hundred cubic meters of solid waste each year. The flaring technique essentially traps the methane gas resulting from solid waste, and goes a long way in reducing the number of climate pollutants deriving from Bekasi. Methane is a greenhouse gas that is potentially 21 times more harmful than CO2, the main contributor to global warming. The flaring facility will be built by PT Gikoko Kogyo Indonesia, an engineering company that specializes in clean air technology, and is scheduled to be operational by the end of March.

The World Bank, acting as a trustee of the Netherlands Clean Development Mechanism, will help provide the social benefit component. Under the agreement for Bekasi city, the World Bank will purchase 250,000 tons of CO2-equivalent of Certified Emissions Reductions (CER) each year, for the next 15 years. In the global carbon market, one CER is equal to one ton of CO2 and is priced between US$5 to $10. From the deal signed between the World Bank and PT Gikoko, seventeen percent of the revenues generated would towards developing Bekasi.

“Seven percent of the revenues will support community development in Sumur Batu,” said Bekasi city secretary Tjandra Utama Effendi in a press conference after the signing ceremony. “Another 10 percent of the revenue will be added to the local budget.”

The Bekasi gas flaring project is only the second of its kind in Indonesia. Last year, the World Bank facilitated a similar agreement to a landfill in Pontianak, West Kalimantan. Another such project is currently being prepared in Makassar, South Sulawesi.

WB, firm deal on carbon trading

Adianto P. Simamora , The Jakarta Post , Bekasi | Tue, 03/04/2008 11:11am

The World Bank and PT Gikoko Kogyo Indonesia signed an agreement Monday to develop an eco-friendly project that will trap climate pollutants released from the Sumur Batu sanitary landfill in Bekasi.

Under the agreement, the World Bank, acting as trustee of the Netherlands' Clean Development Mechanism (CDM) Facility, will purchase 250,000 tons of carbon dioxide (CO2) per year for 15 years.

"This project, together with the growing number of CDM projects in Indonesia, is an indication of the critical role the country is playing in addressing climate change," Joachim von Amsberg, World Bank director for Indonesia, said during the launch ceremony here.

The daily management of the landfill gas flaring project, aimed to harvest methane gas from solid waste in Sumur Batu landfill, would be run by Gikoko.

"The CDM enables Gikoko and Bekasi municipality to enter into private-public partnership in waste management to convert a liability with investment into a cash stream utilizing the Kyoto Protocol," said Joseph Hwang, production director of Gikoko.

Methane is a greenhouse gas that is potentially 21 times more harmful than CO2, the main contributor to global warming.

Carbon trading is part of the Kyoto Protocol allowing developing countries, including Indonesia, to reduce emissions.

The host of the CDM project will receive certified emission reduction (CER) credits issued by the United Nations executive board. The credits are traded in 38 developed nations that have the obligation to cut emissions between 2008 and 2012 by 5.2 percent below their 1990 levels.

The government of the Netherlands, which purchased the credits from the Bekasi landfill, is among the developed countries which are required to cut their emissions under the Kyoto Protocol.

One CER credit is equal to one ton of CO2 priced between US$5 and $10.

The UN Executive Board has approved 819 carbon reduction projects worldwide to begin in October -- 34 percent in India and 15 percent in China.

Indonesia, which ratified the Kyoto Protocol in 2004, listed only nine projects with the executive board. The government has so far approved 40 carbon trading projects. Most of them are related to the energy sector.

The UN reported that developing countries produced nearly 450 tons of CO2 and CER credits in 2006, with China still leading at 61 percent of the total.

The World Bank said the global carbon market was worth less than $1 billion in 2004 but skyrocketed to $11 billion in 2005 and to more than $30 billion last year.

The Bekasi administration said 7 percent of the funds generated from the carbon trading project would be used to develop communities living near landfill areas.

"The revenue will support community development in Sumur Batu. In addition, 10 percent of the revenue will be added to the local budget," Bekasi city secretary Chandra Utama Effendi said.

He said the Sumur Batu landfill received about 700 cubic meters of solid waste per day in the 10,000-hectare area, located along the northeast border of Bantar Gebang which belongs to the Jakarta administration.

Gikoko also expressed concerns about the United Nation's bureaucracy in validating the CDM project.

"The bureaucratic process is still too long. We have to wait about six months for validation to determine whether or not the UN approves the project. We hope the UN can improve its efficiency and encourage more private companies and local administrations to host CDM projects," Hwang said.

Transforming waste into energy at Suwung Garbage dump

Prodita Sabarini, The Jakarta Post, Denpasar

The foul smell of piling garbage at the largest landfill in Bali, the Suwung landfill, has been a source of disgust for the Balinese.

Thanks to technology, however, people on the island-province can now look forward to making use of their waste.

Home to household waste from four areas of Bali - Denpasar, Badung, Gianyar and Tabanan - the landfill receives as much as 800 tons of waste per day.

As two third of the waste is organic, it releases methane gas -- the source of the "foul smell" and is one of the greenhouse gasses that contributes to global warming - to the atmosphere.

The Bali administration, working with PT Navigat Organic Energy Indonesia (NOEI), set up an integrated waste management system at Suwung by building its first biogas plant.

The plant would capture methane gasses and turn it into energy in the form of electricity. The plant will also help rehabilitate the landfill site.

"By August 2008 the facility would be able to produce two megawatts for public use," PT NOEI spokesperson Bernt Bakken said Sunday.

The facility was launched by the Bali Governor Made Dewa Beratha on Dec. 13, sporting the momentum of the United Nations Climate Change Conference that ended on Dec. 15.

It is the first project in Bali carried out under the United Nation's Clean Development Mechanism (CDM) -- a carbon trade scheme that enables a group of developed countries and countries in transition, which are binding for emission cuts to earn emission reduction credits by promoting sustainable development in developing countries.

Indonesia has 11 projects under the carbon trade scheme registered at the CDM executive board so far, with only two of them approved by the board.

The biogas plant project would reduce around 123,423 tons per year of the amount of methane gasses released to the atmosphere, cutting the greenhouse gasses that contribute to global warming.

Bakken said from 2010, the facility would produce 10 Megawatts of electricity.

State Electricity Company (PLN) has signed an agreement to buy power from the biogas plant.

PT NOEI uses a Jenbacher machine, distributed by GE Energy. GE Energy country executive Gatot Prawiro said waste-to-energy conversion was a good solution to provide energy in areas that has no access to the national power grid.

Bali is still dependent on Java for power supply, with 130 Megawatts of the 439 Megawatts needed to power Bali comes from the Paiton Power Plant in East Java.

Geothermal promoters told to seek opportunities in carbon market

Ika Krismantari, The Jakarta Post, Jakarta

The government wants geothermal energy promoters to take advantage of global carbon trading market as an alternative source of funding to help lower their investment and production costs, a minister says.

Energy and Mineral Resources Ministry Purnomo Yusgiantoro said Tuesday that geothermal energy promoters could benefit hugely from the global carbon credit program to compensate for their huge investment costs, thereby allowing them to offer competitive tariffs to state power firm PT PLN as their buyer.

"Let say that to build a 100-megawatt geothermal power plant, the investors will need some US$100 million. If the project was eligible for carbon credits, for example, credits worth $70 million, that means that the investment would only cost $30 million," Purnomo said.

The carbon-credit mechanism was created under the Kyoto Protocol to help developed nations meet the target of reducing their carbon dioxide emissions by 5 percent from the 1990 level by 2012.

Under the scheme, businesses developing clean projects in developing nations can seek compensation in the form of carbon credits, certified by the United Nations (UN), and then sell these to the developed nations.

Purnomo's remarks came after a recent study by a special ministry committee showed that the feasible price for geothermal-generated electricity is around 7 to 8 U.S. cents per kwh, well above PLN's standard purchase price of around 5 U.S. cents per kwh.

The committee, which was established to come up with a formula for determining an economically feasible ceiling price for electricity, said the main reason for such a high price was the huge investments geothermal projects require.

However, according to Purnomo, the carbon-credit trading mechanism now provides a quid pro quo for investors in the geothermal sector.

"With lower investment costs, we can expect the price of the electricity to be much lower than the 8 U.S. cents per kwh suggested by the committee," he said.

Purnomo pointed to three geothermal projects -- Drajat and Kamojang in West Java and Lahendong in North Sulawesi -- which he said had secured carbon credit certificates worth $156 million.

Indonesia has great potential to participate in the carbon-credit market through geothermal projects as it is host to 40 percent of the world's reserves.

Currently, the country only has seven geothermal plants in operation, which have a combined capacity of a mere 852 megawatts.

Top RI scientists to increase expertise on climate change

Nusa Dua (ANTARA News) - Indonesia`s top environmentalist association and the Indonesian Environmental Intellectuals (Perwaku) expressed their intention to step up their expertise on Clean Development Mechanism (CDM) and climate change and carbon credit issues in the country.

A press release made available to ANTARA News here on Saturday said during the signing of an MoU between Perwaku and Sindicatum Carbon Capital Asia Ltd (SCC) that SCC (special developer of projects relating to climate change) agreed to share knowledge and their expertise to Perwaku which was made up of scientists, intellectuals and Indonesian environmental academicians.

Perwaku also agreed that SCC Asia will involve scientists, its advisors and its executive personnel in efforts to participate in carrying out projects in Indonesia.

Indonesia asks for ADB loan extension

Jakarta (ANTARA News) - Indonesia has asked the Asian Development Bank (ADB) for the extension of its loans for a number of hydro-powered plant (PLTA) projects with a total value of US$7.5 million.

"Indonesia has asked that the ADB loans, which would have been ended in 2008, be extended until 2011," RM Dewo Broto Joko of the National Development Planning Board (Beppenas) said here on Sunday.

He said that the ADB was considering to approve the request because the projects were utilizing renewable energies and were part of the clean development mechanism (CDM).

Dewo Broto Joko said that Indonesia had asked for the extension because there had been delays in the implementation of the renewable energy development (RED) projects.

He cited as an example the Poigar PLTA project in North Sulawesi whose construction had been delayed because the land acquisition and resettlement plan (LARP) for the project had not yet been completed.

The Bapennas official said that the Genyem PLTA project in Papua province had also been delayed because the local government was asking for a portion of share-ownership in the PLTA project and no agreement about it had been reached so far.

"There were still a large number of ADB-financed PLTA projects in West Kalimantan, Gorontalo, Lombok and Flores, for which we are asking extension from the bank," he added.

Dutch horticulture, traffic, key to green future

Monstersandcritics.com, Dec 1, 2007, 12:19 GMT

Amsterdam - If the people of Venlo have their way, new buildings in this busy nexus of the Netherlands, Germany and Belgium will generate more energy than they use.

This ambitious target has been gaining momentum in the province of Limburg, southern Netherlands, since the airing of a television documentary about the revolutionary concept of 'cradle-to-cradle' living that produces zero garbage and zero pollution yet allows maximum economic activity.

The idea would to be have things up and running by the time the once-a-decade mammoth flower show - Floriade - starts drawing world tourists to the region in 2012.

In fact, the horticulture industry and Floriade are lynchpins in the recycling concept of the Planet Prosperity Foundation (PPF), the group launching the project. A meeting in early November drew 650 producers, entrepreneurs, environmentalists and local politicians to discuss the way forward.

As world governments head to Bali, Indonesia, in December to discuss what happens after the two-year-old Kyoto Protocol on climate change - imposing mandatory cuts on industrial nations' emissions - expires in 2012, projects like this one are sure to attract attention.

Carbon dioxide is key to the Venlo concept. Plans call for trucks to collect carbon dioxide emissions in on-board storage tanks and deliver the gas to hot houses, where bacteria and algae will turn the CO2 into fuel. There's no shortage of carbon dioxide in the region, with five highways headed to Germany alone from Venlo, a major transport hub on Europe's InterCity train line.

New industrial parks are to make wide use of ecological roofs of moss and solar panels. The Floriade will be powered by solar and biofuels, and materials used in construction will be biodegradable or reusable.

The region was inspired by the 2006 Dutch public television documentary 'Afval = Voedsel,' or Garbage equals Food, which spotlighted the work of the dynamic German-American eco team, Michael Braungart and William McDonough.

Braungart, a chemist and German university professor in Lower Saxony, and McDonough, an architect, have made their name brainstorming award-winning designs - like an eco-friendly production facility for Ford motors in the United States. In 2002, they wrote a book, 'Cradle to Cradle: Remaking the Way We Make Things.'

The two believe that everything humanity needs can be made of environmentally friendly, 100-per-cent sustainable material. Moss, used on the Ford factory, is a key element because it guarantees maximum insulation and, not coincidentally, also absorbs carbon dioxide.

Within months of the programme's airing, local politicians in tiny Venlo, a city of 92,000, decided to become the pioneering ground for the cradle-to-cradle theory.

Braungart emphasized at the November conference that Venlo and the surrounding region are an ideal testing ground.

The region is Western Europe's largest horticulture centre, serving some 30 million consumers within a 150 kilometre radius stretching from the Netherlands to Germany's industrial Ruhr heartland. It is an important centre of industrial production. And trucks criss-cross the region with products, goods and services, with the logistics sector engaging some 30,000 people in Venlo alone.

To get the ball rolling, Harry Loozen and Dick Thesingh, director and marketing manager of the Chamber of Commerce of the Dutch province of Limburg-Noord, contacted the province of Limburg, the Floriade, and several other public and private partners.

Together, they founded the Planet Prosperity Foundation (PPF), whose director, Roger Cox, is an enthusiastic promoter.

'All cities cope with sustainability problems. They all need to comply with the Kyoto Protocol. That's why we advocate the implementation of the cradle-to-cradle on the regional level,' he said.

Braungart was impressed with the turnout.

'The enormous number of participants at this conference and their enthusiasm demonstrates that there is a strong public interest in pushing forward with cradle-to-cradle,' he said.

He also encouraged each sector to pursue change 'without fearing to make mistakes. Just do it.'

The meeting drew a large number of architects and designers, established banks such as ABN Amro and ING Bank, and international producers such as printing company Oce Technologies.

One of the world's largest carpet manufacturers, Shaw Floors, of Dalton, Georgia, US, described how its production costs dropped dramatically after it had implemented the cradle-to-cradle theory in its production process. Its 23-billion-kilogramme annual garbage output had dropped drastically.

The 21 workshops even had some immediate results. A snack producer decided to switch to recycled packaging, and several companies pledged to buy only new furniture made of reusable fabric.

Regions to get due share of global warming fund

Urip Hudiono, The Jakarta Post, Jakarta

Regions hosting environmental projects will receive a share of money allotted to Indonesia under a planned global warming mitigation and adaptation fund to be discussed at the upcoming international conference on climate change in Bali.

The central government will disburse the money through the state budget's revenue sharing mechanism, Finance Ministry secretary general Mulia P. Nasution said, although the details are still to be discussed.

"It will still depend on whether the projects are business-to-business or government-to-government," he told reporters Monday.

"It's still too early to talk about how much will be allocated to each region, but the matter is expected to be agreed upon in due time."

Indonesia has been actively supporting a new proposal called the Reduced Emissions from Deforestation in Developing Countries mechanism, which is expected to provide more fair incentives -- meaning developed nations will also help -- for the better management of forests in developing countries.

The scheme will complement the Kyoto Protocol's Clean Development Mechanism, which requires developed nations to reduce their carbon emissions to invest in green projects, which are considered to be more feasible if implemented in developing countries.

The carbon trading scheme requires 2 percent of each project's proceeds -- which can fetch up to US$10 for every one ton of carbon dioxide reduced -- be set aside for a mitigation and adaptation fund. This global fund will be managed by a multilateral agency to support the development of sustainable technologies and help nations directly affected by global warming.

Related financial issues and sustainable development policies are expected to be discussed in a meeting of world financial ministers on the matter on Dec. 10 and 11, which will run in conjunction with the climate change conference from Dec. 3 to 14.

Indonesia has recently launched a campaign to plant 79 million trees in regions across the country, worth some Rp 1.28 trillion ($137 million).

Forestry Minister M.S. Kaban has said Indonesia may need up to Rp 216 trillion to replant all of Indonesia's forests that have been damaged.

Although not directly related to the climate change issue, the government has also been engaging in "debt-for-nature swap" schemes with creditor countries.

A recent program involved Indonesia providing 12.5 billion euros for forest conservation efforts in return for debt relief of 25 million euros.

Indonesia seeks international help to protect forests

Jakarta (ANTARA News) - Indonesia's environment minister said Thursday his country needed about six billion dollars a year from rich nations to preserve dwindling forests, a key step in fighting climate change.

"We need financial assistance for the conservation of our forests. Developed countries must give their support by providing financial assistance to developing countries," Rachmat Witoelar told AFP.

Indonesia is gearing up to host a global UN summit on climate change next month in which nations will attempt to lay the groundwork for an agreement on reducing greenhouse gas emissions after the current phase of the Kyoto protocol expires in 2012.

Witoelar said that direct funding from foreign governments was a more efficient way of financing his country's climate change fight than the Clean Development Mechanism (CDM) agreed under the Kyoto Protocol.

"The CDM is too complicated and bureaucratic. We need direct funding from developed countries in an effort to protect human beings from disasters caused by global warming," he said.

The CDM allows developing nations to sell carbon credits to rich countries earned through development projects that reduce carbon emissions.

The CDM lets countries earn credits by planting or restoring forests -- which are key absorbers of carbon -- but does not provide financial incentives for preserving existing forests.

Nicholas Stern, author of a key climate change report, said during a visit to the Indonesian capital Jakarta in March that the world should invest 10 billion dollars annually to halve deforestation in Indonesia, Brazil and other countries.

Rapid deforestation of Indonesia's equatorial forests, which include carbon-rich peatland swamps, has pushed the country to the unenviable rank of third-largest emitter of greenhouse gases in the world, behind the United States and China.

Australia to provide funds for reducing gas emissions in Indonesia

Jakarta (ANTARA News) - Indonesia is one of the countries to which Australia will give priority in the channeling of its Global Initiative on Forest Climate (GIFC) funds to finance efforts to reduce global CO2 gas emissions, a forestry official said here on Friday.

Indonesian Forestry Center spokesman Achmad Fauzi said in a press statement Australia would prioritize Indonesia because the latter was one of the countries possessing the world`s largest forest areas and located near Australia.

He said Australian Prime Minister John Howard had announced a fund allocation amounting to A$200 million in the form of global funds to finance greenhouse gas emission reduction activities in a number of countries.

The activities would include efforts to prevent forest damage, forest rehabilitation, reforestation and sustainable forest management, Fauzi said.

To realize the program, the foreign ministers of Australia and Indonesia had issued a joint announcement on "Kalimantan Forest and Climate Partnership," he said.

Fauzi said in the announcement, the Australian government had pledged to provide A$30 million for, among other things, peat land rehabilitation in Kalimantan provinces.

To follow up the announcement, Australian Ambassador to Indonesia Bill Farmer and the Indonesian forestry minister as well as the head of the National Development Planning Agency (Bappenas) signed last month a subsidiary arrangement document between the government of Indonesia and the government of Australia relating to a program of bilateral cooperation to reduce greenhouse gas emissions associated with deforestation in Indonesia.

Fauzi said the cooperation program would be effective for five years as of October 2007, with the main activities to be carried out to support the Indonesian government in the Working Group Reducing Emissions, Capacity Building in handling forest and peat land fires, research and rehabilitation.

He said the Indonesian government and its Australian counterpart had been preparing an implementing plan for the subsidiary arrangements.

For this purpose, the senior officials of both nations would meet some time in the near future and conduct a field study in the peat land areas and national parks in Kalimantan, Fauzi said.

CO2 emission reduction 'not working' for RI

Adianto P. Simamora, The Jakarta Post, Jakarta

While India and China have seen fortunes moved through their carbon markets, none of Indonesia's carbon projects have received certification from the United Nations for carbon emission trade with developed nations, an official said Tuesday.

Indonesia has since last year listed nine carbon projects to the UN Executive Board for approval.

"No certificates on carbon emission reductions (CERs) have been issued to Indonesia because project hosts have not implemented activities as stated in the clean development mechanism proposal," Liana Bratasida, assistant minister for global environmental and international cooperation at the state ministry of environment said.

Liana, who is also member of the UN Executive Board for the Clean Development Mechanism (CDM), was a speaker at a discussion on CDM projects Tuesday, attended by dozens of business players.

Carbon credits are measured by CERs which are issued by the UN Executive Board for approved CDM projects.

One CER is equal to one ton of carbon dioxide reduction (CO2) and one ton of CO2 is worth between US$5 and $10 on the carbon market.

Liana said from August, the UN had approved 819 projects worldwide -- 34 percent in India and 15 percent in China.

"We are left far behind India and China in terms of CDM projects," she said.

"The UN has so far issued 77 million CERs globally to countries including India, China and Brazil.

From this figure, 52 million CERs have been sold to Annex I countries, while 1.5 million CERs were given for adaptation funds," she said.

The CDM is part of commitments made within the Kyoto Protocol and allows developing countries to host projects that would reduce CO2 emissions, including through the use of alternative fuels.

Under the protocol, the host project must allocate 2 percent of approved CERs for an adaptation fund.

The CERs can be traded to 38 developed nations with an obligation to cut carbon emissions as per the Kyoto Protocol.

The Indonesian government has so far approved 24 carbon projects, nine of which are waiting for approval from the UN Executive Board.

The nine projects include PT Petromat Agrotech which is promoting a solar stove project in Aceh; PT Indocement Tunggal Prakarsa Tbk with its alternative fuel project; PT Multimas Nabati Asahan and its bio-mass condensing steam turbine project in Asahan, North Sumatra; PT Murini Sam Sam with a bio-mass condensing steam turbine project in Riau; and PT Indotirta Suaka with a methane capture and combustion from swine manure treatment project in Riau.

The World Bank said the global carbon market trade volume was worth less than $1 billion in 2004.

But the value skyrocketed to $11 billion in 2005 and to more than $30 billion last year.

The state ministry for the environment said Indonesia could supply 2 percent of the global carbon trading market, or equivalent to reducing 125 million tons of CO2.

Liana said the lack of attention from financial institutions had discouraged companies to host carbon projects.

"It is different in India and China where their financial institutions are very active and push local companies to host CDM projects," she said.

"Local business players should start CDM projects because the Kyoto Protocol will end in 2012."

Carbon credit boom in the offing for Indonesian firms

Andi Haswidi, The Jakarta Post, Jakarta

Companies in developing countries engaging in carbon credit sales are likely to increase their earnings significantly this year as the global value of the market, which reached about US$30 billion in 2006, is expected to double, an analyst says.

"The market value of carbon credits is likely to again increase in very, very significant percentages. It could be double again," Jotdeep Singh, Rabo India Finance's head for renewable energy and carbon credits in Asia Pacific, told The Jakarta Post.

Rabo India Finance is a subsidiary of Rabobank International.

Singh said that as carbon credit trading itself only commenced in October 2005 following the ratification of the Kyoto Protocol, more countries had been entering the market recently.

"You have a few countries that have taken the lead in terms of volumes and projects, such as China and India. Therefore, Indonesia does not want to be left behind. More and more companies need to find this out, what the opportunities are for them."

What is of concern to developing countries, like Indonesia, Jotdeep said, is how to promote the Clean Development Mechanism (CDM).

The CDM is an arrangement under the Kyoto Protocol allowing industrialized countries, also called the Annex 1 countries who signed quantitative limits to their gas emissions, to buy carbon credits from other countries -- mostly developing countries -- who did not sign up to poverty reduction goals under the Protocol.

Last year, CDM projects contributed about $5 billion to the total world market value, and is also expected to double this year.

"These non-Annex 1 countries still have the challenge of addressing poverty. That is why they were exempted from taking on emission reduction targets, because it was seen that the targets could harm their economic growth and therefore their poverty reduction efforts."

With that advantage in hand, companies in developing countries can reduce their gas emissions and obtain carbon credit certificates, called Certified Emission Rights (CERs), from the United Nations, which can later be traded.

A one-ton carbon dioxide reduction is estimated to be worth $13.

So far, Indonesia has only registered nine CDM projects, which delivered over one million tons of CO2 reductions. Another nine are still in the pipeline, Jotdeep said.

Indonesian Chamber of Commerce and Industry (Kadin) chairman Muhammad Hidayat admitted that the participation of local companies in mechanism was still as most businesses still had little idea of what it was all about.

"Indonesia has a big potential. I have received offers from Northern European countries that want to trade carbon credits with Indonesian companies. I've also met the Norwegian prime minister, who wanted to discuss a couple of projects, with one of them located in Bali," Hidayat said.

Companies planning to reduce their greenhouse gas emissions should prepare a document outlining their plans and hire a consultant to prepare a carbon credit proposal for submission to the UN. These proposals are known as Project Design Documents (PDD), which must be validated by UN Designated Operating Entities (DOEs).

Consultation and validation combined can cost from $30,000 to $50,000, Jotdeep said.

Those firms that cannot afford consultancy or validation can avail of the Verified Emission Reduction (VER) mechanism, which also involves a form of tradable credits, but which entails a lower cost compared to the CER.