POLICY AND STRATEGY OF INDONESIA DEVELOPMENT

IN FACING CLIMATE CHANGE

Fabby Tumiwa1

Preface

Indonesia is an archipelago with more than 13,000 islands with the length of its coastal line
reaching 80,000 km. With total population of 231 million people, it is estimated that 41.6
million people live in 10 meter above sea level coastlines or also well known as Low
Elevation Coastal Zone (McGranahan, et.al 2007). In addition, numbers of industrial
operations, economical activities, and infrastructures centers take place in coastal areas of
major islands in Indonesia. It is estimated that the coastal activities contribute 25% of gross
domestic income and absorb 15% of workforce (Boer, 2007). The sea level rise due to global
warming is potential to cause economical loss for Indonesia. Based on the projection of 1.1
meter sea level rise in the year 2100, 90,260 km2 of coastal line will be disappeared and the
total economical loss will reach 25.56 billion USD (Susandi, 2008).

Indonesia also rank as the fourth most populace country in the world, hence one of the
countries with significant release of green house gas (GHG) emission. The GHG emission
was contributed by deforestation and land use changes. Total area of Indonesia is nearly 2
million kilometer square with forest cover of 88.49 million hectares in 2005. The number is
decreasing from 116.95 million hectare in 1990 (WRI, 2006).

One of UN Agencies, Food and Agriculture Organization (FAO), estimate that Indonesia has
lost 1.87 million hectares of forest per year during the 2000-2005. The official deforestation
data from Ministry of Forestry (2010) shows various number of deforestation rate during
1996-2006, averaging at 1.9 million hectares deforestation per year (Table 1). The decreasing
number of forest cover is caused by conversion of forest area and mass changes in forest
function for timber production, plantation, mining, and agricultural activities.

Table 1. Deforestation Rate in Indonesia (1990 – 2010)

Deforestation Rate 1990-1996 1996-2000 2000-2003 2003-2006 2010

(million hectares/year) (projected)
Indonesia 1.87 3.51 1.08 1.17 1.125

Inside designated forest 1.37 2.83 0.78 0.76 0.770

Outside designated 0.50 0.68 0.30 0.41 0.355

forests

1
Executive Director of Institute for Essential Services Reform (IESR), member of Financial Working
Group of National Council of Climate (DNPI), and member of Indonesian Delegates in UNFCCC negotiations.

1
Source: Data from Ministry of Forestry (2010)

As a country with the third largest tropical forest in the world after Brazil and Democratic
Republic of the Congo, Indonesia has prominent potency as carbon storage and sink.
Moreover, forest and sea in Indonesia possess abundance wealth of biodiversity. Indonesia
holds the fifth rank of biodiversity richness in the world. Indonesia is the place for 10 percent
of flower species in the world, 12 percent of mammals, 16 percent of reptile and amphibians,
and 17 percent of bird species. The 33 million hectares of sea in Indonesia is the habitat for
450 coral species and 25 percent of fish species in the world, including rare coral fish. These
richness in biodiversity and forests have high conservation value for ecosystem services and
become the source of livelihoods for million of people that reliant on forest and sea.i

The economical condition in Indonesia highly depends on natural resources, especially from
sea and forest ecosystems. The sustainability of both ecosystems is threatened by traditional
factors such as increasing population, industrial development, and urbanization. These have
accelerated the process of land conversion, large-scale deforestation, land/forest fire,
indigenous habitat of animals and plants damage, water catchment area damage, and sea
resources exploitation. Moreover, these entire threats are also worsened by the climate
change.

From the above description, the climate change phenomena add the complexity in the context
of natural resources management and economical condition in Indonesia. This has in fact
been realized by the government and community of Indonesia. For the past 15 years, many
institutions have issued various papers to review the impact of climate change in Indonesia.
For the last three years, there are also many reviews in regards with the selection of several
policy and strategy to support low carbon emission development in Indonesia. The results are
some policy and strategy products for climate change mitigation and adaptation.

This paper intends to provide information on the updated review of climate change mitigation
and adaptation and the current development of public policies related with climate change in
Indonesia. It is expected that this paper can present the readers with description regarding
discourses and efforts done by the Government of Indonesia to deal with climate change.

Climate Change in Indonesia

In principle, the climate in Indonesia depends on the Asian and Australian monsoon
circulation characterized by the near-surface wind system that changes direction almost every
half year. Such change bases the key seasons change, those are rainy and dry seasons. In the
literature regarding Asian monsoon (e.g., Johnson, 1992), summer monsoon happens during
June-July-August (JJA) while winter monsoon happens during December-January-February
(DJF). Such period more or less similar with what generally perceived by most people in
Indonesia, especially those live in Java Island that is with the term ’east season’ for dry
season and ’west season’ for rainy season.

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Although DJF is more often identified as the rain period in Indonesia, such condition is not
generally applied in the entire regions of the country. There are several differences. At least
there are three annual rainfall patterns in Indonesia, monsoonal, equatorial, and local (Aldrian
and Susanto, 2003). For monsoonal pattern, DJF is usually the period of peak rain.
Meanwhile, there are two peaks of rain period for equatorial pattern April – May and October
– November. Lastly, the peak rain period for local pattern is during June – July.

By considering the geographical, topographical, and climate condition, Indonesia is a country

vulnerable to climate change phenomena. The impact of climate change has been experienced
in Indonesia for the past century. In general, the surface temperature of most country in Asia
increase 1-3°C averagely for the past century. The climate change impact can be estimated in
Indonesia from the tendency of temperature increase and relative humidity in all area of
Indonesia. Besides, climate change can also be detected from the change of rain intensity that
related with the frequent extreme weather and climate recorded since 1981 to 2007 (DNPI,
2010).

The absent of reliable data regarding temperature history has troubled the efforts to measure
the increasing surface temperature in Indonesia. Nevertheless, some researches have
attempted to capture the increasing temperature in Indonesia. The review of Hulme and
Sheard (1999) found that the increasing surface temperature in Indonesia had reached 0.3°C Kurang jelas kurun
waktunya (periode) karena berbicara
since 1900. The review from ICCSR BAPPENAS team showed that the surface temperature tentang peningkatan. Peningkatan suhu
permukaan selama berapa tahun? Dari
in Indonesia during the 20th century is increasing 0.5 °C (ICCSR, 2009). In regards with 1990-?
rainfall, Hulme and Sheard (1999) concluded that generally in all Indonesia, the rainfall
intensity has decreased 2-3%. Nevertheless, Boer and Faqih (2004) found that there are
varieties among regions where it record decreasing rainfall in the southern part of Indonesia
(Java, Lampung, South Sumatera, South Sulawesi, and Nusa Tenggara) and increasing
rainfall in the northern part of Indonesia (most Kalimantan and Sulawesi).

The precipitation rate has been shifting as well in both rainy and dry seasons. In the southern
part of Indonesia, the rainfall is increasing in both rainy and dry season. Meanwhile, the
northern part of Indonesia experiences its contradiction. The fact that rainfall variability in Bhs Indo: Di bagian
selatan Indonesia, curah hujan di musim
Indonesia is highly affected by El Nino-Southern Oscillation (ENSO)ii should be highlighted, penghujan bertambah, sedangkan curah
hujan di musim kemarau bertambah.
whereas: (i) the dry season is longer than normal situation during El Nino period and shorter Situasi yang terbalik terjadi di kawasan
utara Indonesia. Please recheck.
during La Nina period; (ii) the beginning of rainy season is delayed for El Nino and earlier
for La Nina; (iii) the rainfall significantly decreased during rainy season happens during El
Nino period and significant rainfall increase happens during La Nina period. Some scientific
reviews estimate that in the future, the ENSO phenomena will be more frequent and have
higher intensity due to the global climate warming. The review of ICCSR (2009) stated the
interval of ENSO would be shortened from 3-7 years into 2-3 years as already proven by the
tendency of the past few years. It means, Indonesia will tend to experience significantly
higher weather varieties in the future and it will widely affect various aspects including
social, economical, and environmental such as agriculture production and extreme weather
condition.

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Some scientific reviews also show that the temperature in Indonesia will be increased
gradually. Review done by Boer and Faqih (2004) estimates the temperature increase from
0.2°C to 0.3°C per decade. ICCSR had issued a review based on climate model that has been
developed globally. It projects temperature increase of 0.8-1°C on the year 2020-2050
relative to basic reference of the year 1960-1990. In the year 2070-2100, the temperature
increase in Java-Bali ranges at 2-3°C and the highest will be in Sumatra of 4°C.

It is also estimated that the sea surface temperature will be increasing due to the increasing
surface temperature. The increasing sea surface temperature is estimated to reach 0.65°C in
the year 2030, 1.1°C in the year 2050, and 2.15°C in the year 2100. One of the direct impacts
of such increasing number is the relocation of fish stocks from Indonesian water (ICCSR,
2009). As for rainfall, the review from ICCSR team show various results for every area/island
in Indonesia during the 2010-2050 and 2070-2100 period, with tendency of increasing
rainfall during wet seasons and decreasing rainfall in transition months.iii

One of the impacts of escalating global warming rate is the rise on seawater surface due to
the melting ice in the polar. Based on the results from review and observation, Indonesia will
experience sea level rise of 0.6-0.8 cm per year (ICCSR, 2009). With thousands of small
islands and kilometers of coastlines, it is estimated that Indonesia will lose significant number
of land as the result of sea level rise. In addition to such rise, land subsidence will also
worsen the seawater intrusion and inundation for big cities in Indonesia, especially those
located in the northern Java coastline such as Jakarta, Semarang, and Surabaya.

Profile and Opportunities for Reducing Green House Gas Emission in Indonesia

Indonesia produces significant amount of green house gases. Based on the data collected in
2008 by CDIAC (Carbon Dioxide Information Analysis Center), if only observed from the
CO2 emission of the energy sector, then Indonesia holds the 15th rank of global emitter with
total emission of 397 million ton CO2 in 2007. Meanwhile, data of the year 2005 collected by
WRI (World Resource Institute) that exclude forestry sector and land use change activities
show that the total green house gases emission for Indonesia in that particular year is 586.3
million tones CO2 equal. If the forestry sector and land use change activities are included,
then the total emission is 2,045.3 million ton CO2 equal.

Total emission released from Indonesia in the end of 1990s decade significantly increased
due to the land and forest fire in the year 1997/1998. It is estimated that 24 billion of carbon
stocks stored in vegetation and land, and 80 percent of them are stored in forest (KLH, 2003).

The key contributors to the growing emission of green house gases come from land change
and land use change (forest fire, illegal logging, peat land degradation, deforestation, and Bhs Indo:
‘perubahan lahan dan perubahan tata guna
many more). In addition, the GHG emission from energy sector is dramatically increasing for lahan’ = land change and land use
change. Namun jika maksudnya
the past two decades. The GHG emissions from other sectors are also increasing, although ‘penggunaan lahan dan perubahan tata
guna lahan’ = land use and land use
it’s not as major as those coming from both key sectors. change.

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Picture 1. Profile and Scenario of Green House Gases Emission in Indonesia (2005 – 2030)

Review from National Council of Climate Change (Dewan Nasional Perubahan Iklim)
(DNPI, 2010) shows that the annual GHG emission in Indonesia reach 2.1 Giga ton (Gt)iv in
the year 2005. Along with the economical and development growth, it is estimated that the
GHG emission will reach 3.3 Gt per year in 2030. The calculation and projection of GHG
emission in Indonesia is presented in the Picture 1.

Land Use, Land Use Change, and Forestry (LULUCF) and peat land degradation are both
considered as the two largest contributors of GHG emission. At least 1.61 Gt CO2e or 78
percent of GHG emission in Indonesia in the year 2005 was caused by both sectors. The third
largest contributor is the agriculture sector with 0.13 Gt, the fourth is power plant sector with
0.11 Gt, the fifth is the oil and gas sector with 0.095 Gt, the sixth is transportation sector with
0.06 Gt, and the last two sectors are cement factory and building which each contribute 0.025 Or
construction?
Gt CO2e. Total GHG emissions from three energy sectors (power plant, oil and gas, and
transportation) reach 0.265 Gt CO2e or around 13 percent of total GHG emission in
Indonesia.

Peat Land Emission

Emission from peat land contributes 38 percent of total GHG emission in Indonesia in 2005.
Based on business as usual scenario projection, if there would be no proper actions to deal
with, then the annual emission from peat land will increase 20 percent from 772 MtCO2ev in

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2005 to 972 MtCO2e in 2030. The exposure of carbon from tropical peat land considered as a
particular and dominant challenges for Indonesia because it cover 5 percent peat land and 50
percent tropical peat land of global peat land area.

The exposure of emission from peat land is caused by peat land decomposition due to land
conversion for other uses, especially for planting pulp producer trees and oil palm as well as
peat land fire that is highly influenced by season.

Although become the major source of GHG emission, the potency of peat land to actually
reducing GHG emissions is applicable at low cost, depending on the selected actions to be
implemented. In total, there are chances to reduce GHG emission of 566 MtCO2e in peat land
sector at many level, including avoiding peat land fire, peat land reforestation, as well as
water management for existing timber and oil palm plantation or at peat land used for
agricultural purposes.

The prevention of peat land fire at many levels can reduce emission up to 320 MtCO2e in
2030 with cost US$ 0.35 per tCO2e. The preventive actions include avoiding land burning
during land clearing, using proper technology for peat land manually, strengthening Or
opening?
regulations and law enforcement, building community awareness, and several other activities.
Water management in peat land area is potential to reduce emission up to 80 MtCO2e at cost
US$ 0,85 per tCO2e. Meanwhile, peat land rehabilitation, for example in the peat land area
previously used for one million hectare rice-estate mega project in Central Kalimantan, can
reduce GHG emission up to 180 tCO2e at cost US$ 5,21 per tCO2e.

Emission from Land Use, Land Use Change and Forestry (LULUCF)
Emissions released from LULUCF activities contribute more than 35 percent of total carbon
emission in Indonesia, that is 745 MtCO2e in the year 2005. The contribution from LULUCF
is estimated to still be significant although clean emission from LULUCF will reduce to 670
MtCO2e in 2030 or reducing 18 percent compare to the emission in 2005. However, the
annual gross emission is predicted to stay at higher number that is more than 1.080 MtCO2e.
The emission reduction of 170 MtCO2e is coming from the increasing potency of carbon Is coming
or will come?
storage from reforested area and from the expansion of trees planting for timber production
and large-scale plantations.

The LULUCF sector is potential to significantly reduce GHG emission in 2030 even beyond
the increasing emission of this sector based on business as usual scenario. Such condition will
be possible due to the planting for conservation purposes (not for production). Effective
forest planting and reforestation can create new carbon sink that can store more carbon than
those released to the atmosphere. The potency of yearly reduction from LULUCF sector
reaches 1.204 MtCO2e in the year 2030. From such number, the efforts to stop deforestation
and forest degradation (including through the REDD scheme, Reducing Emissions from
Deforestation and forest Degradation) can contribute the emission reduction up to 811
MtCO2e. Forest planting and reforestation can reduce emission of 280 MtCO2e, while efforts
to prevent forest fire can contribute to the emission reduction by 43 MtCO2e.

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The review from DNPI (2010) recommends the nine choices of abatement levels for GHG
emission reduction in 2010-2030. Among others are:
1. The emission reduction from deforestation and forest degradation (REDD) has the
largest potency of reducing 570 MtCO2e of emission, where the efforts to prevent
forest conversion to small-scale agriculture land is potential to reduce 190 MtCO2e of
emission. The cost needed to halt the deforestation rate is very various, from US$ 1 to
US$ 30 per tCO2e. The lowest cost goes for efforts to prevent the land conversion into
small-scale agriculture land. Meanwhile, the highest cost goes for efforts to prevent
forest conversion into industrial plantation (planting trees for pulp production) and/or
palm oil plantation that can reach US$ 30 per tCO2e of avoided emission. Apakah
perlu ditambahkan ‘large-scale’?
2. The forestation and reforestation (planting and reforesting the ex-forest land) provide
chance to reduce 300 MtCO2e emission in 2030, at the cost of US$ 5 to 6 per tCO2e
that can be done by reforesting 10 million hectares of degraded land and forest, other
than the GERHAN (Forest and Land Rehabilitation Movement) program initiated by
Ministry of Forestry.
3. The application of sustainable forest management concept for emission reduction due
to the land degradation in production forest area is potential to reduce emission at 200
MtCO2e with the cost of US$ 2 per tCO2e.
4. The intensive forest cultivation (silviculture) as an effort to increase riap growth that ‘Riap’???

also means to increase the carbon sink capacity for plants in production forest are Perlu
ditambah carbon?
potential to reduce emission at 100 MtCO2e with the cost of US$ 10 per tCO2e.
5. Prevention of forest fire is potential to reduce 43 MtCO2e in 2030 at the cost of US$
5 per tCO2e.

The selection of action and cost for emission reduction from LULUCF sector is presented at
Picture 2.

Picture 2. Selection of action and cost for emission reduction from LULUCF sector

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Emission from Energy Sector
The projection of GHG emission from energy sector in 2020 and 2030 shows significant
increase. In accumulation, the emission from energy sector is contributed by power plant, oil
and gas production, and transportation.

Compare to 2005, the GHG emission from power plant is estimated to multifold for four
times in 2020 into 370 MtCO2e and seven times in 2030 into 810 MtCO2e. The soaring
number is caused by increasing electrification rate from 60 to 100 percent that is predicted to
happen before 2030, as well as the increasing demand of electricity due to the manufacture
and service business development. The electricity consumption is estimated to increase from
120 Terawatt-hour (TWh) in 2005 into 970 TWh in 2030.

For the future two decades, it is estimated that more than 80 percent of operating power plant
will use fossil fuel (coal, oil, and gas), where 66 percent of them will be coal-based power
plant. The government has also planned to optimize the use of geothermal by targeting 9
Gigawatt (GW) of Geothermal Power Plant (Pembangkit Listrik Tenaga Panas Bumi/PLTP)
to be available in 2030.

The electricity sector has the potency to reduce emission by 260 MtCO2e, where 225
MtCO2e of them will be collected from the increasing utilization of renewable energy
resources such as geothermal optimization, biomass utilization for power plant, nuclear
power plant, and the use of clean-coal power plant technology namely Carbon Capture and
Storage (CCS). The additional emission reduction of 47 MtCO2e will be collected from
demand side management to reduce electricity demand.

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The cost of GHG emission reduction in power plant sector varies from US$ 10 to 40 per
tCO2e. Increasing geothermal capacity from the previous plan of 6 GW in 2020 require US$
27 per tCO2e. Meanwhile, the utilization of biomass waste from timber processing, oil palm
plantation waste, agriculture waste, and many more require US$ 45 per tCO2e. The
construction of coal-fired power plant (PLTU) by using CCS technology is estimated to
require US$ 10 per tCO2e while the construction of nuclear power plant will require US$ 14
per tCO2evi.

Emission from transportation sector is estimated to multifold for seven times in 2030 into 443
MtCO2e from 60 MtCO2e in 2005. The increasing number is caused by three times higher of
private and commercial vehicles from the current number that correlate with the increasing
consumption of oil as fuel in transportation sector.

The potency to reduce emission from transportation sector is reaching 100 MtCO2e in 2030
through three main mitigation options as follows: (1) internal combustion engine system
reparation; (2) substitution from fossil-fuel based vehicles into hybrids and electro-executed
vehicles; and (3) adoption of biodiesel fuel made from oil palm. Three quarters from the total
emission reduction potency (or 75 MtCO2e) will come from refinement of conventional
internal combustion engine system in all level of vehicles by endorsing higher fuel efficiency
standards that can be reached with negative cost. Other options such as utilization of
biodiesel from oil palm can add the reduction of 10 MtCO2e at the cost of US$ 100 per
tCO2e, while the application of electro-executed vehicles will require US$ 300 per tCO2e.

The GHG emission from oil and gas production and refineries facilities will increase from
122 MtCO2e in 2005 into 135 MtCO2e in 2020 and 137 MtCO2e in 2030. DNPI review for
carbon emission is limited to production, including gas flaring and oil processing, yet
excluded the emission from oil and gas reserve development, transportation and petro-
chemistry, and oil and gas consumption that depends on the use in each sector.

The oil and gas sector has the potency to reduce GHG emission in Indonesia up to 30 percent
(41 MtCO2e) until 2030 by focusing on three mitigation options: (1) maintenance and control
process reparation, (2) save energy and energy efficiency related programs, and (3) reduction
of gas flaring reuse.

The highest cost for emission reduction will occur during the gas flaring reuse efforts, that is
US$ 28 per tCO2e. The implementation of co-generation in the refinery will add cost of US$
6 per tCO2e. The reparation of maintenance and control process in crosscutting production
and refinery sub-sectors will generate emission reduction slightly higher from 7 MtCO2e and
it will be positive net profit (-103 USD per tCO2e) hence will increase profit during the
emission reduction process.

Emission from Agriculture

Agriculture is the third highest sector releasing emission in Indonesia after LULUCF and peat
land, with number of emission reaching 132 MtCO2e in 2005 (based on the land use at the

9
moment). The emission from this sector is estimated to increase 25 percent into 164 MtCO2e
in 2030. The reduction potency for this sector is estimated to reach around 105 MtCO2e per
year in 2030, or around 63 percent of emission from related sectors.

Refinement of water and fertilizer management for rice fields offers significant emission
reduction up to 45 MtCO2e or 43 percent from the emission in the sector. The opportunities
of reduction from the third agriculture sector come from the revitalization of damaged land Kalimat
dalam bahasa Indonesia: ‘Peluang
(i.e. caused by excessive problems, erosion, the absent of organic substances, salt or acid pengurangan sektor pertanian yang
ketiga berasal dari..’. Kata ‘yang
problems) that will contribute to the emission reduction by 35 MtCO2e. ketiga’ kurang jelas maksudnya.

The average cost for such reduction in the agriculture sector reach US$ 5 per tCO2e. The
revitalization of damaged land by constructing carbon sink (increasing the organic substance
in the soil) requires cost of US$ 13.8 per tCO2e. Meanwhile, each of the reparation of water
and fertilizer management requires cost of US$ 7 and US$ 21.7 per tCO2e respectively.

Emission from Cement Production

Emission from cement sector is estimated to multifold three times from 26 MtCO2e in 2005
to 75 MtCO2e in 2030. The growing number is mostly due to the significant increasing
production of cement in Indonesia from 31 million ton in 2005 into 125 million ton in 2030.
Most of the emission is released during clinker production process, the key step during
cement production. The process involved calcification process of limestone and clay, a
chemical reaction releasing CO2e in significant number as side product. Substituting clinker
with other substances such as fly ash (coal waste) or slag (metal making waste) can
significantly reduce emission from cement production sector.

With the wide range of technology that available at the moment, the cement sector can further
decrease their emission until 12 percent (or 9 MtCO2e) in 2030. Although the clinker
substitution will reduce the emission the most at 7.5 MtCO2e with the negative cost averagely
at US$ -25 per tCO2e, the inclusion of alternative fuel especially from industrial and urban
waste can further reduce the emission from cement sector up to 4.5 MtCO2e with not too
expensive average cost that is US$ 8 per tCO2e.

Emission from construction sector

Emission from construction sector will increase from 71 MtCO2e in the year 2005 into 215
MtCO2e in 2030 triggered by the increasing household and commercial energy consumption
of 5-7 percent per year.

With the wide range of technology that available at the moment, the construction sector can
further decrease their emission until 22 percent to 2030, that is 48 MtCO2e – where most of
the cost for reduction (more than 70 percent) will be negative.

The GHG emission from Indonesia contributes 5 percent of global GHG emission. Such
contribution is far higher compare to the contribution for the world'
s Gross Domestic Product
(GDP) that is 0.6 percent in 2005. This indicator shows that the increment rate for GHG

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emission is far above the GDP rate, hence it indicate the unsustainable direction of
development in Indonesia.

Review of carbon emission from DNPI conclude that generally Indonesia has the potency of
emission reduction to 2.3 GtCO2e per year in 2030 for the entire emitter sectors with various
cost based on business as usual scenario (Picture 3). More than half of the potency of such
emission reduction can be applied with no additional or even negative cost. Such conclusion
shows that Indonesia can significantly reduce emission and change development pattern from
high to low carbon emission, without jeopardizing long-term economical growth.

Picture 3. The potency of GHG emission reduction and its cost in 2030

Adaptation and Mitigation Strategies in Dealing with Climate Change

The issue of climate change has gained more attention in policy making and long-term
development program. There have been a number of assessments done on the impact of
climate change on various sectors, fields, and lives of Indonesian people. In general, the
adaptation and mitigation strategy is the integration of both actions program into the long,
medium, and short-term national development plans which are embodied in the ministerial
and institutional work program.

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This integration process goes through several stages and phases. Within the Long Term
Development Plan (RPJP) of 2005 -2025, climate change is described as a challenge in
reaching the goal of sustainable development and poverty alleviation. The Medium Term
National Development Plan (RPJMN) 2004-2009 document also identifies the impact of
climate change in Indonesia. However, the national development strategies that are embodied
in RPJMN 2004-2009 have not yet considered the detailed actions of adaptation and
mitigation of climate change both within and cross sectors.

The attention toward climate change issue has increased significantly among different
stakeholders in Indonesia, including policy-makers. Just before the 13th Conference of Parties
(COP-13) of the United Nations Framework Convention on Climate Change (UNFCCC) in
Bali on December 2007, the government issued a document of National Action Plan in
dealing with Climate Change (RAN-PI), containing a proposal of the action plans in the
mitigation of greenhouse gases and adaptation to the increasing global warming and climate
change, through coordination between different development sectors.

Approximately six months after COP 13, judging by the need to improve the coordination of
climate change control implementation and to strengthen Indonesian position in international
discussion forums of climate change control, the president of Republic of Indonesia formed
the National Council of Climate Change (DNPI) through the Presidential Regulation No.
46/2008. The President of Indonesia become the Head of DNPI and he is assisted by two
deputies, which are the Coordinating Minister for Economy and the Coordinating Minister
for Public Health, as well as 17 other related ministers and the head of Meteorology,
Climatology, and Geophysics Agency (BMKG) as its members. In order to perform its
mandate, the President appointed an Executive Director and Head of Secretariat who are
assisted by Working Groups (Pokja) as the daily executors of the Council’s activities.

The effort to operate RAN-PI into RPJMN 2004-2009 has been attempted by the National
Development Planning Agency (BAPPENAS) by drafting the National Development
Planning document: Indonesia Response to Climate Change. This document, later known as
“Yellow Book”, has been introduced partially at COP 13 yet it was not fully published until
2008. The Yellow Book is also issued as a bridging document that considers the sector and
cross-sector issues that are sensitive to climate change, while at the same time sharpens the
development programs embodied in RPJMN 2004-2009 and act as feedback in formulating
RPJMN 2010-2014.

The Yellow Book document tries to integrate the climate change adaptation and mitigation
into the national development planning. In addition to that, number of sectors have been
prioritized for adaptation, which are: (i) agriculture and (ii) coastal areas, small islands,
marine and fisheries; and mitigation, which are: (i) energy and mining, (ii) forestry. Above
all, the most important content of Yellow Book is the list of projects for the prioritized and
non-prioritized sectors that are related to climate change.

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The Ministry of Environment (KLH) has also written the Second National Communication
(SNC) in 2009. According to the Convention of Climate Change, the reporting of greenhouse
gases inventory in the form of National Communication is one of the responsibilities of
developing countries. SNC covers the emission inventory during 2000-2005 period. In the
essence, SNC is the inventory document of greenhouse gases emission from many different
sectors in Indonesia, and the calculated emission is the net greenhouse gas emission. SNC is
the reference document for climate change policies and mitigation actions.

In an effort to integrate climate change further into national development, BAPPENAS draft
a policy document of sectoral planning called "Indonesia Climate Change Sectoral Roadmap
(ICCSR). According to BAPPENAS, the sectoral roadmap is intended to integrate climate
change into the sectoral and cross-sector development, and also to accelerate the
implementation of many relevant sectors in dealing with climate change. ICCSR covers 20
years development period, with development priority is determined based on the 5-year
medium term development plan. Within the adaptation strategy formulation, ICCSR
integrates the framework for the risks assessment caused by global warming and climate
change impacts that have happened and will happen in Indonesia. This is to determine the
climate hazards and their impacts on relevant sectors. The activity of prioritized adaptation is
determined according to those impacts.

Meanwhile, the mitigation strategy is achieved through the analysis of greenhouse gases
emission rate in each sector that is based on the assessment of emission levels from those
sectors. In addition, the analysis of mitigation scenario for each sector (energy, transportation,
industry, forestry and waste) is also conducted.

The ICCSR document describes in detail the planned activities for energy, industry,
transportation, waste, forestry, trash, agriculture, marine and fishery, water, and health sectors
that are categorized into 3 groups of activities. According to the plan, those various action
plans are supposed to be implemented as work program of the related ministries and
institutions in accordance with the development priorities stated in the Medium Term
National Development Plan (RPJMN), which is valid for 5 years.

The National Climate Change Council (DNPI) has conducted the Indonesia GHGs
Abatement Cost Curve to identify the opportunities and options in mitigation actions in order
to reduce GHGs emissions in Indonesia based on abatement costs of each of those mitigation
actions. The reports of this DNPI assessment results have been published on September 2010
and can be used as one of the references in determining the priority of policies and actions to
reach the GHGs emission reduction target of 26 and 41 percent as has set by the President of
Indonesia.

In order to implement the REDD plus program in Indonesia, on September 20, 2010 the
President has issued a Presidential Decree to UKP4 in forming a REDD Task Force with UKP4 ??

Kuntoro Mangkusubroto, as its chairman supported with several officials representing

relevant ministries as its members (Bappenas, Ministry of Environment, Ministry of Finance,

13
Ministry of Forestry, National Land Agency and DNPI). The duty of REED Task Force as
mentioned in the decree is to make sure the formation of national strategies to reduce
greenhouse gases emission from deforestation and forest degradation (REDD plus) and the
formation of national plan for reducing the green house gases emission.vii

The National Strategy of Emission Reduction from Deforestation and Forest Degradation
(Stranas REDD plus) also needs to be released.viii Stranas REDD plus tries to identify the
causes of deforestation and forest degradation as well as identify the formulation of strategies
needed to suppress those causes in order to reduce the emission and increase carbon sink and
storage through forest conservation activities, sustainable forest management, ecosystem
restoration, and various efforts to improve the productivity of production forest and
plantations.

This document also presents the phases of REDD+ implementation in Indonesia which is
generally divided into three phases: (1) strategy drafting that covers the national strategy and
REDD+ national action plans; (2) developing preparedness and implementation of initial
actions in the form of the development of infrastructure required for REDD+, fulfillment of
enabling conditions, and implementation of initial actions; and (3) implementation that cover
the mainstreaming of REDD+ in development, integration of REDD+ into RPJMN and its
full implementation, especially in model areas based on the set criteria.

In order to support the National Strategy of Adaptation and Action Plan of Adaptation in
dealing with climate change, DNPI has completed the Adaptation Science and Policy Study.ix
The analysis tries to identify the various assessments and analysis that have been done by
different institutions that are related to the adaptation of climate change in Indonesia.
Through this review, the analysis team tries to identify the gap and requirement to develop
adaptation strategy, the need and strategy for funding, and also technology to be applied in
Indonesia.

Commitment to Reduce GHG Emission

“Indonesia is committed to reduce GHG emission by 26 percent from business as usual or by
41 percent with international support by 2020.” President Susilo Bambang Yudhoyono (SBY)
published this announcement during the G20 meeting in Pittsburgh, Pennsylvania, United
States of America, at September 2009. He strengthened this commitment on his speech
during COP 15 United Nations Framework Convention on Climate Change (UNFCCC) in
Copenhagen, Denmark, at December 2009. In his speech, President SBY also addressed the
commitment from Indonesia to materialize “low carbon economy.”

Although the conference failed to reach binding agreement between Parties, COP 15 resulted
Copenhagen Accord, a political declaration initiated by 23 leaders of developed and
developing countries involved in the discussion during COP 15. The characteristic of
Copenhagen Accord is not binding and not resulted from transparent and democratic
multilateral negotiation process. Nevertheless, Copenhagen Accord considered as the best
result to be obtained from the conference that accommodate concrete commitment regarding

14
target to limit global temperature rising and funding commitment for climate change
mitigation until 2020.

As follow up, UNFCCC provide deadline to 31 January 2010 for the member countries of
UNFCCC to present their plan of reducing GHG emission.x Government of Indonesia
through DNPI has conveyed a letter dated on 19 January 2010 to UNFCCC Secretariat as a
symbol to support the accord and to show the commitment from Indonesia to reduce
emission. The letter was followed up with submission of formal emission reduction target for
Indonesia on 30 January 2010, to be attached in Copenhagen Accord, by detailing sectors to
be involved in such initiative. Considering that it is a voluntary target based on the capacity
of Indonesia as developing country, thus it is not required to attach further detail of how to
achieve such target as mentioned in Appendix II of Copenhagen Accord.

In the letter sent by Rachmat Witoelar as the Executive Chair of DNPI to Yvo De Boer as
Executive Secretary of UNFCCC, Indonesia has detailed seven actions to achieve emission
reduction of 26% from the business as usual scenario in 2020, those are:
• sustainable peat land management
• deforestation rate and forest land degradation reduction
• development carbon emission absorption project in forestry and agriculture sector
• energy saving and efficiency promotion
• alternative and renewable energy resources development and utilization
• solid and liquid waste reduction
• substitution to low emission transportation

One of the efforts done by Indonesian Government at the moment is signing the Letter of
Intent (LoI) with Norwegian Government to reduce global GHG caused by deforestation,
forest degradation, and peat land conversion in Indonesia. The implementation of LoI will be
done at three levels. The first will be done until the end of 2010, the second during 2011-
2013, and the third will be done since 2014 to 2016.

More structured effort is to combine the target to reduce 26 percent carbon emission and
roadmap document into Medium Development Plan (RPJM) 2010-2014 and combine it with
working priority for government in 2010 that will be accommodated in Presidential
Instruction (Inpres) 1/2010. The result is scenario for emission reduction of both 26 and 41
percent from seven sectors to be achieved in 2020 that can be seen in Table 2.

Table 2. Profile of Indonesian Emission Reduction in the year 2005 and 2020 with 26 and 41
percent Emission Reduction Scenario (in Giga ton)

Sector Emission Profile Target of 26% Additional target Emission Profile 2020
Emission of 15% emission
Reduction reduction
Emission BAU Emissi % from Emissi % from Scenario Scenario
2005 2020 on BAU on BAU 26% 41%

15
Peat land 0,83 1,09 0,280 9,5 0,057 2,03 0,81 0,75
Waste 0,17 0,25 0,048 1,6 0,03 1,07 0,20 0,17
Forestry 0,65 0.49 0,392 13,3 0,31 11,02 0,10 (0,21)
Agriculture 0,05 0,06 0,008 0,3 0,003 0,11 0,05 0,05
Industry 0,05 0,06 0,001 0,0 0,004 0,14 0,06 0,06
Transportation - - 0,008 0,3 0,008 0,28 (0,01) (0,02)
Energy 0,37 1,00 0,030 1,0 0,01 0,38 0,97 0,96
Total 2,12 2,95 0,767 26 0,422 15,01 2,18 1,76
Source: Mubariq Ahmad (Prisma, Vol 3, 2010)

The Strategy of Greenhouse Gases Emission Reduction to 26 and 41 percent

In order to achieve the targeted reduction of GHG, the Indonesian government through
BAPPENAS is issuing the National Action Plan for Green House Gas Emission Reduction
(RAN-GRK), which is embodied in form of President Regulation.xi

In the appendix of the President Regulation RAN-GRK, it is stated that this plan is derived
from the Sustainable National Development Strategy, with the scope of direct emission
reduction, improvement of absorption capacity, and the activities that indirectly reduces the
GHG emission. It is also stated that RAN-GRK does not hamper the economic growth and
poverty alleviation, and it is the commitment of Indonesia in reducing emission at the global
level. RAN GRK is also used as a way to coordinate the efforts of accessing the domestic and
international funding effectively.

The basis of RAN GRK is the proposal from the ministry/institution in RPJMN 2010-2014
and RPJMN 2005-2025, which is then explained in the RAN GRK coordination planning
forum as plan for reducing the national GHG to 26 percent from the business as usual
scenario. The prioritized programs are the ones that use the funding from State Budget and
Local Budget (including loans), private sources, and communities, with a number of criteria
such as: efficient use of funds with the principle of the lowest cost, integrated GHG emission
reduction, feasibility in implementation, and compliance with national development
priorities.

RAN-GRK sets six areas with the emission reduction target of 26 and 41 percent. In order to
achieve those targets, RAN-GRK has also appointed the ministries/institutions in charge of
implementing the action plans in accordance with the programs within each
ministry/institution. The emission reduction plan and target of both 26 and 41 percent is
stated in RAN-GRK as shown in Table 2.

Table 3. GHG Emission Reduction Target per Sector 2010 – 2020 (Draft)
Sector Emission Reduction Action Plan Implementing
Plan (GtCO2e) Ministry/Institution
26% 41%
Forestry and peat 0,672 1,039 Land and forest fire control, network Ministry of Forestry,
land and water management, forest and land Ministry of

16
 rehabilitation, industrial forest (HTI), Environment,
community forest (HR), illegal logging Ministry of Public
elimination, deforestation prevention, Work, Ministry of
community empowerment Agriculture.
Agriculture 0,008 0,011 Introduction of varieties in low Ministry of
emission, water irrigation efficiency, Agriculture,
using organic fertilizers Ministry of
Environment
Energy and 0,038 0,056 Biofuel usage, substitution to engine Ministry of
transportation with higher fossil fuel standard of Transportation,
efficiency, TDM reparation, Ministry of Energy TDM = ?

transportation quality, demand side and Mineral

management, energy efficiency, Resources, Ministry
renewable energy development. of Public Work
Industry 0,001 0,005 Energy efficiency, renewable energy Ministry of Industry
usage
Waste 0,048 0,078 Landfill construction, waste Ministry of Public
management by applying 3R, and Work, Ministry of
integrated waste processing in urban Environment
area
Total 0,767 1189

Source: National Action Plan for Green House Gas Emission Reduction (Draft, 3 October
2010)

In parallel with the development of negotiation at the international level, the voluntary
emission reduction target which has become the target for Indonesia in the future will be
categorized as self-funded NAMA or unilateral NAMA, which is 26 % and will be achieved Tdk ada
keterangan. Apakah maksudnya:
through domestic funding (government and private funding). Meanwhile, the supported Nationally Appropriate Mitigation
Action?
NAMA of 15%, derived from 26% and 41% margin, is planned to be achieved by the support
of international funding. The emission reduction efforts outside the activities categorized as
the efforts to achieve the 26% and 41% targets basically can be categorized as crediting
NAMA or implemented as a part of Clean Development Mechanisms (CDM), which is part
of carbon market.

One thing that we need to understand is that the implementation of emission reduction efforts
for developing countries such as Indonesia can be done simultaneously in different NAMA as
long as the activity does not carried out in two different categories at the same time.
Therefore, it is important to determine and agree on the activities in each sector that belongs
to the achievement of 26% and 41% target by using international funding. By creating this
list of activities, the emission reduction efforts can be done in a more effective and efficient
manner.

Funding Mechanisms for Climate Change Actions in Indonesia

Funding Needs

17
The climate change funding mechanism is one of the vital components that enable a country
to implement the strategy of GHG emission reduction (mitigation) and the strategy to deal
with the impacts of climate change (adaptation).

In order to implement effective mitigation and adaptation to reach emission reduction targets,
it’s important to locate the funding required in achieving the GHG emission mitigation
targets as well as the emission reduction potentials that available for every action in each
sector/area. The Indonesian government has also drafted policy to support the action
programs of each sector that implement the mitigation as well as budget to implement those
action programs. The bigger target of emission reduction in a sector means bigger budget will
be allocated to that sector.

The calculation of funds required to implement the adaptation strategy and action for
prioritized sectors is currently not available. This is because the calculation of adaptation
costs is influenced by many complex variables. The adaptation characteristics that is unique
and specific for certain areas complicate the calculation of funding needs for adaptation that
must be done carefully. Unlike adaptation, the calculation of funds required for mitigation
actions is relatively easy. The calculation of costs for mitigation action can easily be found in
NEEDS study by DNPI and UNFCCC Secretariat, ICCSR, Indonesia GHG Abatement Cost
Curve, and other analyses which have been done in Indonesia.

According to the analysis of Second National Communication (Ministry of Environment,

2009), the emission reduction of 26% up to the year 2020 will cost as much as 83.3 trillion
rupiahs per year. Meanwhile, the 41 percent emission reduction will cost as much as 168.3
trillion rupiahs per year. This number is equivalent to 1.4 percent and 2.8 percent of
Indonesian Gross Domestic Product (PDB) projection in 2010.

The calculation of Indonesia GHG Abatement Cost Curve by DNPI indicates that annual cost
for implementing all options for mitigation actions reaches to a total of 12.84 billion Euros or
180 trillion Rupiah per year up to the year 2030, with the average reduction cost of 6 Euro
per tCO2e. The total emission reduction cost is equal to 5.6 percent of Indonesian GDP in
2005.

Meanwhile, the analysis of ICCSR for mitigation in cement production, transportation

(change of transportation mode), waste/garbage (optimistic scenario), and forestry
(LULUCF) sectors to reach the emission reduction target of 26 percent, shows an estimate
total cost of US$ 26.89 billion dollars. If the action of peat land is included, the cost will
reach US$ 36.619 billion in 2020. ICCSR has not included the adaptation cost and required
funds for electricity generation sub-sector yet.

Sources of Funds
According to the National, Economic, Environment, and Development Study (NEEDS)
assessment done by DNPI, the sources of funds for climate change actions in Indonesia
consist of: (i) existing sources of funds and (ii) future potential sources of funds. The sources

18
of funds available today come from: (i) government funds (State Budget/Local Budget), (ii)
funds from bilateral and multilateral foundations/institutions (ODA), (iii) grants from
multilateral and bilateral institutions for climate change; (iv) funds from private philanthropic
organization (national and international). The potential sources of funding in the future
include foreign and domestic private funding and carbon markets sources, for example from
the Clean Development Mechanism projects (CDM), carbon offsets, and so forth.

Since 2008, the Indonesian government has received aid in the form of Development
Program Loans (DPL) and Climate Change Policy Loan (CCPL), from the French
Government (AfD), Japanese Government (JICA), and recently in 2010 from the World
Bank. Up to 2010, the total amount of DPL/CCPL credit from those three institutions reached
2 billion USD. Those loans were not intended for a specific project. However, the loans that
are managed by the Ministry of Finance as a part of the government budget are intended to
help the Indonesian government develop policies and programs that can help Indonesia
towards low carbon and more sustainable development. Related to those loans, the
government has also states its commitment to solve a number of policies and the steps related
to climate change mitigation and adaptation.

In addition to program loans, there are also project loans such as electricity, geothermal, and
hydro power sector which comes from multilateral and bilateral financial institutions, such as
World Bank, Asia Development Bank, KfW, JICA, etc. There is also seeds fund as a
revolving capital and soft loan that is intended for environmentally friendly projects, such as
IEPC program which is supported by KfW and PAE, which were funded by JBIC (JICA).

A number of grants that are also available for Indonesia for the next two to four years are
largely intended for mitigation actions, such as Climate Investment Fund (CIF), which
consists of Clean Technology Fund and Forest Investment Program. The fund is part of the
programs managed by World Bank and ADB and intended to support the renewable energy
projects in Indonesia. For REDD program, there is the UN-REDD grant which at the moment
is managed by UNDP. This fund is intended to help Indonesian government in preparing the
implementation of REDD program. In addition, there is also the Technical Assistance Fund
from Global Environmental Facility (GEF) for the geothermal development, energy
efficiency, and forest ecosystem restoration.

Climate Funding Institutions

In order to mobilize the funding of climate change from public funding sources, especially
from bilateral and multilateral institutions and funds from the Indonesian government itself,
the Indonesian Climate Change Trust Fund was formed in 2009 by the Indonesian
government under the coordination of BAPPENAS. The funds managed by ICCTF are
intended for the funding of mitigation and adaptation programs in accordance with the
BAPPENAS sectoral roadmap.

In addition to ICCTF, Indonesia Green Investment Fund (IGIF) was also formed by the
Ministry of Finance. The management of IGIF was done by the Government Investment

19
Center (PIP). The goal of IGIF is to gather and encourage investment from private sector
(market-based) to fund the low-carbon emission investment projects. IGIF was designed as
an instrument of coordination with private funding in order to fulfill the need of large-scale
investment.

ICCTF and IGIF institution model is a novelty, especially in the funding of climate change
programs or projects. The formation of this facility should place Indonesia at the forefront
among other developing countries in respect of its preparedness to access international
funding under UNFCCC, or outside UNFCCC, in the future. Both of these institutions have
at least adopted the international standards of finance management both in the institutional
structure and operational principles, which are the major requirements of international donor
countries at the moment.

The Challenge of Action Program Implementation in dealing with Climate Change

As has been conveyed by the President of Republic Indonesia at the past meeting of G-20 in
2009, Indonesia has committed to implement the concept of low-carbon economy, which is
then embodied into a target of GHG emissions reduction by 26 and 41 percent from business
as usual. On the other hand, economic growth, poverty alleviation and unemployment are the apa perlu ada
keterangan soal 41 percent adalah
challenges to be faced domestically. The desire to play a role in solving global warming and with international support?

priorities in the country gave birth to new challenge. The challenge is how to formulate
policies and programs on climate change adaptation and mitigation that support pro-growth,
pro-poor and pro-jobs strategies, which can also support the achievement of low carbon
economic development (ERK), which is a new concept in Indonesian developmental
discourse.

After nearly a year of the launching of emissions reduction, there are still challenges to have
commitment support to reduce GHG emissions on a voluntary basis from various circles. One
of the debatable issues rising these days is related to GHG reduction program that is derived
from Indonesian and Norway agreement. Some businessperson and academics still question
the commitment from Indonesia to reduce its GHG emissions. Some opposing groups assume
that GHG mitigation is not the responsibility of Indonesia as a country. This group considers
that the commitment of President to the people worldwide could reduce economic
superiority, hamper investment, and close business opportunity in Indonesia.xii

That refusal is a challenge for the current government. How to make this strong political
desire to bring Indonesia to ERK can gain support from wider circle, the bureaucracy, civil ERK??

society, and employers. One way to do it is to communicate the idea of ERK to all
stakeholders and to local governments intensively, as well as attempts to give confidence that
the option to implement ERK and efforts to achieve green growth in Indonesia actually has a
positive value and is good to achieve economic superiority in the future. The argument based
on the costs and benefits need to be addressed honestly by considering that early stages of
implementation are usually heavy. Support from stakeholders is needed by considering that

20
the various policies and regulations will be drafted to achieve the level of targeted emissions
reductions need to be implemented by the related various parties.

In addition, it should be highlighted that the implementation of this policy will lead to social
and political costs in the short term, which can be a boomerang for government. Therefore,
attempts to explain and disseminate policy information should be done in pro-active manner.
Similarly, post-implementation review and determination to guard this commitment is needed
in order to reduce various distortion effects that can pull Indonesia back from the path of low
carbon economy development.

Another challenge is to achieve balance in implementing adaptation and mitigation programs.

So far, the more prominent discourse is the mitigation actions. President' s speech at the G20
forum in the past 2009 stressed more on the commitment from Indonesia to carry out
mitigation, yet only slightly mentioned adaptation. The low priority to the adaptation more or
less reflected in the form of bilateral and multilateral cooperation as well as various activities
of government institutions and non-governmental organizations dealing with climate change
lately. There is an impression that the priority for mitigation is prioritized rather than the
adaptation, regardless the serious threat of climate change on various sectors and parts of,
based on the results of studies that have been done so far.

In the context of climate change adaptation, crosscutting program for coordination and
integration remains a major challenge. So far the government has pushed policies and
adaptation strategies at the sectoral level with minimal inter-sectoral integration effort.
Number of sectors vulnerable to climate change is trying to make a vulnerability assessment
and formulating sectoral adaptation strategies and programs.

Considering that climate change adaptation has both local and cross-sectoral dimensions that
are intertwined each other, then one of the solutions to be offered to overcome this barrier is
to accelerate crosscutting coordination process to encourage the mainstreaming of adaptation
into national development planning, establish information networks of disaster threat due to
climate change, and integrate adaptation strategies in various sectors. Therefore, it is
necessary to increase budget allocation in the state/local budget for adaptation actions.
Besides, the role of institutions set up specifically to deal with climate change needs, that are
DNPI, should be optimized.xiii These can be done by the support from BAPPENAS and the
vital support from Ministry of Finance to encourage cross-sectoral integration in the context
of development planning and budgeting.

With the plan to draft the Presidential Regulation on the National Action Plan to Reduce
Greenhouse Gas Emissions (RAN-GRK) as the legal basis for achieving 26 and 41 percent
emissions reductions, the challenges faced today are: (i) the consistency of policies post-
2014, after the end of President Yudhoyono' s administration, (ii) how to reduce the emission
reduction targets of each sector that has been set into detailed, sectoral programs that can
provide results of measureable, reportable and verifiable (MRV-able) emission reduction, (iii)

21
how to translate and derive various targets of sectoral emission reduction into provincial
development plans and district/cities across Indonesia.

Concern on the consistency of action plan implementation post 2014 is very reasonable,
given the emission reduction targets is the main program of the current administration and it
might not be a commitment for the next regime. It is usual to hear the jargon of: "change of
leadership, change of policy." The chances where Indonesian government will not continue
this plan after 2014, or continue but with lower priority, still existed. Plus, the Copenhagen
Accord is no longer a binding decision to all supported parties. Similarly, voluntarily
emissions reduction targets submitted by the countries supporting the accord is no longer
binding as well.

In order to deal with this possibility, the implementation of action plans for emission
reductions within the next five years (2010-2014) will be valuable to provide indications and
evidence that the targets is achievable. The success of implementing emission reduction can
be a solid foundation for the sustainability of this action plan implementation for the next five
year. Thus the target of 26 percent emission reduction of business as usual scenario in 2020
and the road map to achieve a low carbon economy can be realized.

The next challenge is to realize the emission reduction targets in each area and sector into the
work program of the agency ministries/institutions bearing the task (see table 2), with
measurable and verifiable results. Currently, a number of strategies and action plans that
support emissions reductions were written in the ICCSR manuscript developed by Bappenas.
Although the ICCSR document looks quite comprehensive, yet various action programs
indicated in this program may not necessarily implemented by the related ministries.
Implementation still requires crosscutting coordination and cooperation among related
agencies, outside the agencies that are responsible for these targets.

In the energy sector for example, one of the action plan is developing renewable energy. The
indicated plan is increasing the penetration of renewable energy to produce electricity. The
person in charge for this field is the Ministry of Energy and Mineral Resources. It is
estimated that it is not easy for the Ministry of Energy and Mineral Resources to achieve the
target bear onto them, by considering that the investment in electricity generation from
renewable energy depends heavily on various policy of fiscal and non-fiscal incentives,
which are not in the control of the Ministry of Energy and Mineral Resources. Instead, it is
under the authority of the Ministry of Finance. The implementation is also done by number of
state-owned companies and private parties.

The action plan of emission reduction through saving energy of vehicle engines, which is the
responsibility of the Ministry of Transportation also requires coordination and cooperation
with the Ministry of Industry. The latter ministry regulates the production and automotive
industry standards. The consequence of such action plan is to raise standards of vehicles
operating in Indonesia and restrict vehicles that consume a lot of fuel. In order to do so, not

22
only a higher industry standard is required, but also more stringent policies and trade rules, as
well as various disincentives policy that encourage consumers to buy fuel-intensive vehicles.

A number of action plans also requires the cooperation and the ability of local governments
to be able to be implemented. For example, emissions reduction plans through improving the
quality of public transport in urban areas and improve the transport demand management
(TDM) especially in big cities. In the era of regional autonomy, urban transportation policy is
the responsibility of local governments. Therefore, this plan must fully received support from
the government and need to be embodied in the planning and regional development priorities
as well as adequate budget allocation in the local budget. Various other examples can be seen
in a number of other fields, such as peat land and forestry management, and city
waste/garbage management.

Another challenge is the implications cost of action plans as outlined in the RAN-GRK.
Several selected action have not reflected the principle of marginal abatement cost yet, which
actually is important in determining priorities for action. Example in the energy sector
includes the growing consumption of biofuel. Implementation of action might not always
appropriate to take part in achieving emission reduction targets since the cost of this action is
relatively high, as presented on the cost curve DNPI.xiv

Funding access for climate change mitigation is relatively easier to get, compared access to
adaptation. Limitations of cost calculation for national and cross-sector adaptation as a basis
for priority action complicate the allocation of funds for adaptation and subsequently, the
budgeting process. With the limited international commitment to provide adaptation funding
to climate change, including funding mechanisms currently available under the UNFCCC, it
has given the implication that adaptation programs should be funded from the government
budget (State/Local budget) or foreign loans. The current challenge is to set priorities for
action to be funded, by considering the limited fiscal space in the existing budget, as well as
considering the conflict of interest with the priority for mitigation actions that have been
designated as a national policy.

Fiscal policy has an important role in encouraging the achievement of green house emission
reduction targets. Review of Green Paper on Economic and Fiscal Policy Strategies for
Climate Change in Indonesia, issued by the Ministry of Finance has recommended the
application of carbon taxes/levies in fossil fuels with potential revenue of 95 trillion rupiah
per year. Implementation of this policy can be a driving force for the achievement of a
number of action plans in RAN-GRK. For example, in energy efficiency, vehicle fuel
efficiency, and penetration of renewable energy, and so forth. Besides, this carbon tax can be
a source of domestic funding for adaptation and mitigation activities.

Although this recommendation is good in the context of climate change policy, its
implementation requires a number of institutional reforms, taxation rules, and domestic
energy pricing policies. In addition to that, strategies are needed to persuade public as well as

23
to anticipate resistance from industry and business and effect of welfare reduction of the
poor.

Policy Recommendation
1. For developing country like Indonesia, climate change is highly related with community
development and livelihood. Therefore, climate change strategy and policy must cover
both interconnected adaptation and mitigation strategy and policy and it cannot be
detached from poverty alleviation and disaster management efforts.

2. National Action Plan for Green House Gases Emission Reduction as guideline for
achieving voluntary emission reduction target should be interpreted at the soonest
possible into policy and action plan in each sector by considering the least cost options,
especially for activities allocated in domestic budget.

3. Implementation of ministries and institutional programs in each sector requires more

operational policies and guidelines. Therefore, it will be important to focus the working
program 2011 in related ministries and institutions into such effort, thus the achievement
target can be determined and later become one of the assessment and performance
indicators and conformation in the budget allocation (APBN/APBD) from related
ministries and institutions.

4. Accountability and transparency cannot be put aside. Therefore, regulations on MRV

standard (measurement, reporting, and verification) need to be developed in each
ministries and institutions. Thus, the achievement of voluntary target can be held
accountable even in international level, especially for activities supported by international
fund.

5. Coordination of action plan for implementation and formulation of direction, strategy,

and policy on climate change is critical. Therefore, the function and role of DNPI in
accordance with Presidential Regulations no 46/2008 should be implemented optimally
with support from related sectors, ministries, and institutions.

6. The capacity building program should be implemented at the soonest possible for:
a. Ministries and central government institution to (a) integrate the climate change
mitigation and adaptation strategy into action program planning in related
ministries and institutions, and (b) create measurable and achievable working
program with qualitative and quantitative performance monitoring and evaluation.
b. Local government (Pemda) to integrate concept and approach of low carbon
economy into local development planning

7. The importance of conducting further review related with domestic fund resources for
both adaptation and mitigation by developing fiscal and non-fiscal instruments and
increasing the role of bank and carbon market to encourage the low carbon development
and actual emission reduction.

24
8. The coordination mechanism and capacity building for existing climate change financial
institutions (ICCTF and IGIF) and other mechanisms or institutions need to be formulated
at the soonest possible. It is also important to formulate oversight mechanisms to ensure
the governance, investment effectiveness, funding, and the achievement of social integrity
and environmental sustainability during its implementation.

9. It is important to educate ministries and institutions, local government, and public to

encourage the implementation of actual emission reduction efforts.

10. Various activities and trial projects in provincial and district/city level need to be
developed as follow up of the education program done previously so that the voluntary
target of reducing GHG emission can be achieved.

Specific recommendations related with budget function and development monitoring done by
House of Representative:

11. The budget conformity needs to be confirmed, especially in regards with the number and
its allocation in ministries and institutional level for program implementation and GHG
emission reduction activities.

12. The balance between climate change mitigation and adaptation efforts need to be
confirmed for short, medium, and long-term development in accordance with the specific
condition in each sector and area.

i
In publication of the year 2000, Ministry of Forestry estimate at least 30 million people depend their
life directly to forestry sector.

ii
El Nino – Southern Oscillation (ENSO) is an anomaly in Pacific Ocean surface temperature in
Ecuador west coastline and Peru that are higher from its normal average. Such symptom is well known among
public with the name of El Niño (read as: "El Ninyo" that means boy "). Similar symptom at the same place but
this one decreasing temperature is more known as La Niña (read as: "La Ninya"). The term was firstly used to
name warm sea stream that sometime flow from North to South through Paita and Pacasmayo Ports, Peru, in
December. Such condition occurs more frequent, that is three to seven year, thus it can influence global climate
for more than one year.

iii
For more complete reading, please refer such discussion to ICCSR (2010): Basis Saintifik: Analisa
Proyeksi Suhu dan Curah Hujan, Bappenas, Jakarta, document.

iv
1 Giga ton = 1.000.000.000 ton; 1 ton = 1000 kg.

v
Million ton CO2 equivalent = million ton equal to carbon dioxide (CO2).

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vi
Until current, the coal-fired PLTU using CCS has not been commercially implemented and estimated
to establish and proper for commercial use after 2020. The formulation and analysis done by DNPI (2010) study
for coal-fired PLTU with CCS is using investment estimation. Meanwhile, PLN is based on current investment.

vii
http://www.thejakartapost.com/news/2010/09/24/kuntoro-mangkusubroto-chairs-redd-task-force.html
viii
First draft of REDD National Strategies Manuscript, dated September 23, 2010. This manuscript is
drafted by Bappenas, in collaboration with Ministry of Forestry and Ministry of Agriculture.

ix
This assessment titled is “Adaptation Science and Policy Studies”, carried out by DNPI and LAPI ITB,
under the support of UK Aid and British Council. This assessment began on March 2010 and ended on July
2010.
x
Until current there are 138 countries representing at least 86% of global emission in 2005 that already
submit their support to Copenhagen Accord while presenting the GHG emission reduction target.

xi
Until this writing was made, the draft of Presidential Regulation has been discussed in State
Secretariat. It is expected that the Presidential Regulation will be issued in the end of the coming October.

xii
Sofyan Wanadi, one of the leading entrepreneurs openly against the cooperation agreement between
Indonesia and Norwegian that includes moratorium actions in forestry sector. The news can be seen in:
http://www.suarakarya-online.com/news.html?id=261322; A number of academicians also questioned the
scientific justification of the moratorium plan towards the target of emission reduction that has been launched by
the government: http://www.thejakartapost.com/news/2010/09/03/skepticism-mounts-benefits-moratorium.html

xiii
According to Chapter 3, Presidential Regulation No. 46/2008, two out of four tasks of DNPI are: (a)
Draft national policy, the strategy, program and mitigation activities of climate change; (b) Coordinate activities
in executing the task of climate change that covers adaptation, mitigation, transfer of technologies and funding
activities.
xiv
Indonesian Report GHGs Abatement Cost Curve by DNPI and McKinsey, calculating abatement cost
for the use of bio-diesel from CPO that reaches 100 USD per tCO2e (exhibit 21, page. 30).

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