Renewable Energy  in Carbon Market
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  • 1. Renewable Energy in Indonesia Carbon Market Dicky Edwin Hindarto National Council on Climate Change of Indonesia The Indonesia DNANational Council on Climate Change of Indonesia
  • 2. Outlines 1. NCCC roles in carbon market 2. Indonesia carbon market current condition 3. Indonesia future carbon market scenario 4. RE in Indonesia future carbon market scenario 5. Nusantara Carbon Scheme. 2 National Council on Climate Change of Indonesia
  • 3. NCCC of Indonesia roles on carbon market NCCC has 5 tasks, one of the most important thing is to develop carbon trading within Indonesia area (Presidential Decree number 46, 2008) NCCC is the Indonesia UNFCCC focal point and also the focal point for another carbon market related international forum and negotiation e.g. bilateral initiative with the Japan and Australia The Executive Chairman of the NCCC is also the head of the Designated National Authority for Clean Development Mechanism (CDM) in Indonesia, called “Komite Nasional Mekanisme Pembangunan Bersih” (Komnas MPB) The Carbon Trading Mechanism Division also act as the secretariat of DNA- CDM in Indonesia. The CDM Projects development in Indonesia 3 National Council on Climate Change of Indonesia
  • 4. The Indonesia CDM and voluntary projects Solar, 1 Solar, 1 Afforestation, Afforestation, 1 0 Agriculture, 1 Agriculture, 0 Cement, 1 Reforestation, Cement, 1 PFCs and SF6, 3 Reforestation, 1 PFCs and SF6, 1 0 EE EE N2O, 2 N2O, 1 households, 0 households, 1 EE Industry, 2 Biomass EE Industry, 7 Biomass EE supply energy, 33 energy, 11 side, 2 EE supply side, 7 EE own generation, 0 Methane EE own Methane generation, 6 Fossil fuel avoidance, 95 avoidance, 35 switch, 3 Fossil fuel Fugitive, 1 switch, 10 Geothermal, 4 Fugitive, 4 Geothermal, 12 Hydro, 6Coal bed/mine Hydro, 27 Coal bed/mine methane, 2 Landfill gas, 12 Landfill gas, 7 methane, 0 The CDM projects in UNFCCC pipeline The registered CDM projects in UNFCCC Total CER expected until 2012 : 50,132,380 CER; mostly from methane avoidance Total CER expected until 2012from the registered projects : 27,513,180 CERs; mostly from geothermal There are more than 20 voluntary carbon markets that being developed in Indonesia Some of the so called “REDD+” projects goes to the voluntary carbon market About 2,5 millions VER are already issuanced for voluntary carbon market projects. 4 National Council on Climate Change of Indonesia
  • 5. The Indonesia issuanced CDM projects Expected IssuanceNo. Title Province / State Type Sub-type CERs CERs success1 CDM SOLAR COOKER PROJECT Aceh 1 Aceh Solar Solar cooking 1,077 6,060 18%2 Methane Capture and Combustion from Riau Methane Manure 42,716 221,485 19% Swine Manure Treatment Project at PT avoidance Indotirta Suaka Bulan Farm in Indonesia3 Indocement Alternative Fuels Project West Java & South Biomass energy Agricultural 80,967 258,308 31% Kalimantan residues: other kinds4 Indocement Blended Cement Project West Java & South Cement Clinker replacement 333,076 1,211,054 28% Kalimantan5 Darajat Unit III Geothermal Project West Java Geothermal Geothermal 1,329,960 1,390,111 96% electricity6 Tambun LPG Associated Gas Recovery and West Java Fugitive Oil field flaring 1,483,279 1,040,953 142% Utilization Project reduction7 MEN-Tangerang 13.6MW Natural Gas Co- Banten EE supply side Cogeneration 17,154 21,836 79% generation Project8 Emission reductions through partial West Java & Biomass energy Agricultural 12,335 106,284 12% substitution of fossil fuel with alternative fuels Central Java residues: other in the 2 cement plants of PT Holcim kinds9 Indonesia Tbk Power Plants Using Waste 4MW Biomass Central Java Biomass energy Forest residues: 10,982 14,322 77% Wood Chips & Sawdust in Central Java sawmill waste10 Province, Indonesia Gianyar Waste Recovery Project Bali Methane Composting 2,110 6,713 31% avoidance11 Methane Recovery in Wastewater South Sumatra Methane Waste water 14,472 41,349 35% Treatment, Project AIN07-W-01, Sumatera avoidance12 Utara (North Sumatera), Indonesia Methane Recovery in Wastewater North Sumatra Methane Waste water 30,235 42,206 72% Treatment, Project AIN07-W-05, Sumatera avoidance13 Utara, Indonesia AIN08-W-03, Methane Recovery in North Sumatra Methane Waste water 15,537 38,319 41% Wastewater Treatment, Sumatera Utara, avoidance14 Indonesia BAJ Gunung Agung Factory tapioca starch Lampung Methane Waste water 6,858 30,779 22% wastewater biogas extraction and utilization avoidance15 project, Lampung Province, Republic of Kamojang Geothermal West Java Geothermal Geothermal 92,691 81,660 114% electricity16 Wayang Windu Phase 2 Geothermal Power West Java Geothermal Geothermal 379,773 372,373 102% Project electricity Total 3,853,222 4,883,812 79% 5 National Council on Climate Change of Indonesia
  • 6. New carbon market scenarios for Indonesia • New CDM Readiness of the • REDD+ government and • Crediting NAMAs Voluntary • CDM Carbon Market privates to prepare legal, organizational, • Regional market Domestic market and technical • Bilateral offset structures of market. credit mechanism • Others• Reformed CDM post-2012• Programmatic CDM (we have issued 5 LoAs)• REDD+• Creditable NAMAs• Bilateral offset credit mechanism, 32 FS have been done)• Voluntary market and domestic market• Regional market (with Australia and New Zealand) 6 National Council on Climate Change of Indonesia
  • 7. Indonesia future carbon market frame work International Carbon Markets Direct link with other International Linking via offset domestic market Crediting mechanism mechanism Mechanism DOMESTIC MARKET MECHANISMS that based on voluntary market system REGIONAL AND (e.g. Emissions trading scheme or sectoral trading) BILATERAL MARKET Indonesia will prepare standard, policies, and that based on regional and market instrument. bilateral agreement and domestic CARBON CREDIT SUPPLIER emission reduction policies Indonesia will produce carbon credit for (e.g. NAMA or sectoral crediting) mandatory and voluntary based market system for international market. 7 National Council on Climate Change of Indonesia
  • 8. Where do we put the RE in future carbon markets? CDM and PoA Other Creditable New NAMAs Markets Renewable Energy BOCM VCM Traditionally, RE can be developed in future CDM and PoA. Large RE is one of the main target in Creditable NAMAs. VCM can be used for the small to the large capacity of RE. Some countries are eager to invest the RE projects using BOCM scenario (geothermal, hydro, biomass). One or two other new markets mechanism still will be developed and use RE as one of the main target. 8 National Council on Climate Change of Indonesia
  • 9. Designing new market mechanism Voluntary Offset Cap and Trade New Market Mechanism?• Politically easier to adopt • Need strong political will • Easy to adopt• Relatively harder to to adopt • Simple governance operate due to its • Easier to implement due • Does not require lengthy ‘project-based’ nature its nature of ‘inventory- preparation• Governance is simple based’ • Customize-able• Does not require lengthy • Friendlier to large-scale • Easy to implement preparation eg. ‘green’ investment (inventory-based?) Preparing sectoral • Need rigorous • Support large-scale baseline, etc. preparation to establish ‘green’ investment• Can be customized by baseline design to accommodate • Governance is complex specific need eg. Micro  cap setting and project, co-benefit value, mechanism design etc. • Leakage issuesNew market mechanism should seek to feature only the merits of existingmechanisms with regard of UNFCCC negotiation results. 9 National Council on Climate Change of Indonesia
  • 10. Indonesia initiative on domestic carbon market Skema Karbon Nusantara, or Nusantara Carbon Scheme (NCS), is an Indonesian-based voluntary carbon market scheme. By entering NCS, Indonesians can reduce greenhouse gas emissions by developing low carbon project or buying NCS credits. NCS features:  A simple yet robust procedures;  Technical assistance from National Council on Climate Change; and  Assurance that the project had delivered real and measurable emissions reduction and contributes directly to Indonesia low carbon and sustainable development. Skema Karbon Nusantara 10 National Council on Climate Change of Indonesia
  • 11. Renewable energy is one of our main targetSpecifically, SKN will be targetted:• Projects that ‘traditionally’ not feasible for carbon market, e.g. micro projects (<5MW energy generation, <10 GWh/yr. of energy saving, <20.000 tCO2/yr. of emissions reduction) and community- based forestry/agriculture projects as Seller; and• Indonesian entities interested in offsetting GHG emission and contributes to sustainable development as BuyerAlong with other countries initiative and VCM standards! K-CER J-VER Skema Karbon Nusantara 11 National Council on Climate Change of Indonesia
  • 12. SKN’s flow of operation Project Design Validation No Yes Registry and Document Validation Report Credit Issuance Distribution of Credits No Yes Monitoring and Monitoring Assessment Report Verification By Project Developer By Validator/Verificator By SKN Committee• SKN flow of operation is comparable with CDM.• Validation/verification in SKN will prioritize local entities (private companies/NGOs/research institutes) with reference to ISO 14064 series and ISO 14065 12 National Council on Climate Change of Indonesia
  • 13. Terima kasih SkemaThank you Karbon Nusantara National Council on Climate Change of Indonesia