Seminar 13 Mar 2013 - Session 5 - What shade of green_ by KObidzinski


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Indonesia has embarked on a major economic transition. It has done so by launching in 2011 the MP3EI accelerated development and investment policy which by 2025 is expected to turn Indonesia into a major Asian economic power house and top-10 economy in the world. Projected targets require up to USD 400 billion over the lifetime of this policy. More than 50% of the required investment is to originate from domestic private funders and FDI. There are concerns that MP3EI development program may be at odds with the GHG emission reduction agenda which for the same time frame aims to reduce GHG emissions by 26%, manly through managing land use change, especially the conversion of forest areas. MP3EI places heavy emphasis on land-based projects and large-scale industrial investment. In this context, MP3EI is being presented in the mass media as a form of “green” development whereby the investment projects adhere to environmental guidelines and therefore does not contradict the emission reduction plans. This presentation examines the relationship between MP3EI investments and GHG emissions reduction objectives with a focus on the province of East Kalimantan, which constitutes one of the main sub-corridors of MP3EI.

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Seminar 13 Mar 2013 - Session 5 - What shade of green_ by KObidzinski

  1. 1. “What shade of green? MP3EI and economic development discourse in Indonesia Obidzinski K., Komarudin H., Dermawan A., Andrianto A.Wednesday, March 13th, 2013, Amazon Room, CIFOR THINKING beyond the canopy
  2. 2. Indonesia TodaySource:McKinsey2012 THINKING beyond the canopy
  3. 3. ….and in 2030Source:McKinsey2012 THINKING beyond the canopy
  4. 4. MP3EI: quantum leap forwardSource: MP3EI THINKING beyond the canopy
  5. 5. USD 400 bln in overall investment KalimantanSource: MP3EI THINKING beyond the canopy
  6. 6. Emphasis on resource extraction and processing Main economic activity Sumatera Java Kalimantan Sulawesi Bali-Nusa Papua – Kep. Tenggara MalukuSteel  Food and beverages Textile Transportation equipment Shipping  Nickel  Copper Bauxite Palm oil  Rubber Food agriculture  Tourism ICT Coal  Oil and gas   Jabodetabek Area Sunda Straits National Strategic Area Defense equipment Animal husbandry Timber Cocoa Fishery THINKING beyond the canopy   
  7. 7. But there are some challengesSource:Strategic Asia2012 THINKING beyond the canopy
  8. 8. “Green Economy”•Allows for: economic growth but significantlyreduces environmental risks and ecologicalscarcities•Understands that: We are reaching limits in our use of the natural resources ENV and SOC costs of our current economic model must be taken into account Need for a balance between growth, income, jobs, ENV quality and equity THINKING beyond the canopy
  9. 9. “Green Economy” cont•Needs: Enabling conditions that makegreen sectors attractive opportunities forinvestors and businesses•Enabling conditions: Right mix of fiscal measures, laws, norms, international frameworks, know-how and infrastructure What is currently in place in Indonesia/East Kalimantan? THINKING beyond the canopy
  10. 10. Steps towards a greener approachObjective: bridge the gap between GHG national emissionreduction targets and impact of land based investmentsApproach:•Forest conversion and concession moratoria•Low Carbon Growth Strategy•GHG emission reduction actions (RAN/RAD-GRK; SRAPREDD+)•Certification (RSPO, ISPO, VPA-SVLK, FSC)•Green Master Plan MP3EI project portfolios THINKING beyond the canopy
  11. 11. “Green Nearly 1M Ha of economy” forest in oil palmchallenges: concessions oil palm Oil palm concessions on: land cover area_ha Intact natural forest 165,592.75 Mangroves 34,274.25 Logged forests 651,877.50 Intact natural forest on peat 57,846.25 Logged forest on peat 79,758.25 total 989,349.00 THINKING beyond the canopy
  12. 12. “Green development” challenges: Coal Mining6,000,0005,000,0004,000,0003,000,0002,000,0001,000,000 0 1998 2000 2002 2004 2006 2008 2010 2012 West Kalimantan Central Kalimantan East Kalimantan South Kalimantan THINKING beyond the canopy
  13. 13. “Green 1.3M Ha of remaining forest economy” cover in miningchallenges: concessionscoal mining Mining concessions on: land cover area_ha Intact natural forest 190,612.50 Mangroves 8,121.25 Logged forests 1,085,216.25 Intact natural forest on peat 7,500.75 Logged forest on peat 23,190.25 total 1,314,641.00 THINKING beyond the canopy
  14. 14. What shade of green?•Bridging the gap between BAU and low emissiondevelopment•Some policy measures and market mechanisms are beingdeployed to affect change•Enabling conditions nascent and fragmentary•Significant challenges remain with redesign of landbasedinvestments and creation of effective transition framework THINKING beyond the canopy