Opportunity and Risk of REDD+, Green Economy, and Sustainable Development

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Opportunity and Risk of REDD+, Green Economy, and Sustainable Development

  1. 1. OPPORTUNITY AND RISKof REDD+, GREEN ECONOMY, ANDSUSTAINABLE DEVELOPMENT Dr. Irfa Ampri Center of Climate Change Financing and Multilateral Policy Fiscal Policy Agency, Ministry of Finance Jakarta, 25 July 2012
  2. 2. Outline• The Future Economic and Development agenda• New Business Opportunities• Challenges (Risk)• Risk Mitigation• Conclusions
  3. 3. The Future Economic and Development Agenda• REDD+ Rewarding actors that maintain and protect forests in both the forest area and other land use area (Area Penggunaan Lain - APL) – contribute significantly (85%) to achievement of national commitment (27/41)• Green Economy (GE) One that results in improved human well-being and social equity, while significantly reducing environmental and ecological risks• Sustainable development (SD) Development that meets the needs of the present without compromising the ability of future generations to meet their own needs (Economic Growth, Environmental Aspect, Social Aspect)• REDD+ correlates closely to the effective implementation of GE with later contributing to the SD goals
  4. 4. New Business Opportunity• If managed properly according to the country’s specific, REDD+ and GE will not be the threats for the achievement of national agenda (maintain high growth and reduce poverty level) – The issue is how to effectively use the resources availability in order to compete with the traditional ways• On the contrary, REDD+ and GE can provide new economic and business opportunities while at the same time conserve the environment and ecology – Business providing added value and resource efficiency• New industries and clean and renewable energy will arise
  5. 5. Global total New investment in clean energy, 2004–11 ($bn) 5% 5% $260bn $247bn 31% 1% 22% $187bn $189bn 35% $153bn 51% $113bn 39% $0bn $0bn $75bn $0bn $54bn $0bn $0bn $0bn 2004 2005 2006 2007 2008 2009 2010 2011Note: Includes corporate and government R&D, and small distributed capacity. Adjusted forre-invested equity. Does not include proceeds from acquisition transactions Source: Bloomberg New Energy Finance
  6. 6. New Business Opportunity (Indonesia Case)• New ways of doing business in forest areas and APL will reduce carbon emission to 778.15 Million Ton CO2e by 2014. – Assuming carbon price of US$4 per ton CO2e, new business in forestry sector will produce revenues of USS 3.2 billions.• 2% investment in green economy in Indonesia will provide 4,4-6,3 million new job opportunity, in 5 years a head (report by Green and Decent Job dari International Trade Union Confederation)• Ecotourism can create jobs and provide revenue to support the conservation of natural capital. Ecotourism in Indonesia is growing by 8% per yea• Banning in exporting raw rattan and other forest raw materials will expand and create industries providing value added with better price. At the same time, reduce the exploitation of forest and ecology.
  7. 7. Estimate Carbon Credit Carbon Value (assume Emission US$4 per ton No Activities/Targets Location Reduction CO2e) (Million Ton (US$ million) CO2e) Penataan Batas Kawasan Hutan Seluruh 1 123.41 493.64 sepanjang 25.000 Km provinsi 2 HTI/HTR seluas 3 juta ha 26 provinsi 110.1 440.4 Lahan pertanian baru seluas 3 11 provinsi 103.98 415.92 325.000 ha Optimalisasi Lahan gambut 4 terlantar dan lahan non tanaman 9 provinsi 100.75 403 pangan seluas 250.000 ha Hutan Kemasyarakatan 5 (HKm)/Hutan Desa (HD) seluas 25 provinsi 91.75 367 2.500.000 ha Kemitraan usaha dalam hutan 6 11 provinsi 9.18 36.72 rakyat seluas 250.000 ha 7 Kelapa sawit seluas 860.000 ha 19 provinsi 74.53 298.12 8 Karet seluas 105.200 ha 14 provinsi 2.38 9.52 9 Kakao seluas 687.000 ha 16 provinsi 5.42 21.68 SeluruhOpportunity 10 Rehabilitasi lahan kritis pada DAS provinsi 71.71 286.84 prioritas seluas 1.954.000 ha kecuali DKIand Risk JakartaAttachment 11 Ekosistem esensial sebagai 17 provinsi 41.5 166 penyangga kehidupan sebesar 10 %forestry.docx konservasi dan perlindungan hutan 12 12 provinsi 49.77 199.08 pada 12 provinsi prioritas 2 provinsi: REDD di kawasan konservasi 13 Jambi dan 3.67 14.68 (hutan gambut) Kalteng Total 788.15 3,152.60
  8. 8. Challenges (Risk)• REDD+ and GE will threat the achievement of national development goals – of As developing Country ---- Grow now, clean up later (prefer short term achievement > long term goal – Some studies show that moratorium of new licenses for logging and plantation brings negative economic impacts to certain local communities• Sustainability of international commitment is not clear o Grant, technology transfer, voluntary carbon market, and countries’ commitment in achieving emission reduction goals• Sustainability of Government commitment: o Moratorium, Financial support (BLU, K/L DIPA, grants), & Fiscal incentives o Licensing for carbon businesses
  9. 9. Challenges (Risk continue..)• The limitation of public funding o Public funding to leverage private participation• Private business involvement in green environment and forest sectors are still limited• Sustainability of local government support: o Moratorium, Licensing for carbon businesses o Benefit and incentives for local economy• Mitigation of tenure conflict in degraded lands including peat lands o Benefits and incentives for local community o Protection for carbon businessmen• The sustainability of carbon prices and participation parties
  10. 10. Risk Mitigation• Change the culture from the recipient to the owner of REDD+• 4 Pilllar of development strategy (pro growth, pro poor, pro job, pro environtment) should work simultaneously and equally• Prioritize education and R&D• Manage appropriate public finance support (budget, fiscal incentives, and regional Transfer)• Provide a comprehensive incentive support for the participation of private and financial sectors• New institutions in managing REDD+ (REDD+institution and Dana Perwalian) should show best practices and concerted collaboration with related parties• Active participation in multilateral fora showing our best examples in attracting other countries increase commitment• Donors assistance is still relevant in the area where Indonesia has the limitation in implementing REDD+ and GE
  11. 11. Conclusions• REDD+ correlates positively with GE and SD• REDD+ and GE will not be the threats for the achievement of national agenda (maintain high growth and reduce poverty level)• REDD+ and GE can provide new economic and business opportunities while at the same time conserve the environment and ecology• Challenges in effective implementation of REDD+ and GE are abundant, and can be mitigated through, among others, change the culture, education, sustainability of public finance, improvement of investment climate for private and financial institution participation, and active diplomacy in international fora
  12. 12. THANK YOU

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