Renewable Energy in Carbon Market

National Council on Climate Change of Indonesia

Renewable Energy in Indonesia Carbon Market

Dicky Edwin Hindarto

National Council on Climate Change of Indonesia The Indonesia DNA


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.


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


4

Biomass energy, 11

Cement, 1

EE households, 0

EE Industry, 2

EE supply side, 2

EE own generation, 0

Fossil fuel switch, 3

Fugitive, 1

Geothermal, 4

Hydro, 6

Landfill gas, 7Coal bed/mine methane, 0

Methane avoidance, 35

N2O, 1

PFCs and SF6, 1

Agriculture, 0

Solar, 1 Afforestation, 0

Reforestation, 0

The Indonesia CDM and voluntary projects

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.

Biomass energy, 33

Cement, 1

EE households, 1

EE Industry, 7

EE supply side, 7

EE own generation, 6

Fossil fuel switch, 10

Fugitive, 4

Geothermal, 12

Hydro, 27Landfill gas, 12

Coal bed/mine methane, 2

Methane avoidance, 95

N2O, 2

PFCs and SF6, 3

Agriculture, 1

Solar, 1 Afforestation, 1

Reforestation, 1

The CDM projects in UNFCCC pipeline The registered CDM projects in UNFCCC


5

The Indonesia issuanced CDM projects No. Title Province / State Type Sub-type CERs

Expected

CERs

Issuance

success

1 CDM SOLAR COOKER PROJECT Aceh 1 Aceh Solar Solar cooking 1,077 6,060 18%

2 Methane Capture and Combustion from

Swine Manure Treatment Project at PT

Indotirta Suaka Bulan Farm in Indonesia

Riau Methane

avoidance

Manure 42,716 221,485 19%

3 Indocement Alternative Fuels Project West Java & South

Kalimantan

Biomass energy Agricultural

residues: other

kinds

80,967 258,308 31%

4 Indocement Blended Cement Project West Java & South

Kalimantan

Cement Clinker replacement 333,076 1,211,054 28%

5 Darajat Unit III Geothermal Project West Java Geothermal Geothermal

electricity

1,329,960 1,390,111 96%

6 Tambun LPG Associated Gas Recovery and

Utilization Project

West Java Fugitive Oil field flaring

reduction

1,483,279 1,040,953 142%

7 MEN-Tangerang 13.6MW Natural Gas Co-

generation Project

Banten EE supply side Cogeneration 17,154 21,836 79%

8 Emission reductions through partial

substitution of fossil fuel with alternative fuels

in the 2 cement plants of PT Holcim

Indonesia Tbk

West Java &

Central Java

Biomass energy Agricultural

residues: other

kinds

12,335 106,284 12%

9 4MW Biomass Power Plants Using Waste

Wood Chips & Sawdust in Central Java

Province, Indonesia

Central Java Biomass energy Forest residues:

sawmill waste

10,982 14,322 77%

10 Gianyar Waste Recovery Project Bali Methane

avoidance

Composting 2,110 6,713 31%

11 Methane Recovery in Wastewater

Treatment, Project AIN07-W-01, Sumatera

Utara (North Sumatera), Indonesia

South Sumatra Methane

avoidance

Waste water 14,472 41,349 35%

12 Methane Recovery in Wastewater

Treatment, Project AIN07-W-05, Sumatera

Utara, Indonesia

North Sumatra Methane

avoidance

Waste water 30,235 42,206 72%

13 AIN08-W-03, Methane Recovery in

Wastewater Treatment, Sumatera Utara,

Indonesia

North Sumatra Methane

avoidance

Waste water 15,537 38,319 41%

14 BAJ Gunung Agung Factory tapioca starch

wastewater biogas extraction and utilization

project, Lampung Province, Republic of

Lampung Methane

avoidance

Waste water 6,858 30,779 22%

15 Kamojang Geothermal West Java Geothermal Geothermal

electricity

92,691 81,660 114%

16 Wayang Windu Phase 2 Geothermal Power

Project

West Java Geothermal Geothermal

electricity

379,773 372,373 102%

Total 3,853,222 4,883,812 79%


6

New carbon market scenarios for Indonesia

CDM Voluntary

Carbon Market

Readiness of the government and privates to prepare legal, organizational, and technical structures of market.

• New CDM • REDD+ • Crediting NAMAs • Regional market • Domestic market • Bilateral offset

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)


7

Indonesia future carbon market frame work

International Carbon Markets

Linking via offset mechanism

Direct link with other domestic market

mechanism

International Crediting

Mechanism

DOMESTIC MARKET MECHANISMS that based on voluntary market system

(e.g. Emissions trading scheme or sectoral trading) Indonesia will prepare standard, policies, and

market instrument.

CARBON CREDIT SUPPLIER Indonesia will produce carbon credit for

mandatory and voluntary based market system for international market.

REGIONAL AND BILATERAL MARKET

that based on regional and bilateral agreement and domestic

emission reduction policies (e.g. NAMA or sectoral crediting)


8

Where do we put the RE in future carbon markets?

Renewable Energy

CDM and PoA

Creditable NAMAs

VCM BOCM

Other New

Markets

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.


9

Designing new market mechanism

Voluntary Offset Cap and Trade New Market Mechanism?

• Politically easier to adopt • Relatively harder to

operate due to its ‘project-based’ nature

• Governance is simple • Does not require lengthy

preparation eg. Preparing sectoral baseline, etc.

• Can be customized by design to accommodate specific need eg. Micro project, co-benefit value, etc.

• Need strong political will to adopt

• Easier to implement due its nature of ‘inventory-based’

• Friendlier to large-scale ‘green’ investment

• Need rigorous preparation to establish baseline

• Governance is complex cap setting and mechanism design

• Leakage issues

• Easy to adopt • Simple governance • Does not require lengthy

preparation • Customize-able • Easy to implement

(inventory-based?) • Support large-scale

‘green’ investment

New market mechanism should seek to feature only the merits of existing mechanisms with regard of UNFCCC negotiation results.


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.

SkemaKarbonNusantara


11

Renewable energy is one of our main target

Specifically, 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 Buyer

Along with other countries initiative and VCM standards!

J-VER

K-CER



12

SKN’s flow of operation

• 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

Project Design Document Validation

AssessmentMonitoring and

Verification

Monitoring Report

Credit IssuanceRegistry and

Distribution of Credits

Validation Report

No Yes

YesNo

By Validator/Verificator By SKN CommitteeBy Project Developer


Terima kasih Thank you


Technology

Renewable Energy in Carbon Market