Indonesia experiences in market based mechanisms development

a Joint Crediting Mechanism case study

Dicky Edwin Hindarto

Head of Indonesia JCM Secretariat

Indonesia target on GHG emission reduction pre and post Paris Agreement

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

1995 2000 2005 2010 2015 2020 2025 2030 2035BAU Baseline Emisi Baseline Emisi Skenario Kebijakan Ambitious

Baseline Emisi Skenario Kebijakan Fair Baseline Emisi Skenario Kebijakan Unilateral

Voluntary emission reduction at362 M.ton CO2e or

20% compared to BAU in 2020

Conditional scenario:Estimated emission reduction

at 1.2 G.ton CO2e or 41 % compared to BAU

In 2030

Unconditional scenario: Estimated emission reduction of

848 M.ton CO2e or 29 % compared to BAU in 2030

BAU Baseline emission

Fair scenario of baseline emission

Ambitious scenario of baseline emission

Unilateral scenario of baseline emission

Source, Bappenas, 2015

What our NDC said on market based mechanism

"Indonesia welcomes bilateral, regional

and international market mechanisms

that facilitate and expedite technology

development and transfer, payment for

performance, technical cooperation,

and access to financial resources to

support Indonesia's climate mitigation

and adaptation efforts towards a

climate resilient future“

How Indonesia finance its GHG emission reduction activities

Non-Market Based

Mechanism

Government Budget

Private Sector

Foreign Direct Investment

Private Investment

Private Sector Public

Local Gov’t Budget Investment

Central Gov’t Budget

Foreign Investment

Private &Gov’t InvestmentMarket Based

Mechanism

Carbon Market

Other Types of Market

Market based mechanism is one of the tools to finance GHG emission reduction activities

Market Based Mechanism (MBM) experiences in Indonesia

• Total of 121 registered projects

• 2% of total global CDM registered projectCDM

• Total of 12 registered projects

• Project registered included forestry project VCS

• Total of 23 projects in forestry, energy efficiency, and renewable energy (in 3 years of its development)JCM

• Total of 26 projects in energy efficiency, renewable energy, forestry, waste handling and disposalGold Standard

• Total of 6 projects in the forestry and ecosystem sectorPlan Vivo

GS and Plan Vivo has lower degree of asurance compare to other schemes

Other Indonesia’s initiatives in market based mechanism

• Indonesia was one of the first countries who join this initiative in 2010.

• Currently still in the implementation preparation stage.PMR

• Indonesia actively involved in Asia Pacific Carbon Market Roundtable initiated by New Zealand.

• The roundtable is intended to seek the possibilities of regional market based cooperation.

APCMR

• The newest international initiatives on market based mechanism dialogue initiated by G7 countries.

• This is a high level dialogue and discussion intended to create common understanding in the MBM implementation.

Carbon Market Platform

How the JCM works

• The Joint Crediting Mechanism as a G-to-G scheme which encourages private sector organizations to investin Low Carbon Development activities in Indonesia through incentive from the Government of Japan.

• JCM cooperation is not only conducted by Japan and Indonesia, but also with other 15 developingcountries.

• Bilateral Cooperation on the Joint Crediting Mechanism for the Low Carbon Growth Partnership betweenthe Republic of Indonesia and Japan has been signed by the Coordinating Minister for Economic Affairs ofIndonesia and Minister for Foreign Affairs of Japan.

• Objectives of the JCM:1. Facillitate diffusion of leading low carbon technologies, products, systems, services, and infrastructure as

well as implementation of mitigation actions, and contributing to sustainable development of developingcountries.

2. Evaluate contributions to GHG emission reductions/removals from developed countries in a quantitativemanner, through mitigation actions implemented in developing countries and use those emissionreductions or removals to achieve emission reduction targets of the developed countries.

3. Contribute to the ultimate objective of the UNFCCC by facilitating global actions for emission reductionsor removals.

List of JCM projectsJCM Implemented Projects (from 108 Feasibility Studies) Emission Reduction

Demonstration Project

Remote Auto-Monitoring System for Thin-Film Solar Power Plant in Indonesia 1.433 tCO2/tahun

Energy Saving by Optimum Operation at Oil Refinery 3.400 tCO2/tahun

Utility Facility Operation Optimization Technology 58.000 tCO2/tahun

The low carbonization of mobile communication’s BTS by the introduction of TRIBRID system in Indonesia163 tCO2/tahun

Model Project

Power generation by waste heat recovery in cement industry 122.000 tCO2/tahun

Energy Savings at Convenience Stores 372 tCO2/tahun

Energy saving through introduction of regenerative burners to the aluminum holding furnace of the automotive components manufacturer856 tCO2/tahun

Solar power hybrid System installation to existing base transceiver stations in off-grid area 2.786 tCO2/tahun

Energy saving by double bundle-type heat pump 170 tCO2/tahun

Introduction of High efficient Old Corrugated Cartons Process at Paper Factory 14.884 tCO2/tahun

Reducing GHG emission at textile factories by upgrading to air-saving loom 566 tCO2/tahun

Installation of Gas Co-generation System for Automobile Manufacturing Plant 20,439 tCO2tahun

Energy Saving for Shopping Mall with High Efficiency Centrifugal Chiller 925 tCO2/tahun

Energy Saving for Industrial Park with Smart LED Street Lighting System 900 tCO2/tahun

Energy saving by introduction of high efficiency once-through boiler system in a film factory 428 tCO2/tahun

Introduction of high efficiency once-through boiler and RO pure water system in golf ball factory 380 tCO2/tahun

Jakabaring Sports City Megasolar Power Plant Project 1.265 tCO2/tahun

REDD+ Model Project

REDD+ Model Project in Boalemo district 100.000 tCO2/tahun

Registered Project

Energy saving for air-conditioning and process cooling by Introducing High-efficiency Centrifugal Chiller114 tCO2/tahun

Project of Introducing High Efficiency Refrigerators to a Food Industry Cold Storage in Indonesia (credit issued) 29 tCO2/tahun

Project of Introducing High Efficient Refrigerator to a Frozen Food Processing Plant in Indonesia (credit issued) 11 tCO2/tahun

Energy saving for textile factory facility cooling by high efficiency centrifugal chiller 118 tCO2/tahun

Energy saving for air-conditioning and process cooling at textile factory 117 tCO2/tahun

Total: 23 Projects 329.382 tCO2/year

MRV’s key component

JCM as a market based mechanism (MBM) follows the key elements in carbon market instrument infrastructure:

M R VMeasurement Reporting Verification

elements to have a robust emission reduction i.e 1 tCO2 is really 1 tCO2

Methodology Registry

MRV in carbon market is project based

Step by step of JCM scheme

*PDD: Project Design Document

Submission of Proposed

Methodology

Approval of Proposed

Methodology

Developmentof PDD

Validation

Registration

Monitoring

Verification

Issuanceof credits

Project Participant / Each GovernmentJoint Committee

Joint Committee

Project Participant

Third Party Entities

Joint Committee

Project Participant

Third Party Entities

Joint Committee decides the amountEach Government issues the creditC

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Measurement

Reporting

Verification

JCM’s infrastructure as an example of MBM

• As a bilateral scheme, JCM comply to each country’s policy• Decision makers in JCM are related ministries as the representative of each respective

country• According to Indonesia’s NDC, bilateral scheme is recognized as one of the tools to achieve

its conditional target• Article 6 in Paris Agreement recognized market mechanism as part of the effort to achieve

global emission reduction target

Guideline:1. Project Design

Document2. Proposed Methodology3. Third Party Entity4. Validation and

Verification5. Sustainable

Development Implementation Plan and Report

Procedure: Project Cycle Procedure

Rules: 1. Rules of Implementation2. Rules of Procedure for JC

Registry system

Methodologies:12 methodologies of energy efficiencies and renewable

energy have been developed

ISO 1

40

65

base

d

EnvironmentEconomic

Social

Technology

1. One of the JCM purposes is to contribute to sustainable development

2. Indicator is needed to evaluate achievement in JCM.3. Ensure every JCM project will deliver co-benefit for

Indonesia.4. To fulfill global standards for appropriate climate change

mitigation action under the UNFCCC5. Enforcement of sustainable development criteria suitable

for Indonesian conditions

Sustainable Development Implementation Plan (SDIP) must be submitted during request of registration

Sustainable Development Implementation Report (SDIR) is assessed during request of issuance

Sustainable Development Criteria

Parties shall, where engaging on a voluntary basis in cooperative approaches that involve the use of internationally transferred mitigation outcomes towards nationally determined contributions, promote sustainable development and ensure environmental integrity and transparency, including in governance, and shall apply robust accounting to ensure, inter alia, the avoidance of double counting, consistent with guidance adopted by the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement.

Paris Agreement article 6 para 2

• The registry system in Indonesia is developed and maintained to ensure the accurate accounting of the issuance, holding, transfer, acquisition, cancellation and retirement of JCM credits.

• Three (3) basic transactions in JCM registry: transfer, cancellation, and retirement.

• Components in the Indonesia JCM registry:

o “Master Operation sheet” to register JCM

project and new account in the system and to

modify the information which already in the

registry system

o “Credit Related Operation sheet” to manage the

JCM credit in the registry system

o “Master sheets” act as a database that store all

operation and input in the system.

o “Account sheets” is to manage the credit

amount of each account.

And the latest development is our JCM registry system

JCM has issued carbon credits for

its first 2 projects on May 2016!

The JCM registry is the first climate change

registry that developed in Indonesia

Our website: http://jcm.ekon.go.idContact us at secretariat@jcmindonesia.com

Sekretariat JCM IndonesiaGedung Kementerian Koordinator Bidang Perekonomian Lt.2

Jl. Medan Merdeka Barat 7, Jakarta 10110

Thank you! Terima kasih!