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The Procedure Of Implementation Afforestation And Reforestation
Project Under The Clean Development Mechanism (CDM)
In Indonesia

by : Dr. Gun Mardiatmoko (gum_mardi@yahoo.com) (HP:+6281904227676)

I. INTRODUCTION

Indonesian forest with mega biodiversity, is very potential for the implementation of carbon trading schemes, i.e. the Clean Development Mechanism (CDM) scheme, Reducing Emission from Deforestation and Degradation (REDD) scheme and Voluntary scheme. The Forestry CDM is a partnership between developed country and developing country to reduce Green House Gases (GHG) emission through forestry activity: afforestation and reforestation. Principally, carbon trading will assist in reconstruction of forest ecology and forest protection in Indonesia.

The actor of the Forestry CDM is called developer of afforestation & reforestation project under the CDM. This developer is a union of two institutions between investor from developed country (Annex I of the United Nations Framework Convention on Climate Change/UNFCC) and business sector by state or private company, cooperation or personal from developing country.

The Clean Development Mechanism

The Kyoto Protocol is a 1997 international treaty which came into force in 2005, which binds most developed nations to a cap and trade system for the six major green house gases. Emission quotas were agreed by each participating country, with the intention of reducing their overall emissions by 5.2% of their 1990 levels by the end of 2012. Under the treaty, for the 5-year compliance period from 2008 until 2012, nations that emit less than their quota will be able to sell emissions credits to nations that exceed their quota. It is also possible for developed countries within the trading scheme to sponsor carbon projects that provide a reduction in green house gas emissions in other countries, as a way of generating trade-able carbon credits. The Protocol allows this through Clean Development Mechanism (CDM), in order to provide flexible mechanisms to aid regulated entities in meeting their compliance with their caps. The UNFCC validates all CDM projects to ensure they create genuine additional savings and that there is no carbon leakage.

Carbon Trading is a market based mechanism for helping mitigate the increase of CO2 in the atmosphere. Carbon trading markets are developed that bring buyers and sellers of carbon credits together with standardized rules of trade. Any entity, typically a business, that emits CO2 to the atmosphere may have an interest or may be required by law to balance their emissions through mechanism of Carbon sequestration. These businesses may include power generating facilities or many kinds of manufacturers. Entities that manage forest or agricultural land might sell carbon credits based on the accumulation of carbon in their forest trees or agricultural soils. Similarly, business entities that reduce their carbon emission may be able to sell their reductions to other emitters. The legal aspect of carbon trading is Certificate of Emission Reductions (CERs).

Developer of afforestation & reforestation project under the CDM can obtain CERs if they make: (1) Project proposal of afforestation & reforestation project under the CDM and (2) Project Design Document for project activities under the CDM. Developer requirement of afforestation & reforestation project under the CDM in Indonesia, in general as below:

  • Developer has license to use the product of forest wood at forest plantation/industrial forest plantation or to use environmental benefit from carbon trading.
  • Developer has a letter of land information/recommendation for the CDM from regency at project area respective.
  • Developer makes project proposal regarding the CDM and send proposal to the Ministry of Forestry of Republic of Indonesia.

II. THE PILOT PROJECT OF CARBON TRADING IN INDONESIA

Indonesia has two pilot projects of carbon trading in Reducing Emission from Deforestation and Degradation (REDD) scheme at forest area of East Kalimantan and Aceh. The implementation of carbon trading has been done through joint operation with some international institutions, i.e. Meryl Lynch, Global Environmental Resources (GER), Eco Securities and Bird Life, etc.

Information regarding pilot project of carbon trading in Ulu Masen Project, Aceh in short, as follows:
Ulu Masen Project is certified by the Climate, Community & Biodiversity Alliance which involved Non Governmental Organization (NGO): the Nature Conservancy, the Rainforest Alliance and the big company Weyerhaeuser Co. the sponsor of Ulu Masen Project hopes that level of logging operation in project area must be cut until 85%.

Thus, if price estimation of carbon is US $ 5 per ton the project can produce carbon credit US $ 16.5 million per years. The other benefits are:
(1) biodiversity benefit because the project area is habitat for elephant of Sumatera, tiger of Sumatera, orang utan and clouded leopard, etc.;
(2) Socio-economic benefits when the villages receive money as a compensation that local people have involvement and participation on forest conservations or they do not cut the trees in project area, etc.
In my opinion, the afforestation & reforestation project under the CDM is very flexible because it can be done at forest area, forest community area, state forest area and private land. Land use change that can be done in the afforestation & reforestation project under the CDM is conversion from agriculture, wetland, settlement area, ranch area or prairie to forest. Type of forestry activity for implementation of the afforestation & reforestation project under the CDM is agroforestry, sylvofishery, rubber estate, monoculture and mixed species plantation, multipurpose species plantation, etc. Unfortunately, as far as I know, the Forestry CDM in Indonesia is still in concept and macro policy and is not ready to implement afforestation & reforestation project under the CDM. So, it is time to make concrete action to implement the Forestry CDM and I hope there is NGO or international institution will take participation in this project in Indonesia.

Some constraints in the implementation of the Forestry CDM Indonesia is lack of financial resources and there is no experience to establish the Forestry CDM but Indonesia has experiences in industrial forest plantation project for pulp and papers in Sumatera and Kalimantan. In other words knowledge and skills of human resources in Indonesia is ready to implement of the Forestry-CDM, mainly if there is support from developed country (Annex I). Ideally, it is better if we can start to implement the pilot project of the Forestry CDM minimum 6 units (in West Indonesia 2 units, Central Indonesia 2 units and East Indonesia 2 units).

III. 11 STEPS TO IMPLEMENT AFFORESTATION AND REFORESTATION PROJECT UNDER THE CDM IN INDONESIA

1. Developer makes project proposal of the afforestration and reforestation project under the CDM and send the proposal to Ministry of Forestry of Republic of Indonesia, in Jakarta (Outline of project proposal can be seen in Annex A).

2. Ministry of Forestry of Republic of Indonesia checks on the project proposal and gives guidance of project proposal improvement, also gives an information letter to the National Committee of the CDM that the project proposal from developer has a contribution to implement the sustainable development in forestry.

3. After finishing with final project proposal, developer makes the Project Design Document and sends the document to the National Committee of the CDM and Ministry of Forestry (Outline of the Project Design Document can be seen in Annex B).

4. The National Committee of the CDM will verify the accuracy and feasibility of the Project Design Document. If the project is good and feasible, the National Committee will make a recommendation that the project proposal has a contribution to implement the sustainable development in forestry.

5. After receive the recommendation at step 4, developer can make a request of the Operational Entity to examine or to test the Project Design Document. The Operational Entity is an independent institution which established by the Executive Board of the CDM.

6. The Operational Entity sends the test result of the Project Design Document to the Executive Board of the CDM.

7. Based on the test result of the Project Design Document from the Operational Entity, the Executive Board of the CDM makes decision that developer can implement his project.

8. Developer must implement all of project activity monitoring and to send progress report to the Operational Entity.

9. Based on the progress report of project activity monitoring from developer, the Operational Entity implements verifications.

10. If the result of verification is good and complete, the Operational Entity proposes that the Executive Board of the CDM to establish a Certificate of Emission Reductions (CERs) for developer respective.

11. Developer must make the progress report of project activity periodically to the Ministry of Forestry in Jakarta.

(Sources: Peraturan Menteri Kehutanan /Forestry Regulation, No. P.14/Menhut-II/2004, 5 th October 2004).

IV. CONCLUSIONS

1. Indonesian forest with mega biodiversity, is very potential for the implementation of carbon trading schemes, i.e. the Clean Development Mechanism (CDM) scheme, Reducing Emission from Deforestation and Degradation (REDD) scheme and Voluntary scheme.

2. The afforestation & reforestation project under the CDM is very flexible because it can be done at forest area, forest community area, state forest area and private land. Land use change that can be done in the afforestation & reforestation project under the CDM is conversion from agriculture, wetland, settlement area, ranch area or prairie to forest.

3. There is 11 steps to implement afforesation and reforestation project under the CDM in Indonesia.

4. The afforestation & reforestation project under the CDM can be done well if there is big support from NGO or international institution. It is important thing, because Indonesia is lack of finance sources and has no experiences in implementation the Forestry CDM.

5. Knowledge and skills of human resources in Indonesia is ready to implement of the Forestry-CDM, mainly if there is support from developed country (Annex I).

6. Ideally, it is better if we can start to implement the pilot project of the Forestry CDM minimum 6 units (in West Indonesia 2 units, Central Indonesia 2 units and East Indonesia 2 units).

ANNEX A :

OUTLINE OF THE PROJECT PROPOSAL OF AFFORESTATION AND REFORESTATION PROJECT UNDER THE CDM IN INDONESIA

I. General Information

A. Data of developer

B. Status of negotiation and description of project proponents (level of joint agreement between Indonesia and partners with all of preparation which have been done)

C. Type of project (type of project activity, total project area, type of plantation, rotation and ege of plantation, etc.)

D. Project location

II. Action plans

A. Project period
B. Description of project activity
C. Pattern of plantation
D. Pattern of plantation maintenance and productions

III. Plan of Investment

A. Estimation of project costs
B. Sources of project finances
C. Estimation of project income

IV. Estimation of environmental benefits

A. Estimation of total amount of carbon sequestration periodically from project start to the end of project activity
B. Baseline scenario
C. Environmental benefits at level global, national and local area
D. Method of forest biomass measurement

V. Estimation of socio-economic benefits

A. Labor involvement and participation at every step of the project activity
B. Incomes labor increment from the project activity
C. Impact of the project activity in domain economic at project area respective
D. Others impact
E. Link and match with the national policy of Republic of Indonesia
F. Direct and indirect of Stake holders participation, including total participants.

ANNEX B :

OUTLINE OF THE PROJECT DESIGN DOCUMENT UNDER THE CDM IN INDONESIA

COVER, TITLE: THE PROJECT DESIGN DOCUMENT FOR AFFORESTATION AND REFORESTATION UNDER THE CDM (Area: ….ha, Location: ……, Date: ….)

I. General Description of Project Activity

A. Project and sector background (describing project backgrounds and their relation with the policy of forestry sector I Indonesia)
B. Project objectives (describing project objectives from the benefits of Annex I Country /target of green house gases reduction and from the benefits of Indonesia/sustainable development)
C. Project location (describing project location including information of climate, hydrology, soils, ecosystem, endangered species of flora and fauna, status of land use, etc.)
D. Type of project (describing type of project proposal, i.e. agroforestry, industrial forest plantation, or other activities and explanation for definition of forests, afforestation, reforestation and proposed species of trees)
E. Project costs/project financing (describing analysis and estimation of finance, including explanation for public funds)
F. Project proponents (describing company name of Indonesian partners and company name of investor partners)
G. Host country approval (describing project approval and explanation for Kyoto Protocol ratification)
H. Project start (describing date of project start)

II. Project Baseline and Additionality

A. Project baseline (describing total amount of biomass stock exchange at carbon pools in project area respective)
B. Baseline methodology (describing selected methodology from the Executive Board of the CDM and technical implementation. Baseline establishment should be done transparent and conservative)
C. Project boundary (describing project boundary. A project can be done in some locations or in one massive area, small scale area or large scale area)
D. Leakage (describing some activities for minimizing leakage of carbon in project area)
E. GHG coverage (to show green house gases at the project area)
F. Additionality (describing some predictions/estimations of additionality from environmental aspect; impact positive for biodiversity conservation and also impact positive for handling efforts of land degradation at project area)
G. Start date and crediting period (describing selection of crediting period and handling approach in the use of ICERs or tCERs. Developer has two options: (1) project duration is maximum 20 years and can be expanded two times or (2) project duration is maximum 30 years without expanding period).

III. Project Monitoring

A. Monitoring plan (explanation for accuracy, comparability, completeness and validity of monitoring plan and all of relevant information regarding monitoring plan at project area)
B. Calculation of CERs (explanation for the use of formula for establishing baseline, leakage estimations, calculation of green house gases and all relevant information regarding CERs calculations)

IV. Environmental Impacts of the Project and Socio-economic Benefits

A. Local Environmental benefits (describing environmental benefits at project area respective. Explanation for technical measurement approach in project monitoring plan)
B. Socio-Economic benefits (describing socio-economic benefits at the project implementations)
C. Capacity building (describing development of human resources capacity and institutions)
D. Technology transfer (describing processing of technology transfer from Annex I Country to host country , Indonesia /if any)
E. Host country criteria (describing special host country/if any for approval project as the CDM activities)
F. Sustainable Development Criteria (describing sustainable development criteria that have defined by host country or have identified for project respective)
G. Environmental Impact Assessment (EIA) (describing the main results of the study of environmental impacts at the project area and their synchronization with the objectives of host country)

V. Stakeholder Comments (describing processes, summary regarding comments of stakeholder with their feedback and problem solving)

VI. Other Project Documents (explanation for completeness of other documents which have closed relation with project activities)

Source :
The Procedure Of Implementation Afforestation And Reforestation Project Under The Clean Development Mechanism (CDM) In Indonesia. by: Dr. Gun Mardiatmoko (gum_mardi@yahoo.com). FORESTRY DEPARTMENT, FACULTY OF AGRICULTURE, PATTIMURA UNIVERSITY. 2009

The Clean Development Mechanism The Clean Development Mechanism

 

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