Dicky presentation for ebtke econex

National Council on Climate Change of Indonesia

Carbon Market Role in Indonesia Renewable Energy Development:

Geothermal Case Study

Dicky Edwin Hindarto

Coordinator of Carbon Trade Mechanism Division National Council on Climate Change of Indonesia


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1. Why do we choose carbon market?

2. How is the current condition of Indonesia geothermal projects in carbon market?

3. Is the market only CDM?

4. What are Indonesia strategies on the next carbon markets?

Presentation Structure


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How to finance green development in Indonesia?

Market Compliance market

(CDM)

Voluntary market (VCM)

Future carbon markets

Non-market

National budget

Private investment

Foreign public funding

Policies (e.g fiscal, banking incentives and disincentives)

Philanthropic contribution (companies, NGOs)

Renewable Energy is a part of our green development plan in Indonesia

The financing needs are huge and in great variety; consequently require

a mix of market and non-market approaches


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Biomass energy, 12

Cement, 1

EE Industry, 2

EE supply side, 2

Fossil fuel switch, 3

Fugitive, 1

Geothermal, 4

Hydro, 6

Landfill gas, 7

Methane avoidance, 35

N2O, 1

PFCs and SF6, 1 Solar, 1

Indonesia carbon market status

181 CDM projects received DNA approval (as of May 31st, 2012) , including 5 PoAs. 76 of CDM projects are registered and 19 projects have issued their CERs.

24 of voluntary carbon market projects had been developed.

Biomass energy, 35

Cement, 1

EE households, 1

EE Industry, 7

EE supply side, 7

EE own generation, 7

Fossil fuel switch, 10

Fugitive, 5

Geothermal, 15

Hydro, 27Landfill gas, 12

Coal bed/mine methane, 2

Methane avoidance, 98

N2O, 3

PFCs and SF6, 3

Agriculture, 1

Solar, 1 Afforestation, 1

Reforestation, 1

New carbon market projects are being developed

77 of REDD+ demonstration activities have developed.

Japan government have done 32 FS under the Bilateral Offset Mechanism Proposal (3 projects are geothermal) CDM registered projects

CDM projects in Indonesia


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Geothermal projects in Indonesia carbon market (> 1500 MW)

Gunung Salak ‘94 Reserve: 600 MW

Production: 375 MW

VER: 130.500 tCO2

Wayang Windu ‘99 Reserve: 385 MW

Production: 227 MW

CER: 709.535 tCO2

Darajat ‘94 Reserve: 432 MW

Production: 255 MW

CER: 2.219.297 tCO2

Kamojang ‘83 Reserve: 333 MW

Production: 200 MW

CER: 92.691 tCO2

15 geothermal projects are in our CDM pipeline.

1 project is developed under voluntary carbon market scheme.

4 projects have already produced CERs and VERs.

Solar0%

Cement3%

Biomass energy

2%

Methane avoidance

7%

Geothermal59%

Fugitive29%

EE supply side0%

Indonesia issued CER


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Our experiences in geothermal development on carbon market

The geothermals are green and clean projects.

Most of the additionality criterias are fit to the geothermal projects, but new geothermal electricity ceiling price could affected some difficulties on additionality test if it is developed under CDM.

The emission reductions are relatively huge.

Some of the new markets mechanisms initiatives that currently still being developed are targeted to the renewable energy development, including geothermal.

Geothermal development

under new market mechanism


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Geothermal development impacts on emission reduction

Year Emission factor (ton CO2eq. / MWh)

Ex-post Ex-ante

2007 0,851 -

2008 0,804 -

2009 0,713 0,725

Electricity grid

Emission factor (ton CO2eq. / MWh)

Ex-post Ex-ante

East Kalimantan 0.715 0.742

West Kalimantan 0.786 0.775

Central and South Kalimantan 1.280 1.273

North and Central Sulawesi and Gorontalo 0.121 0.161

South, South East, and West Sulawesi 0.267 0.269

Java-Madura-Bali electricity grid emission factors

Kalimantan and Sulawesi electricity grid emission factor 2010

Geothermal

impacts


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Future carbon market roles on RE projects

Other revenue flow from carbon market for operational and maintenance

Reduce financial and technical risks

To attract “green investment”

To be used for banking and financial institution purposes

+


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Indonesia new carbon markets development strategy

Multilateral carbon market

Bilateral and regional carbon

market

Domestic carbon market

• Currently still being negotiated

• Robust, and maybe still complicated

• Environmantal integrity and sustainable development criteria issues

• Directly between Indonesia and some developed countries

• International carbon offset

• Japan and Australia have already expressed their interests

• Could be mandatory or voluntary based

• National boundary

• Simple and robust

• Could be used for NAMAs

Renewable Energy


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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)


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Where do we put RE and geothermal in future carbon markets?

Renewable Energy

New CDM

Creditable NAMAs

VCM BOCM

Other New

Markets

Traditionally, RE, particularly geothermal, still can be developed under CDM. There are some countries that still want to continue CDM post 2012.

Renewable Energy could be one of the main target in Creditable NAMAs.

VCM can be used for “non additionality” RE projects, particularly geothermal.

Some countries are eager to invest the RE projects using BOCM scenario (3 geothermal FS have been done).

One or two other new markets mechanism still being developed and, geothermal is one of the main target.


Terima kasih Thank you

Dicky presentation for ebtke econex

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