Page 1 The World Bank INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION WORLD BANK OFFICE, JAKARTA JSEB Tower 2, Jl. Jend. Sudirman Kav. 52-53, Jakarta 12190 Telephone: (62-21) 52993000 · Facsimile: (62-21) 52993111 Developing a Market for REDD in Indonesia Report on Implementation of a Learning Workshop: Lokakarya Mengembangkan Pasar REDD di Indonesia / The World Bank Indonesia REDD Team Jakarta, Indonesia January 2009 47621 Page 2 2 I. Introduction / Background The importance of forests in mitigating climate change, 1 balanced with the need for participation of forest-dependent communities in developing forest conservation initiatives, is without question. Of relatively recent interest is determining how governments at all levels, the private sector, non-government organizations and local communities can work together to ensure equitable distribution of benefits from initiatives targeted at reducing emissions from deforestation and forest degradation (REDD). Part of the Bali Action Plan, specifically Decision 2/CP.13 concluded at the UNFCCC in Bali, December 2007 2 , addressed (REDD) with suggested approaches to stimulate actions, including: · further strengthening and support for ongoing REDD efforts; · support for and facilitation of capacity-building, technical assistance and transfer of technology relating to methodological, technical and institutional needs of developing countries; · exploring a range of actions, identification of appropriate options and undertaking demonstration activities to address drivers of deforestation relevant to each country’s national circumstances; · addressing the needs of local and indigenous communities should be addressed when taking actions to reduce emissions from deforestation and forest degradation; and · mobilization of resources to support these efforts. Many countries have expressed their preference for forestry offsets, which are seen as an effective mechanism to channel carbon finance funding to developing countries capable of protecting their forests. To successfully accomplish this, challenges and questions remain, not least of which are: · accurately measuring forest carbon emissions savings; · the types of forests that can / should be included; · ensuring REDD forests can remain standing for the long-term; · effectively preventing illegal logging and losses due to fire; and · the avoidance of leakage, i.e. the cessation of logging in one area leading to deforestation in another. It is also universally agreed that REDD must effectively take into account, in a fully transparent and participatory manner, the livelihoods of local communities in and around forested areas. As a result, REDD partnerships are exploring various options, i.e., a profit sharing scheme allowing for reduced deforestation without the community livelihoods being sacrificed; payments for ecosystem services with local communities fully participating. 1 Globally, it is estimated that deforestation contributes about 20% of greenhouse gas emissions from human activity. 2 See Annex 1 at the end of this report for the complete text of the decision. Page 3 3 During 2008, the Subsidiary Body for Scientific and Technological Advice (SBSTA) committed itself to prepare a report on outcomes and recommendations regarding possible methodological approaches for REDD which were presented at the December 2008 COP 14 in Poznan, Poland. While a preliminary deal reached in Poznan to include forests in future climate treaties is a positive step, a number of stakeholders felt it fell short of progress needed to get a post- Kyoto Protocol REDD mechanism on track for incorporation into the UNFCCC framework post-2012. In Asia, Indonesia has become the epicenter for REDD trial programs because of its existing, large tracts of forest undergoing rapid deforestation. With nearly 100 million ha of state forests, Indonesia contains the world’s third largest area of tropical forests (after Brazil and Congo) and is, consequently, one of the world’s largest greenhouse gas emitters, making Indonesia a key player in forest-related carbon projects. Obviously, challenges remain to get REDD right. In an effort to bring coherency, consistency and direction to all of the various REDD-related activities in Indonesia, the Ministry of Forestry and The World Bank agreed to hold a “learning workshop” entitled “Developing a Market for REDD in Indonesia” on 14 November 2008 at the World Bank offices in Jakarta. 3 The day’s event included a well-attended “REDD Information Marketplace” 4 to share information on individual demonstration project proposals. This brief report details key observations, findings (including identification of market development issues and lessons learned from project proponents / developers), “rules of the game” from the Ministry of Forestry, and recommendations that emerged from the learning workshop (including proposed action steps to facilitate Indonesia’s entry into the forest climate market). II. Getting REDD Right – Developing the Market for REDD in Indonesia In Indonesia, deforestation accounts for about 84 percent of the country’s carbon emissions. 5 To effectively undertake a comprehensive and equitable REDD program, it must compete with other significant pressures on Indonesia’s land use, not least of which from both the legal logging and palm oil industries, both quite profitable. The Indonesian government must, therefore, be convinced that policies designed for avoided deforestation and its associated carbon credits are at least as profitable than either of these alternatives before REDD will have a chance of success. 3 See Annex 2 at the end of this report which details the November Workshop Agenda. 4 Fifteen REDD pilot project proponents interacted with the workshop’s participants, including representatives from the Ministry of Forestry, sharing information on the status of their individual efforts, problems and constraints to development and their hopes for timely and appropriate Government of Indonesia action 5 Deforestation in the country is currently estimated to occur at a rate of 1 million ha / year. Page 4 4 The COP 13 Bali Action Plan lead to a burgeoning interest in implementing REDD pilot / demonstration projects in Indonesia with the goal of reducing emissions from deforestation and forest degradation through an avoided deforestation / carbon market process. Indonesia’s “carbon rush” (not unlike the California gold rush in the mid-19 th century), with its touted high financial returns, has elevated stakeholder expectations, not least of which the private sector, that COP 14 in Poznan would further contribute to clarity for a REDD road map giving REDD proponents the green light for pushing their avoided deforestation / carbon credit initiatives. The potential earnings from avoided deforestation carbon credit sales in Indonesia have been estimated in a range from $500.0 million to $2.0 billion per annum in today’s voluntary market. Should avoided deforestation be included in a new post-2012 Kyoto protocol, returns could increase exponentially with credits available for sale under a clean development mechanism (CDM), where existing prices are significantly higher. It is understandable why the Government of Indonesia in general, and the Ministries of Forestry and Finance, in particular, are so keen to establish sound policy leading to a regulated market for REDD. The question then becomes how best to achieve a balance between different stakeholders. The Government of Indonesia’s initiatives to set policy and establish guidelines for undertaking pilot REDD initiatives / demonstration projects should take into account the private sector’s focus on financial gain and non-government stakeholders’ concern that local communities are fully engaged and equitably benefit in the process. A. Identification of REDD Market Development Issues COP 13 in Bali stimulated the Government of Indonesia to begin setting out the “rules of the game” for REDD. With so many stakeholders initiating pilot projects scattered throughout the country 6 , it is critically important for Indonesia’s Ministry of Forestry, in collaboration with the Ministry of Finance, the National Climate Change Council and the Ministry of the Environment, to define how these pilots can move forward. However, this needs to be done without jeopardizing the Government’s goal of producing appropriate regulations for REDD given the existing confusion in the face of substantial financial gains to be made. 1. Ministry of Forestry Guidelines and Policy – “Rules of the Game” The central government is keen to ensure success in developing the market for REDD. It has demonstrated this through its actions, including, most recently, the public consultative process via the internet that provided the opportunity for the public to provide comments on two REDD policies. 6 Please see Annex 3 detailing the current REDD proponents and their respective areas of operations. Page 5 5 During the first half of 2008, the Ministry of Forestry began a process of formulating two significant policy initiatives that would provide central government management over the REDD process in Indonesia. Through a public consultative process starting in June 2008, the Ministry of Forestry sought broad stakeholder input on its Peraturan Menteri Kehutanan – Tata Cara Pelaksanaan Pengurangan Emisi dari Deforestasi dan Degradasi Hutan (Ministry of Forestry Regulation – Procedure for Implementing Emission Reductions from Deforestation and Forest Degradation) and Keputusan Menteri Kehutanan – Komisi Pengurangan Emisi dari Deforestasi dan Degradasi Hutan (Ministry of Forestry Decision Letter – Commission on Emission Reductions from Deforestation and Forest Degradation). Several weeks after the workshop, the Minister of Forestry issued a regulation on the implementation of REDD demonstration activities (P. 68/Menhut-II/2008) and a decree on establishing the Ministry of Forestry Working Group on Climate Change (SK.455/Menhut-II/2008). Translations of both documents are provided in Annex 6. It is expected that the new additional government regulations will be produced on REDD procedures / guidelines to define the various forestry classifications; what REDD is; where it can be implemented, how benefits will be shared, and will describe implementation procedures for undertaking reduced emissions from deforestation and forest degradation pilot projects. Highlights of the REDD proposal request and approval process and implementation procedures are as follows: · Project initiators submit their proposal for a REDD demonstration project to the Ministry of Forestry; · The Minister assigns the Working Group on Climate Change to assess the feasibility of the proposed activity (criteria and indicators will be defined in an upcoming regulation); · Based on the assessment of the Working Group, the Minister can approve, approve with condition or reject the proposal; and · Ministerial approval must list: a) the area and extent of demonstration activities with a map showing the borders of the activity; b) the duration of the activity (no longer than five years); and c) stipulations related to risks and distribution of revenue. The decree sets out the duties of the Working Group on Climate Change as follows: a) Provide inputs to the Minister of Forestry on the policies, strategies, programs, and activities on climate change control in the Ministry; b) Assist the Minister of Forestry in conducting the duties of controlling climate change consisting of adaptation, mitigation and transfer of technology activities in the Ministry; c) Assist the Minister in evaluating policies on climate change adaptation, mitigation and transfer of technology within the Minsitry; and d) Manage data and information on climate chage in the Ministry. Page 6 6 The Working Group is to be supported by a Secretariat that will report to the Minister every three months. In addition, the Ministry of Forestry has as part of its licensing process the IUPJL ( Izin Usaha Pemanfaatan Jasa Lingkungan – Environmental Services Utilization Permit). An IUPJL is a permit issued for the utilization of environmental services in production forest (Government Regulation No. 6 / 2007, Articles 1 and 61; Government Regulation No. 3 / 2008, Article 33). Carbon capture and storage falls under this regulation. The Ministry of Forestry, through the Director General FORDA, Wahjudi Wardojo, made the case for Government stewardship of the REDD process during the Learning Workshop. He acknowledged that forestry carbon projects can be risky investments, especially in Indonesia, because of the complex social and economic drivers of land use and land use change in a given area making pilot project implementation very challenging. Carbon contracts are an essential aspect of future REDD transactions given the need to manage risks and distribute transaction and implementation costs between buyers and sellers. If governments are the sellers of REDD credits, or if they provide price or delivery guarantees for project-based sales of REDD credits, they may be able to negotiate higher carbon prices. Mr. Wahjudi closed by stressing the following key issues: · uncertainty remains in Indonesia about the future of REDD, partially dependent on the content of the international agreement reached post-Kyoto protocol 2012; · all stakeholders must be prepared to deal with the anticipated large financial inflows from carbon sales, the introduction of a national carbon accounting system, and assurance of permanent emission reductions; he warned that a lack of preparedness could delay the start of (and affect current) REDD demonstration projects; · a carefully designed mix of national and sub-national, market- and fund-based, and regulatory and voluntary approaches to REDD may create suitable incentives if implemented in a coordinated manner; · pioneering pilot activities are encouraged but must be consistent with national regulation, transparent, legal, and adhere to the international climate negotiation process; and · any sub-national pilot carbon initiative linked to climate change commitments and emissions reductions must be consistent with national regulations. The Government of Indonesia wants to take the right next steps and, obviously, understand these steps must be taken in the spirit of mutual respect, trust and benefit for all stakeholders, whether directly or indirectly involved in the REDD implementation processes. All REDD initiatives must have approval from central government, including demonstration / pilot projects. Specifically regarding revenues generated from REDD, Page 7 7 regulations will be prepared separately in consultation with the Ministry of Finance. Guidelines coming out of Jakarta will be consistent with and will not negatively impact national development. Bottom line: the Government of Indonesia, through the Ministry of Forestry, made it very clear that the Government is in the REDD driver’s seat. In addition, the Ministry of Forestry wants to make sure it has produced a comprehensive set of guidelines which will provide the framework for the REDD process and set out a road map for going forward. 2. Donor Participation in the REDD Process Based on the presentations at the Learning Workshop, both bilateral and multilateral donors have been very active in supporting the REDD process in Indonesia, whether it is funding for technical assistance to the central government on issues related to policy and / or strategy development and the national carbon accounting system; in formulating projects in support of financing a myriad of REDD initiatives including regional pilots; and in addressing key stakeholder capacity building issues. 7 While implementation periods vary for each proposed donor initiative, the total estimated global REDD budget, including climate change activities, is in the range of US$ 1.1–1.6 billion. Obviously, the donors want REDD to succeed in Indonesia. 3. Lessons Learned from REDD Project Developers / Proponents It might have been better to have called this workshop the “Partnerships in Developing a Market for REDD” demonstrated by the enthusiasm shown during the information marketplace portion of the workshop. Currently, there are at least 15 REDD demonstration projects with varying degrees of implementation progress (these are summarized in Annex 3). These public-private partnerships demonstrate the level of interest the private sector has in making REDD a success in Indonesia. The REDD Information Marketplace provided a great opportunity for REDD project proponents to market their individual initiatives to a wide audience in an informal setting. However, one of the more interesting aspects of the Learning Workshop was the interaction between the private sector and the Government representatives during the Q&A after the Ministry of Forestry’s presentation during the workshop’s morning session. Questions from the private sector revealed their concerns and frustrations with pilot progress and offered suggestions based on their collective experience despite the relatively short-term implementation periods of each respective demonstration projects. Another theme expressed repeatedly from the private sector was the need for clarity from the Government on where authority lies for decisions on REDD implementation. All of 7 Please see Annex 4 for a description of the various donor initiatives that are currently or will soon be implemented in sup port of the Government of Indonesia’s REDD rollout. Page 8 8 the pilots are being implemented at the kabupaten level and the private sector is seeking guidance on how best to move forward with their respective initiatives. There is recognition among private sector proponents that the national government needs to maintain some control over the process of developing the REDD market. Perhaps a potential solution is to promote a 'fast track' approval process for conversion forests and other forested areas that are currently controlled not by the Ministry of Forestry but rather by the respective Bupatis and Governors where the pilots are taking place. The private sector and NGO proponents also want clarity on whether avoided deforestation carbon credits (verified emission reductions, or VERs) available for immediate sale can be sold or is central government approval needed. As the Ulu Masen Pilot 8 has demonstrated, getting approval to market carbon from REDD pilots seem to take different courses. Ulu Masen, a project to develop and test carbon finance mechanisms to reduce greenhouse gas emissions, contribute to sustainable economic and social development and conserve biodiversity over the next 30 years, went through a rigorous process with the Climate, Community and Biodiversity Alliance (CCBA). CCBA approved 100.0 million tons of carbon for sale over a 30-year period. However, this was only the first step in what has been a protracted process. Over a year has passed since the CCBA gave Ulu Masen a silver rating and, despite Merrill Lynch’s agreement to purchase credits as soon as possible, not a single credit has been marketed. To date, not one other pilot project (out of 15-20 known in Indonesia) has gone through a similar process to have carbon credits from REDD available for sale. III. Key Observations / Findings · The Government of Indonesia has made significant progress in the forestry sector, specifically with issues related to climate change, including: the Indonesian Forest Climate Alliance (IFCA) study, the initial REDD decree and regulation, the Forest Resource Information System in support of the development of Indonesian National Carbon Accounting System, the National Climate Change Council, the National Forestry Council, and provincial- / kabupaten -level “working groups” on REDD (i.e., Kabupaten Berau, East Kalimantan; South Sumatera; Central Kalimantan; Papua) have been established. · REDD challenges in the near term are to effectively implement the Forest Resource Information System, the National Carbon Accounting System, determine the most optimal role for pilot REDD projects, and to establish better coordination among the partners involved in REDD – National Climate Change Council (DNPI) and the National Forestry Council ( Dewan Kehutanan Nasional ) among others. 8 Reducing Carbon Emissions from Deforestation in the Ulu Masen Ecosystem, Aceh, Indonesia – A Triple- Benefit Project approved by CCBA on 6 February 2008. Page 9 9 · The Government has stated that REDD is not just about avoided deforestation and selling carbon credits on the voluntary market but is also about sustainable development, governance, poverty reduction and economic development. It is the Government’s intention to ensure that these concepts are incorporated into REDD regulations. · There has been good will on the part of the Ministry of Forestry to accommodate all stakeholder inputs in the public consultation process, including realized local benefits and regional variations. · All REDD initiatives should have approval from central government, including demonstration / pilot projects. Specifically regarding revenues generated from REDD, regulations will be prepared separately in consultation with the Ministry of Finance. Guidelines coming out of Jakarta will be consistent with and will not negatively impact national development. · The GOI admits there is a lack of capacity among the regional stakeholders to deal with all of the complex issues surrounding carbon trade, avoided deforestation and monitoring pilot implementation. · Beginning in 2006, a number of private sector and international and national non- government organizations collaborated with local governments to develop pilot REDD initiatives in selected areas of the country, more than a year before the COP 13 in Bali decided to include REDD and the importance of forests in regulating climate change. The early, pioneering efforts did not advance implementation beyond having formal audits approved and designation of specific tons of carbon available for sale on the voluntary market. No carbon sales from REDD pilots have taken place since these first efforts in 2006. · Since COP 13, Indonesia has been preparing REDD guidelines but the process has been slow. This slowness is in contrast with a burgeoning in pilot initiatives. · The Government of Indonesia senses an urgency to effectively manage REDD expectations; it perceives that money is a major driving factor of pilot proponents and that pilots currently being undertaken in the regions may be inconsistent with national policies. · Private sector / NGO implementation of REDD pilots has not been smooth. One factor affecting implementation has been the simultaneous effort by the Ministry of Forestry, and to a lesser degree the Ministry of Finance, to provide some guidance over the REDD process in Indonesia and to establish a road map for driving the REDD process forward. · The Government is weighing REDD implementation through a balanced approach – possibly a mix of national and sub-national, market- and fund-based, and regulatory and voluntary approaches. Page 10 10 · Local stakeholders (kabupaten governments, communities, NGOs, private companies) expect to benefit from REDD revenues to support changes in behavior that will reduce deforestation and forest carbon emissions. · Whatever the approach finally adopted, it must be comprehensive and realistically address emissions reduction. Decisions at COP will be drivers for determining consistency of REDD in Indonesia. · Real reductions in GHG emissions need to be proven, i.e., demonstrable, transparent, measurable, reportable and verifiable. · REDD demonstration activities will be identified by the newly created REDD Commission and assessed for consistency and coordination with other initiatives throughout the country. · Based on the presentations at the learning event from both bi- and multilateral donors, whether the World Bank, the Norwegian Government, AusAID, UNDP-UNEP-FAO, etc, the international community has geared up for implementation of REDD. Significant levels of funding are being made available for demonstration projects. While still impressive, total committed amounts are expected to be less than a year ago because of the current financial crisis. · Development partners are keen to invest hundreds of millions of dollars (pre-crisis) in REDD but are conscious of the need to wait for guidance from the central government. · The government is asking the donors to cooperate better in whatever they do in relation to rolling out REDD initiatives. · The donors and the private sector also want to move REDD forward; the private sector is expressing increasing concern about their existing investments. · The private sector is being treated with suspicion by the government and at times is being accused of being mono-focused on profits / money without paying attention to either central government regulations or the welfare of local communities. IV. Summary of Findings, Recommendations and Next Steps First, the Government should maintain its position that whatever REDD market development recommendations are finally made and adopted, the key is to maintain a focus on ensuring real emissions reductions through efforts at avoiding deforestation and forest degradation. Page 11 11 Second, all REDD market development recommendations should address how best to achieve a balance between the desire of the Government of Indonesia to set policy and establish guidelines for undertaking pilot REDD initiatives / demonstration projects with the private sector’s incentive for financial gain and non-government stakeholders’ concern that local communities are fully engaged and equitably benefit in the process. Third, All REDD initiatives should have approval from central government, including demonstration / pilot projects. Fourth, the process of getting REDD right, whether it be the Government issuing regulations and / or decision letters or the private sector and NGOs implementing demonstration REDD projects, must be transparent and done within a credible national framework. Below is a summary of the findings, recommendations and next steps as the REDD process rolls out in Indonesia. Key Finding per Stakeholder Group Associated Recommendation *RYHUQPHQW\03RI\03,QGRQHVLD · Has made significant progress in the forestry sector on issues related to climate change through creation of The Indonesian Forest Climate Alliance (IFCA), the Forest Resource Information System, the National Climate Change Council, the National Forestry Council, and initial provincial- / NDEXSDWHQ -level “REDD working groups”; REDD Commission to be created soon · It is critical the Government consider establish the road map for REDD by finalizing the two current policy initiative – the REDD Regulation and the REDD Commission · All REDD stakeholders are waiting for guidance from the Government; the consultative process should have provided the Government what it needs to finalize the documents · Continuing to drag out this process only extends the uncertainty REDD pilot proponents are experiencing · National framework is still very crucial issues to be discussed among others, especially when local/sub-national should refer it as guidance · Knows that REDD challenges in the near term are to effectively implement the Forest Resource Information System, the National Carbon Accounting System, determine the most optimal role for pilot REDD projects, and to establish better coordination among the partners involved in REDD – National Climate Change Council (DNPI) and the National Forestry Council ( 'HZDQ\03.HKXWDQDQ\031DVLRQDO ) among others · The Government could hold in depth discussions with the donors committed to financing REDD initiatives and determine where funds could best be spent on strengthening the capacity of the National Climate Change Council and the National Forestry Council to facilitate the requirements · Has stated that REDD is not just about avoided deforestation and selling carbon credits on the voluntary market but is also about sustainable development, governance, poverty reduction and economic development ; it is the · As referenced to below, the Government could, as part of one more public consultative “window” seek final wording on governance issues in the 3HUPHQKXW Page 12 12 Government’s intention to ensure that these concepts are incorporated into REDD regulations · Admits there is a lack of capacity among the regional stakeholders to deal with all of the complex issues surrounding carbon trade, avoided deforestation and monitoring pilot implementation · Local capacity is an issue as it impacts the readiness of local stakeholders to successfully implement REDD · Local governments entering into sales and purchase agreements with the private sector need to know what they’re doing so as to generate the greatest benefits for those living in and around the forests that are being targeted for producing carbon credits · Communication strategy development (local, provincial, national, global and the other way around) Page 13 13 Key Finding per Stakeholder Group Associated Recommendation 0LQLVWU\\03RI\03)RUHVW\ · Has issued an initial REDD Regulation and Decree. There has been good will on the part of the Ministry of Forestry to accommodate all stakeholder inputs in the public consultation process, including realized local benefits and regional variations · The Government could open the consultative process on the remaining 3HUPHQKXW and .HSPHQKXW that need to be issued and give the public (encouraging comments from key stakeholders – local governments, the private sector, civil society, local communities) an opportunity to respond with the caveat that the Government is under no obligation to accept outright every suggestion · The Government should carefully re-consider the impact on pilot projects created by an earlier proposal which states, (1) Thirty percent of all REDD credits are to be stored by the REDD Commission as implementation guarantees at the national level; (2) The guarantees in (1) above are to be used by the Government for: (a) addressing the reduction of emissions at the national level, and / or (b) empowering local communities around forested areas. (3) The mechanism and procedures for utilizing these REDD guarantees will be arranged through the Ministry Regulation The 30% requirement effectively kills the financial viability of projects such as Ulu Masen, which has set aside 30% in a risk management buffer · Is weighing REDD implementation through a balanced approach – possibly a mix of national and sub-national, market- and fund-based, and regulatory and voluntary approaches · A balanced approach is probably the best alternative at this time since COP 15 will not be held for another year, the final verdict on REDD is still out, and the Government has stated its intention to make REDD right relying on decisions reached at COP · Whatever the approach finally adopted, it must be comprehensive and realistically address emissions reduction. Decisions at COP will be drivers for determining consistency of REDD in Indonesia · The Government, with donor assistance, could consider developing a credible national framework for verifiable emission reduction, including: - reference scenario - institutional setting & relevant policy interventions guaranteeing strong link / coordination between local & national activities thus increasing effectiveness in addressing within-country emissions displacement & increase fair distribution of incentives, responsibility and accountability Page 14 14 Key Finding per Stakeholder Group Associated Recommendation 5(''\03'HPRQVWUDWLRQ\033URMHFW\033URSRQHQWV · REDD pilots began as early as 2006, more than a year before the COP 13 in Bali decided to include REDD and the importance of forests in regulating climate change · The early, pioneering efforts did not advance implementation beyond having formal audits approved and designation of specific tons of carbon available for sale on the voluntary market. No carbon sales from REDD pilots have taken place since these first efforts in 2006 · Since COP 13, at the same time Indonesia has been preparing REDD guidelines, REDD pilot projects have burgeoned · As stated below, the Government could, through interactions with the private sector in venues similar to the recent “Learning Workshop”, work with the existing pilots, learn from existing pilots and incorporate the best lessons learned from existing pilots in future revisions to REDD regulations / policy · The Government of Indonesia is suspicious of the intentions of REDD proponents; it feels that projects are money-driven and that pilots currently being undertaken may be inconsistent with national policies · The Government could make every effort to effectively utilize the results of the various pilot project as additional input into the REDD regulation process rather than view the private sector with suspicion · Now is not the time for the Ministry of Forestry to stop REDD pilots from going forward while waiting for the Ministry to complete its 3HUPHQKXW and .HSPHQKXW ; these two initiatives could proceed simultaneously · REDD demonstration activities will be identified by the newly created REDD Commission and assessed for consistency and coordination with other initiatives throughout the country · The Working Group on Climate Change needs to begin operation as quickly as possible · The private sector is expressing increasing concern about their existing investments in REDD pilots · As stated in a previous recommendation, the Government needs to provide the REDD road map certainty as quickly as possible · Mistrust still exists between the government and the private sector / NGOs over the “real” intentions behind the latter’s push for REDD pilots · It is imperative the central government and the private sector / NGOs collaborate more closely; the pilot proponents should keep the central government fully informed as to progress with respective pilots while simultaneously demonstrating patience as the government works out its REDD regulations and other policy pronouncements Page 15 15 Key Finding per Stakeholder Group Associated Recommendation 'RQRUV · Have geared up for implementation of REDD with significant levels of funding being made available for demonstration projects · With so much donor money available for REDD, it is imperative for the donors to closely coordinate roll out of their respective initiatives, whether these be capacity building for central / local authorities or support for REDD pilots · Are keen to invest hundreds of millions of dollars in REDD but are conscious of the need to wait for guidance from the central government · If it has not done so already, the Government might want to consider establishing a REDD Working Group in Jakarta with membership from all the major donors committed to funding REDD initiatives · Are being asked by the government to cooperate better in whatever is done in relation to rolling out REDD initiatives · What is needed is to maximize the synergies and strengthen the coordination to get the maximum value from the donor funds available for REDD. Page 16 16 Annex 1 Decision 2/CP.13 Reducing emissions from deforestation in developing countries: Approaches to stimulate action The Conference of the Parties Recalling the relevant provisions of the Convention, in particular Article 2, Article 3, paragraphs 1, 3 and 4, and Article 4, paragraphs 1(a).(d), 3, 5 and 7, Acknowledging the contribution of the emissions from deforestation to global anthropogenic greenhouse gas emissions, Acknowledging that forest degradation also leads to emissions, and needs to be addressed when reducing emissions from deforestation, Recognizing that efforts and actions to reduce deforestation and to maintain and conserve forest carbon stocks in developing countries are already being taken, Recognizing the complexity of the problem, different national circumstances and the multiple drivers of deforestation and forest degradation, Recognizing the potential role of further actions to reduce emissions from deforestation and forest degradation in developing countries in helping to meet the ultimate objective of the Convention, Affirming the urgent need to take further meaningful action to reduce emissions from deforestation and forest degradation in developing countries, Noting that sustainable reduction in emissions from deforestation and forest degradation in developing countries requires stable and predictable availability of resources, Recognizing that reducing emissions from deforestation and forest degradation in developing countries can promote co-benefits and may complement the aims and objectives of other relevant international conventions and agreements, Recognizing also that the needs of local and indigenous communities should be addressed when action is taken to reduce emissions from deforestation and forest degradation in developing countries: 1. Invites Parties to further strengthen and support ongoing efforts to reduce emissions from deforestation and forest degradation on a voluntary basis; 2. Encourages all Parties, in a position to do so, to support capacity-building, provide technical assistance, facilitate the transfer of technology to improve, inter alia, data collection, estimation of emissions from deforestation and forest degradation, monitoring and reporting, and address the institutional needs of Page 17 17 developing countries to estimate and reduce emissions from deforestation and forest degradation; 3. Further encourages Parties to explore a range of actions, identify options and undertake efforts, including demonstration activities, to address the drivers of deforestation relevant to their national circumstances, with a view to reducing emissions from deforestation and forest degradation and thus enhancing forest carbon stocks due to sustainable management of forests; 4. Encourages , without prejudice to future decisions of the Conference of the Parties, the use of the indicative guidance provided in the annex to this decision as an aid in undertaking and evaluating the range of demonstration activities; 5. Invites Parties, in particular Parties included in Annex II to the Convention, to mobilize resources to support efforts in relation to the actions referred to in paragraphs 1.3 above; 6. Encourages the use of the most recent reporting guidelines as a basis for reporting greenhouse gas emissions from deforestation, noting also that Parties not included in Annex I to the Convention are encouraged to apply the Good Practice Guidance for Land Use, Land-Use Change and Forestry ; 7. Requests the Subsidiary Body for Scientific and Technological Advice to undertake a program of work on methodological issues related to a range of policy approaches and positive incentives that aim to reduce emissions from deforestation and forest degradation in developing countries noting relevant documents; the work should include: (a) Inviting Parties to submit, by 21 March 2008, their views on how to address outstanding methodological issues including, inter alia, assessments of changes in forest cover and associated carbon stocks and greenhouse gas emissions, incremental changes due to sustainable management of the forest, demonstration of reductions in emissions from deforestation, including reference emissions levels, estimation and demonstration of reduction in emissions from forest degradation, implications of national and sub-national approaches including displacement of emissions, options for assessing the effectiveness of actions in relation to paragraphs 1, 2, 3 and 5 above, and criteria for evaluating actions, to be compiled into a miscellaneous document for consideration by the Subsidiary Body for Scientific and Technological Advice at its twenty-eighth session; (b) Requesting the secretariat, subject to availability of supplementary funding, to organize a workshop on methodological issues identified in paragraph 7 (a) above, before its twenty-ninth session, and to prepare a report on the workshop for consideration by the Subsidiary Body for Scientific and Technological Advice at that session; Page 18 18 (c) Advancing the development of methodological approaches, taking into account the outcome of the workshop referred to in paragraph 7 (b) above at its twenty ninth session; 8. Requests the Subsidiary Body for Scientific and Technological Advice to report to the Conference of the Parties, at its fourteenth session, on the outcomes of the work referred to in paragraph 7 (a).(c) above, including any recommendations on possible methodological approaches; 9. Invites relevant organizations and stakeholders, without prejudice to any future decision of the Conference of the Parties on reducing emissions from deforestation and forest degradation in developing countries, to support efforts in relation to paragraphs 1, 2, 3 and 5 above and to share outcomes of these efforts with the Subsidiary Body for Scientific and Technological Advice by providing corresponding information to the secretariat; 10. Requests the secretariat to support, subject to the availability of supplementary funding, the activities of all Parties, in particular developing countries, in relation to paragraphs 3, 5, 7 and 9 above, by developing a Web platform where information submitted by Parties, relevant organizations and stakeholders will be made available; 11. Notes the further consideration, under Decision 1/CP.13, of policy approaches and positive incentives on issues relating to reducing emissions from deforestation and forest degradation in developing countries; and the role of conservation, sustainable management of forests and enhancement of forest carbon stocks in developing countries; 12. Notes further that when addressing policy approaches and positive incentives on issues relating to reducing emissions from deforestation and forest degradation in developing countries, the efforts described in paragraph 3 above should be considered. Page 19 19 Annex 2 Workshop Agenda Developing a Market for REDD in Indonesia Bromo Room I, Indonesian Stock Exchange, Tower 2, 13 th Floor, World Bank 14 November 2008 Time Activity Speaker 08:00 – 08:30 Registration and Coffee Session 1: Opening 08:30 – 08:40 Speech Country Director World Bank & Deputy Resident Representative UNDP, Indonesia Joachim von Amsberg Elena Tischenko 08:40 – 09:00 Speech, Head, Forestry Research and Development, Department of Forestry Wahjudi Wardojo Session 2: Developing REDD in Indonesia Moderator : LeRoy Hollenbeck 09:00 – 10:10 Information Marketplace: REDD Development Initiative a. KeeptheHabitat – South Sulawesi b. The Nature Conservancy – East Kalimantan c. KFCP (Kalimantan Forest Carbon Partnership) – Central Kalimantan d. Burung Indonesia - Jambi e. Wetlands International – Central Kalimantan f. The Borneo Orangutan Survival Foundation – Central Kalimantan g. World Wide Fund for Nature – Riau h. ERM – Jambi i. APRIL - Riau j. Global Eco Rescue – East Kalimantan k. FFI – Macquarie Bank – West Kalimantan/Papua l. Infinite Earth – Central Kalimantan m. Green Synergies – North Sulawesi n. Carbon Conservation - Aceh o. New Forests Emerald Planet Papua – Papua Nigel Turvey Lex Hovani Grahame Applegate/ Timothy Jessup Sukianto Lusli Dibjo Sartono Aldrianto Priadjati Fitrian Ardiansyah / Iwan Wibisono Luiz Guimaraes Neil Franklin Tom Houston Frank Momberg Scott Stanley Marie Calmel Derek Trau Tobias C. Garritt/ Darius Sarshar 10:10 – 10:45 Policy Direction and the Potential REDD Market Nur Masripatin 10:45 – 11:30 Discussion 11:30 – 13:45 Lunch and Prayer Session 3: International Support fior REDD in Indonesia Moderator: LeRoy Hollenbeck 13:45 – 15:00 Presentations a. UN – REDD b. Forest Carbon Partnersip Facility (FCPF) c. Bi-lateral Support d. Bi-lateral Support e. Bi-lateral Support f. Multi-lateral Support g. Forest Investment Program UN-REDD Mission Werner Kornexl (World Bank) Neil Scotland (AusAid) Hanssen Steen Bjørn (Norwegian Government) Georg Bucholz (GTZ) Adrian Wells (DfID) Josef Leitmann (World Page 20 20 Bank) 15:00 – 16:00 Discussion 16:00 – 16:15 Summary and Closing Page 21 2 1 A n n e x 3 U p d a t e d m a t r i x o f I n d o n e s i a R E D D d e m o n s t r a t i o n p r o j e c t s P r o j e c t N a m e L o c a t i o n T o t a l A r e a C O 2 s a v i n g s / y e a r K e y P r o p o n e n t s C u r r e n t S t a t u s 1 . R e d u c i n g C a r b o n E m i s s i o n s f r o m D e f o r e s t a t i o n i n t h e U l u M a s e n E c o s y s t e m – A T r i p l e - B e n e f i t P r o j e c t U l u M a s e n E c o s y s t e m , A c e h 7 5 0 , 0 0 0 h a ( 7 , 5 0 0 k m 2 ) 3 , 3 0 0 , 0 0 0 t o n s C a r b o n C o n s e r v a t i o n ; F a u n a a n d F l o r a I n t e r n a t i o n a l ( F F I ) C C B A a u d i t a p p r o v e d 6 F e b ‘ 0 8 ; M o U s i g n e d b e t w e e n C a r b o n C o n s e r v a t i o n a n d t h e G o v e r n m e n t o f A c e h ; T e r m s h e e t s i g n e d b e t w e e n C a r b o n C o n s e r v a t i o n a n d M e r r i l l L y n c h ; S a l e s a n d m a r k e t i n g a g r e e m e n t s i g n e d w i t h C a r b o n C o n s e r v a t i o n a n d t h e G o v e r n m e n t o f A c e h ; v e r i f i c a t i o n p r o c e s s o n - g o i n g 2 . K a m p a r P e n i n s u l a r : I n t e g r a t e d S u s t a i n a b l e D e v e l o p m e n t , C o m m u n i t y a n d C o n s e r v a t i o n L a n d s c a p e M a n a g e m e n t R i a u , S u m a t e r a 3 5 0 , 0 0 0 h a o v e r a l l l a n d s c a p e ( 4 , 0 0 0 k m 2 ) E s t . 3 , 0 0 0 , 0 0 0 t o n s T w o - p h a s e p r i v a t e s e c t o r , g o v e r n m e n t , c o m m u n i t y a n d N G O p a r t n e r s h i p i n t e g r a t i n g s u s t a i n a b l e d e v e l o p m e n t , c o m m u n i t y a n d c o n s e r v a t i o n . P a r t n e r s h i p d e v e l o p m e n t i n p r o c e s s : L e a d b y A l l i a n c e o f N G O p a r t n e r , c o m m u n i t y , L e a f C a r b o n P t y L t d , G o v e r n m e n t a n d A P R I L / R A P P S c i e n c e b a s i s f o r h y d r o l o g y m a n a g e m e n t , e m i s s i o n s r e d u c t i o n , c o n s e r v a t i o n s p a t i a l p l a n n i n g a n d c a l c u l a t i o n a t a d v a n c e d s t a g e . F e a s i b i l i t y s t u d y c o m p l e t e . P r o j e c t P I N , P D D i n p r e p a r a t i o n p e n d i n g f i n a l i z a t i o n o f p r o j e c t p a r t n e r s h i p . C o m m u n i t y c o n s u l t a t i o n o n g o i n g 3 . K u a l a K a m p a r P i l o t P r o j e c t – R E D D R i a u , S u m a t e r a 7 0 0 , 0 0 0 h a ( 7 , 0 0 0 k m 2 ) U n k n o w n W o r l d W i d e F u n d f o r N a t u r e U n d e r t a k e f e a s i b i l i t y s t u d y ; P r e p a r e P I N a n d P D D ; I d e n t i f y i n v e s t o r s 4 . T e s s o N i l o P i l o t P r o j e c t – R E D D S u m a t e r a 5 0 , 0 0 0 h a ( 5 0 0 k m 2 ) U n k n o w n W o r l d W i d e F u n d f o r N a t u r e U n d e r t a k e f e a s i b i l i t y s t u d y ; P r e p a r e P I N a n d P D D ; I d e n t i f y i n v e s t o r s 5 . H a r a p a n R a i n f o r e s t P r o j e c t K a b u p a t e n M u a r a J a m b i , S u m a t e r a 1 0 1 , 0 0 0 h a ( 1 , 0 1 0 k m 2 ) U n k n o w n B u r u n g I n d o n e s i a ; T h e R o y a l S o c i e t y f o r t h e P r o t e c t i o n o f B i r d s ; B i r d l i f e Page 22 2 2 I n t e r n a t i o n a l P r o j e c t N a m e L o c a t i o n T o t a l A r e a C O 2 s a v i n g s / y e a r K e y P r o p o n e n t s C u r r e n t S t a t u s 6 . B e r b a k C a r b o n V a l u e I n i t i a t i v e J a m b i , S u m a t e r a 2 5 0 , 0 0 0 h a ( 2 , 5 0 0 k m 2 ) 7 0 0 , 0 0 0 t o n s E R M ; T h e Z o o l o g i c a l S o c i e t y o f L o n d o n ; B e r b a k N a t i o n a l P a r k P r o j e c t I n f o r m a t i o n N o t e ( P I N ) p r e p a r e d 7 . C o n s e r v a t i o n o f t h e U p p e r K a p u a s L a k e s S y s t e m a n d R e h a b i l i t a t i o n o f t h e S u n g a i P u t r i p e a t s w a m p f o r e s t , K e t a p a n g , K a l i m a n t a n 1 . K e t a p a n g , W e s t K a l i m a n t a a n d 2 . K a b u p a t e n K a p u a s H u l u , W e s t K a l i m a n t a n 1 5 7 , 0 0 0 h a a n d 5 7 , 0 0 0 h a U n k n o w n F F I ; P T M a c q u a r i e C a p i t a l T h e s e a r e t w o o f s i x R E D D p i l o t s t o b e i m p l e m e n t e d t h r o u g h t h e F F I / M a c q u a r i e p a r t n e r s h i p ; C a r b o n F o r e s t s T a s k F o r c e h a s b e e n f o r m e d ; I n t h e K e t a p a n g s i t e , f o r e s t c a r b o n m e a s u r e m e n t h a s a l r e a d y t a k e n p l a c e , w h i l e m e a s u r e m e n t i n t h e K a p u a s H u l u s i t e a r e s c h e d u l e d t o c o m m e n c e i n M a r c h 0 9 . C o m m u n i t y c o n s u l t a t i o n i s u n d e r w a y i n K e t a p a n g ; s t a k e h o l d e r m a p p i n g / p u b l i c c o n s u l t a t i o n w i l l c o m m e n c e i n K a p u a s H u l u i n e a r l y 0 9 8 . N o t k n o w n C e n t r a l K a l i m a n t a n 5 0 , 0 0 0 h a ( 5 0 0 k m 2 ) U n k n o w n I n f i n i t e E a r t h U n k n o w n 9 . K a l i m a n t a n F o r e s t s a n d C a r b o n P a r t n e r s h i p ( K F C P ) C e n t r a l K a l i m a n t a n , K a p u a s D i s t r i c t 1 3 0 , 0 0 0 0 h a ( 1 , 3 0 0 k m 2 ) ? t o n s A u s t r a l i a n G o v e r n m e n t D e t a i l e d d e s i g n n e a r l y f i n a l i s e d , n e x t s t e p i s f u l l d e m o n s t r a t i o n a c t i v i t y i m p l e m e n t a t i o n . C A R E , W e t l a n d s I n t e r n a t i o n a l , B O S F a n d E u r o c o n s u l t e n g a g e d f o r i n i t i a l d a t a c o l l e c t i o n , a n d i m p l e m e n t a t i o n p l a n n i n g 1 0 . K a t i n g a n C o n s e r v a t i o n A r e a : A G l o b a l P e a t l a n d C a p s t o n e P r o j e c t K a b u p a t e n K a t i n g a n a n d K a b u p a t e n K o t a w a r i n g a n , U n k n o w n U n k n o w n S t a r l i n g R e s o u r c e s U n k n o w n Page 23 2 3 C e n t r a l K a l i m a n t a n 1 1 . M a w a s P e a t l a n d C o n s e r v a t i o n A r e a P r o j e c t C e n t r a l K a l i m a n t a n 3 6 4 , 0 0 0 h a ( 3 , 6 4 0 k m 2 ) 1 , 4 4 2 , 2 8 8 t o n s T h e B o r n e o O r a n g u t a n S u r v i v a l F o u n d a t i o n ; T h e D u t c h R o y a l G o v e r n m e n t ; S h e l l C a n a d a C o m p l e t i o n o f P D D ( P r o j e c t D o c u m e n t D e s i g n ) ; v a l i d a t e d b y W i n r o c k I n t ’ l P r o j e c t N a m e L o c a t i o n T o t a l A r e a C O 2 s a v i n g s / y e a r K e y P r o p o n e n t s C u r r e n t S t a t u s 1 2 . C e n t r a l K a l i m a n t a n P e a t l a n d P r o j e c t – R E D D S e b a n g a u N a t i o n a l P a r k , C e n t r a l K a l i m a n t a n 5 0 , 0 0 0 h a ( 5 0 0 k m 2 ) U n k n o w n W o r l d W i d e F u n d f o r N a t u r e ; D e u t s c h e P o s t ; B O S M a w a s P r o g r a m ; W e t l a n d s I n t ’ l I n d o n e s i a P r o g r a m ; C a r e I n t ’ l I n d o n e s i a ; P a l a n g k a R a y a U n i v e r s i t y U n d e r t a k e f e a s i b i l i t y s t u d y ; P r e p a r e P I N a n d P D D ; I d e n t i f y i n v e s t o r s 1 3 . M a l i n a u A v o i d e d D e f o r e s t a t i o n P r o j e c t K a b u p a t e n M a l i n a u , E a s t K a l i m a n t a n 2 6 0 , 0 0 0 h a 1 . 1 m i l l i o n t C O 2 e p e r y e a r , 2 5 y e a r p r o j e c t G l o b a l E c o R e s c u e ; P T I n h u t a n i I I , M a l i n a u R e g e n c y C a r b o n B a s e l i n e e s t a b l i s h e d b y W i n r o c k I n t e r n a t i o n a l P r o j e c t P D D b e i n g f i n a l i z e d V C S a n d C C B A a p p l i c a t i o n i n p r e p a r a t i o n . I n f i n a l p r o j e c t a g r e e m e n t n e g o t i a t i o n , S i g n e d M O U w i t h P T I n h u t a n i I I F o r e s t M a n a g e m e n t a n d C o m m u n i t y D e v e l o p m e n t P l a n s F i n a l i z e d . C o m m u n i t y a n d l o c a l g o v e r n m e n t s t a k e h o l d e r m e e t i n g s h e l d 1 4 . B e r a u , I n d o n e s i a C l i m a t e A c t i o n P r o j e c t ( K a b u p a t e n B e r a u F o r e s t C a r b o n P r o g r a m ) K a b u p a t e n B e r a u , E a s t K a l i m a n t a n 9 7 1 , 2 4 5 h a ( 9 , 7 1 2 k m 2 ) 5 , 0 0 0 , 0 0 0 t o n s T h e N a t u r e C o n s e r v a n c y ; W o r l d A g r o f o r e s t r y C e n t e r ( I C R A F ) ; S e k a l a ; U n i v e r s i t y M u l a w a r m a n ; W i n r o c k S c o p i n g p h a s e c o m p l e t e d ; D e t a i l e d p r o g r a m d e s i g n ( J u n ’ 0 9 ) ; F u n d i n g s e c u r e d ( D e c ’ 0 9 ) Page 24 2 4 I n t ’ l ; U n i v e r s i t y o f Q u e e n s l a n d 1 5 . H e a r t o f B o r n e o P i l o t P r o j e c t – R E D D K a l i m a n t a n 2 2 , 0 0 0 , 0 0 0 h a ( 2 2 0 , 0 0 0 k m 2 ) U n k n o w n W o r l d W i d e F u n d f o r N a t u r e U n k n o w n 1 6 . F o r e s t L a n d U s e a n d C l i m a t e C h a n g e i n N o r t h S u l a w e s i ( F L U C C ) i n t h e P o i g a r F o r e s t K a b u p a t e n B o l a a n g a n d K a b u p a t e n M i n a h a s a S e l a t a n , N o r t h S u l a w e s i 3 4 , 9 8 9 h a ( 3 5 0 k m 2 ) 1 7 0 , 0 0 0 t o n s G r e e n S y n e r g i e s W o r k i n g g r o u p f o r m e d ; C a s e S t u d i e s W o r k s h o p ( S e p ’ 0 9 ) 1 7 . M a m u j u H a b i t a t M a m u j u , W e s t S u l a w e s i 3 0 , 0 0 0 h a ( 3 0 0 k m 2 ) 2 5 0 , 0 0 0 t o n s K e e p t h e H a b i t a t ; I n h u t a n i I S u s p e n d i n g l e g a l f o r e s t h a r v e s t i n g ; P r o t e c t i n g t h e a r e a f r o m i l l e g a l l o g g i n g , c l e a r i n g a n d b u r n i n g P r o j e c t N a m e L o c a t i o n T o t a l A r e a C O 2 s a v i n g s / y e a r K e y P r o p o n e n t s C u r r e n t S t a t u s 1 8 . P a p u a C a r b o n P r o j e c t K a b u p a t e n M i m i k a , K a b u p a t e n M e m b e r a m o 2 6 5 , 0 0 0 h a ( 2 , 6 5 0 k m 2 ) 1 , 0 0 0 , 0 0 0 – 2 , 0 0 0 , 0 0 0 t o n s N e w F o r e s t s A s s e t M a n a g e m e n t ; P T E m e r a l d P l a n e t M o U s i g n e d w i t h t h e G o v e r n m e n t o f P a p u a t o s u r v e y t h e i d e n t i f i e d s i t e s a n d s u b s e q u e n t l y u n d e r t a k e a d e t a i l e d f e a s i b i l i t y s t u d y , m a r k e t i n g p l a n a n d b u s i n e s s p l a n t o s u p p o r t t h e c r e a t i o n o f a c o m m e r c i a l l y o p e r a t e d C a r b o n P r o j e c t f o r v a l i d a t i o n u n d e r t h e V o l u n t a r y C a r b o n S t a n d a r d . L e g a l r e v i e w b e i n g u n d e r t a k e n t o d e t e r m i n e l i c e n s i n g p r o c e s s a n d s t r u c t u r e s . 1 9 . J a y a p u r a P i l o t P r o j e c t – R E D D P a p u a 2 1 7 , 6 3 4 h a ( 2 , 1 7 6 k m 2 ) U n k n o w n W o r l d W i d e F u n d f o r N a t u r e U n d e r t a k e f e a s i b i l i t y s t u d y ; D e v e l o p b a s e l i n e ; P r e p a r e P I N a n d P D D ; I d e n t i f y i n v e s t o r s Page 25 2 5 2 0 . M e r a u k e - M a p p i - A s m a t P i l o t P r o j e c t – R E D D P a p u a U n k n o w n U n k n o w n W o r l d W i d e F u n d f o r N a t u r e U n d e r t a k e f e a s i b i l i t y s t u d y ; P r e p a r e P I N a n d P D D ; I d e n t i f y i n v e s t o r s Page 26 26 Annex 4 Summary of Donor Initiatives UN-REDD (UNDP, UNEP & FAO Partnership) Background • Addresses REDD’s inclusion in the Bali Action Plan, Dec ‘07 • UNDP-administered; Multi-Donor Trust Fund established • Formally launched 24 Sep ‘08 Objectives • To contribute to the REDD Agenda in future UNFCCC meetings • To assist forested developing countries and international communities gain REDD experience • To assess how REDD payments can create the incentives to ensure actual , lasting , achievable , reliable and measurable emission reductions while maintaining and improving the other ecosystem services forests provide Services · Global Component – Development and testing of standards, methods and guidelines, especially for carbon monitoring/verification – Consult international stakeholders, i.e., Indigenous People representatives – Coordinate with other REDD initiatives, i.e., The World Bank’s Forest Carbon Partnership Facility; Australia’s International Forest Carbon Initiative · Pilot Country Component – Build national REDD capacity (“Readiness”), i.e., institutional and policy setting – Develop national carbon accounting systems – Test REDD payment structures and benefit sharing Country Actions • Will be identified and led by the host government • Will vary from country to country • Aim to establish cross-sectoral and multi-stakeholder responses • Aim to facilitate and support the challenging national processes in which REDD actions are defined and agreed • Scoping and Alliance Building • REDD Readiness for Monitoring and Assessment • REDD Dialogue • National REDD strategy • Support for implementing the REDD measures • REDD Data Management, payment distribution, payment structuring Financing • US$ 35.0 million contributed by Norway for initial phase • Approximately US$ 4.0 million / pilot country’s initial phase (Indonesia is a recipient) • Potential performance payments Page 27 27 Forest Carbon Pilot Facility (FCPF) World Bank Background/Guiding Principles · REDD is a climate change mitigation mechanism · REDD is not the silver bullet of development yet will strive for interdependency with other criteria and opportunities for livelihood and biodiversity benefits · Main effectiveness criterion is emissions reduced · Developing (“REDD”) countries have equal voting rights with donors and CF participants on Participants Committee (10 + 10 + Observers) · Voluntary & country-driven · Neutral to climate change negotiations Services · A REDD reference scenario established, based on historic emissions and/or projections of future emissions. Ideally follows guidance from UNFCCC. · A monitoring system designed and implemented · An economically effective, efficient and socially equitable national REDD strategy formulated and vetted through a meaningful policy / stakeholder consultation process · REDD framework established: - national coordination of activities - ownership of ER - distribution of ER revenues - National Registry, etc. Capacity building · Various kinds of performance-based financial approaches will be tested · Catalyst for large financial flows are necessary and private sector scaling up Country Actions · Develop national strategies and national reference scenarios for REDD · Promote projects within a national accounting approach · “National” does not mean “governmental” only · Test, learn and disseminate · Provide inputs for discussions at COP 15 (Dec ‘09) and beyond Financing Readiness Mechanism – Readiness Fund - Approximately US$ 150.0 million - 30 identified countries - Capacity building - Will run from 2008 – 2012 Carbon Finance Mechanism – Carbon Fund - Approximately US$ 200.0 million - 5 identified countries - Payments for emissions reductions - Will run from 2009 – ??? Page 28 28 Forest and Climate Change Program gtz-KfW Background · Bilateral G-G negotiations October 2007 agreed on a new Priority Area Climate Change · Cooperation in a program approach (2 Programs: Environment and Climate Change; Forest and Climate Change) · All German development agencies involved (GTZ, CIM, DED, InWEnt, KfW) · Current focus on Kalimantan · Coordination with other international donors Objective · To implement strategies for forest conservation and sustainable forest management that will result in reduced GHG emissions from the forest sector and improved living conditions of impoverished rural populations Services · Technical Cooperation - Policies and strategy development - Implementation of forest sector reforms (REDD pilots) - Conservation and sustainable development · Financial Cooperation - Investment in Readiness - Investments in REDD demonstration activities - Consulting services for implementation Competitive activities selection REDD pilots with different project sponsors and in different districts with different framework conditions Country Actions · Ministry of Forestry - Executing Agency · Implementation in 3-4 Kalimantan districts · District-based approach Financing · 27.3 million - 7.3 million for technical cooperation – 4 years - 20.0 million for financial cooperation – 7 years Page 29 29 Indonesia-Australia Forest Carbon Partnership International Forest Carbon Initiative – (IFCI) (AusAID) Background · REDD Partnership Agreement signed by President Yudhoyono and Prime Minister Rudd on 13 Jun ‘08 · IFCI supports the Indonesia-Australia Forest Carbon Partnership (IAFCP) to Objectives • To support international efforts to reduce deforestation through the UNFCCC • To demonstrate that REDD can be part of an equitable and effective international agreement on climate change • To develop practical demonstration activities in Indonesia and Papua New Guinea Services · Develop policy and build capacity to support participation in international negotiations and future carbon markets · Provide technical support for Indonesia to develop its national forest carbon accounting and monitoring system · Develop demonstration activities and provide related enabling assistance, to trial approaches to reducing emissions from deforestation and forest degradation. Country Actions At a national level: • Assist the development of a national Forest Resource Information System , and a National Carbon Accounting System • Support efforts to develop a national policy framework for (REDD) • Support policy development and capacity building for participation in international negotiations • Cooperation around a Roadmap for Access to International Carbon Markets • FireWatch real-time fire monitoring Field-level REDD demonstration activities are being designed and implemented: • The Kalimantan Forests and Climate Partnership aims to trial and demonstrate innovative, practical, market-oriented approaches to financing and implementing REDD It is the first, large-scale demonstration of its kind in the world • Agreement to develop a second REDD demonstration activity was announced at the Australia-Indonesia Ministerial Forum 12 Nov ‘08 - Similar scale to the KFCP - A process to identify the focus of this activity will begin shortly. Financing · AUS$ 200 million – 5 years · KFCP – AUS$ 30.0 · National level – AUS$ 10.0 million Page 30 30 Forest Investment Program (FIP) World Bank Background · There is a clear investment gap for achieving the climate change potential of forests · Existing instruments are not designed to close the gap · Diverging views: should investments strictly focus on carbon or be part of the broader development agenda? · FIP partners’ perspective: focus on development dimension of forests, i.e., economic development, poverty alleviation and environmental services · Indigenous communities needs should be addressed in design and implementation · Should build upon complementarities, such as GEF, FCPF, UNREDD and UNFF and follow country-led priorities · Should be a pilot program (number of pilot countries determined by available resources) Objectives • Reduce emissions from deforestation / degradation • Promote sustainable forest management • Protect carbon reservoirs Services · REDD - Shifting agriculture to non-forest lands - Restoration of degraded forests - Protection of forests against fires, etc. - Build capacity for better forest management · Sustainable Forest Management - SFM-based timber & NTFP production - Innovation & research to improve SFM - More efficient forest-based industries · Protecting Carbon Reservoirs - Forest ownership/land use rights - Forest land use zoning & planning Country Actions · Partnership Forum Established consisting of: - Clean Technology Fund to finance technologies for transformational change at scale and ; unleash potential of public and private sectors to achieve GHG reductions - Strategic Climate Fund for targeted programs with funding to pilot new approaches with potential for scaling up, i.e., pilot program for climate resilience, forest investment program and other potential programs · Multi-stakeholder working group being created to plan next design meeting Financing • Grants, soft loans and guarantees for forest carbon investments • Target: US$ 500.0 million - US$ 1.0 billion Page 31 31 Annex 5 Initial Ministerial REDD Regulation and Decree 9 REGULATION OF MINISTER OF FORESTRY NUMBER: P. 68/Menhut-II/2008 ON THE IMPLEMENTATION OF DEMONSTRATION ACTIVITIES ON REDUCTION OF EMISSIONS FROM DEFORESTATION AND DEGRADATION WITH THE BLESSING OF GOD ALMIGHTY THE MINISTER OF FORESTRY Considering : a. That as a response from the decisions of the 13 th Conference of Parties to The United Nations Framework Conventions on Climate Change in Bali, Indonesia has decided on the policy to reduce carbon emission from deforestation and degradation; b. That in relation to the said matter, it is necessary to implement demonstration activities on the reduction of carbon emission from deforestation and degradation with the Regulation of the Minister of Forestry Bearing in Mind : 1. Law Number 5 of 1990 on Conservation of Biological Resources and Their Ecosystem (State Gazette of the Republic of Indonesia of 1990 Number 94, State Gazette Supplemental of the Republic of Indonesia Number 3419); 9 English translation provided courtesy of AusAID Page 32 32 2. Law Number 6 of 1994 on The Ratification of United Nations Framework Convention on Climate Change (State Gazette of the Republic of Indonesia of 1994 Number 42, State Gazette Supplemental Number 3557), 3. Law Number 23 of 1996 on Environmental Management (State Gazette of Republic of Indonesia Year 1997 Number 68, State Gazette Supplement Number 3699) 4. Law Number 41 of 1999 on Forestry (State Gazette of the Republic of Indonesia of 1999 Number 167, State Gazette Supplemental Number 3888) as amended by Law Number 19 of 2004 on the Determination on Government Regulation In Lieu of Law No. 1 of 2004 on Amendment on Law No. 41 of 199 on Forestry to be Law (State Gazette of the Republic of Indonesia of 2004 Number 86, State Gazette of the Republic of Indonesia Number 4412) 5. Law Number 32 of 2004 on Regional Government (State Gazette of the Republic of Indonesia of 2004 Number 125, State Gazette Supplemental of the Republic of Indonesia Number 4437); 6. Law Number 17 of 2004 on the Ratification of Kyoto Protocol to the United Nations Framework Convention on Climate Change (State Gazette of the Republic of Indonesia of 2004 Number 72, State Gazette Supplemental of the Republic of Indonesia Number 4403); 7. Law Number 26 of 2007 on Landscaping (State Gazette of the Republic of Indonesia Number 68 of 2007 State Gazette Supplemental Number 4725); 8. Government Regulation Number 44 of 2004 on Forestry Planning (State Gazette of the Republic of Indonesia of 2004 Number 146, State Gazette of the Republic of Indonesia Number 4452); Page 33 33 9. Government Regulation Number 45 of 2004 on Forest Protection (State Gazette of the Republic of Indonesia of 2004 Number 146, State Gazette Supplemental of the Republic of Indonesia Number 4452); 10. Government Regulation Number 6 of 2007 on Forest Management and Formulation of Forest Management and Forest Utilization Plan (State Gazette of the Republic of Indonesia of 2007 Number 22, State Gazette Supplemental of the Republic of Indonesia Number 4814); 11. Presidential Regulation No. 46 of 2008 on National Council of Climate Change; 12. Regulation of the Minister of Forestry Number P.13/Menhut- II/2004 on the Organization and Work Procedure of the Department of Forestry, as several times improved, last by Number P.64/Menhut-II/2008 HAS DECIDED To Enact : REGULATION OF THE MINISTER OF FORESTRY ON THE IMPLEMENTATION OF DEMONSTRATION ACTIVITIES ON REDUCTION OF EMISSION FROM DEFORESTATION AND DEGRADATION CHAPTER I DEFINITION Article 1 In this regulation the followings are the definitions: 1. Demonstration activities of reduction of emission from deforestation and degradation is testing and development of methodology, technology and institution of sustainable forest management aimed to reduce carbon emission; Page 34 34 2. Forest is a unity of ecosystem in the form of land and natural resources dominated by vegetations in natural harmony with surrounding environment, inseparable between one and another. 3. State forest is a forest within a land upon which no land right is imposed. 4. Right forest is a forest within a land upon which land right is imposed. 5. Minister is Minister who is responsible forestry sector. 6. Proponent is the government, forest timber product utility license holders, holders/managers of right forests, managers of customary forest, and head of forest management unit responsible for the implementation of demonstration activities. 7. Partner is the government, international organisations, private entities and individuals who have the capacity to fund demonstration activities implementation. CHAPTER II AIMS AND OBJECTIVES Article 2 (1) The aim of the implementation of demonstration activities of reduction of emission from deforestation and degradation is to test and develop methodologies, technology and institution of sustainable forest management that endeavor to reduce carbon emission through controlling of forest deforestation and degradation. (2) The objective of implementation of demonstration activities of reduction of emission from deforestation and degradation is to obtain forest management design related to reduction of carbon emission from deforestation and degradation. CHAPTER III LOCATION AND IMPLEMENTOR Article 3 Demonstration activities can be implemented on state forests and/or right forests. Article 4 (1) Demonstration activities are implemented by proponents Page 35 35 (2) In the implementation of demonstration activities as referred to in paragraph (1), proponents can cooperate with partners. CHAPTER IV APPLICATION AND APPROVAL PROCEDURE Article 5 (1) Initiator submits written application on the implementation of demonstration activities to the Minister, by enclosing: a. Plan of demonstration activities, the content of which among others are status and location with location map of the proposed area, form and period of cooperation, estimation of activity values, risk management and plan of revenue distribution allocation. b. In the event that the initiator is an individual whose funding is coming from his/her own money (self-funding), initiator must attach letter of consent to fund the implementation of demonstration activities; c. In the event that the initiator cooperates with partners and all or part of the funding comes from the partners, initiators must attach cooperation document. (2) The Minister assigns Working Group on Climate Change in the Department of Forestry to conduct assessment on the feasibility on the demonstration activity application as referred to in paragraph (1). (3) Feasibility criteria and indicators on demonstration activity implementation will further be regulated with Ministerial Regulation. (4) Based on the assessment of the Working Group on Climate Change Control in the Department of Forestry, the Minister can approve, approve with condition or reject the application of the initiator. (5) The concept of approval or rejection of the Minister as referred to in paragraph (4) is prepared by the Head of Working Group on Climate Change Control in Department of Forestry. (6) Ministerial approval as stipulated in paragraph (5) must list: a. Determination of area and extent of demonstration activities with a map Page 36 36 showing the borders of activity location. b. The period should be no longer than 5 years. c. Stipulations related to the risks and allocation distribution of revenue. CHAPTER V CONCLUDING STIPULATIONS Article 6 This regulation is in force on the date of the enactment To have everybody knows, this Ministerial Regulation is promulgated with its placement in the State Gazette of the Republic of Indonesia Promulgated in Jakarta On December 11, 2008 MINISTER OF FORESTRY H.M.S. K A B A N Page 37 37 DECREE OF MINISTER OF FORESTRY NUMBER: SK.455/Menhut-II/2008 ON WORKING GROUP ON CLIMATE CHANGE IN THE DEPARTMENT OF FORESTRY THE MINISTER OF FORESTRY Considering : a. that as a response of the result of 13 th Conference of Parties to The United Nations Framework Conventions on Climate Change on December 2007 in Bali, policies to save the rainforests need to be developed by promoting forestry sector climate change control; b. That to improve the coordination in formulating, implementing, evaluating and revising the policies of forestry sector climate change control, a Climate Change Working Group needs to be established within the Ministry of Forestry by the issuance of Decree of Minister of Forestry Bearing in Mind : a. Law Number 6 of 1994 on The Ratification of United Nations Framework Convention on Climate Change (State Gazette of the Republic of Indonesia of 1994 Number 42, State Gazette Supplemental of the Republic of Indonesia Number 3557), b. Law Number 23 of 1996 on Environmental Management (State Gazette of the Republic of Indonesia of 1997 Number Page 38 38 68, State Gazette Supplemental of the Republic of Indonesia Number 3699) c. Law number 17 of 2004 on the Ratification of Kyoto Protocol to the United Nations Framework Convention on Climate Change (State Gazette of the Republic of Indonesia of 2004 Number 72, State Gazette Supplemental of the Republic of Indonesia Number 4403) d. Law Number 41 of 1999 on Forestry (State Gazette of the Republic of Indonesia of 1999 Number 167, State Gazette Supplemental of the Republic of Indonesia Number 3888 d. Law Number 41 of 1999 on Forestry (State Gazette of the Republic of Indonesia of 1999 Number 167, State Gazette Supplemental Number 3888) as amended by Law Number 19 of 2004 on the Determination on Government Regulation In Lieu of Law No. 1 of 2004 on Amendment on Law No. 41 of 199 on Forestry to be Law (State Gazette of the Republic of Indonesia of 2004 Number 86, State Gazette of the Republic of Indonesia Number 4412) e. Law Number 5 of 1990 on Conservation of Biological Resources and Their Ecosystem (State Gazette of the Republic of Indonesia of 1990 Number 94, State Gazette Supplemental of the Republic of Indonesia Number 3419); f. Government Regulation Number 44 of 2004 on Forestry Planning (State Gazette of the Republic of Indonesia of 2004 Number 146, State Gazette of the Republic of Indonesia Number 4452); g. Government Regulation Number 6 Of 2007 on Forest Administration and The Formulation of Forest Management and Forest Utilization Plan (State Gazette of the Republic of Indonesia of 2007 Number 22, State Gazette Supplemental of the Republic of Indonesia Number 4696) as amended by Page 39 39 Government Regulation Number 3 of 2008 (State Gazette of the Republic of Indonesia of 2008 Number 16, State Gazette Supplemental of the Republic of Indonesia Number 4814); h. Government Regulation Number 38 of 2007 on the Division of Governmental Affairs Between the Government, Provincial Government and Regency/Municipal Government (State Gazette of the Republic of Indonesia of 2007 Number 82, State Gazette of the Republic of Indonesia Number 4737); i. Presidential Regulation Number 46 of 2008 on the National Council on Climate Change; j. Regulation of the Minister of Forestry Number P.13/Menhut- II/2004 on the Organization and Work Procedure of the Department of Forestry, as several times improved, last by Number P.64/Menhut-II/2008 HAS DECIDED To enact : FIRST : To form a Working Group on Climate Change in the Department of Forestry SECOND : The duties of the Working Group on Climate Change in the Department of Forestry are as follows: a. To provide inputs to the Minister of Forestry on the policies, strategies, programs and activities on climate change control in Department of Forestry; b. To assist the Minister of Forestry in conducting the duties of controlling climate change consisting of adaptation, Page 40 40 mitigation and transfer of technology activities in the Department of Forestry c. To assist the Minister of Forestry in evaluating policies on climate change control consisting of adaptation, mitigation and transfer of technology activities in the Department of Forestry d. To manage data and information on climate change control consisting of adaptation, mitigation and transfer of technology activities in the Department of Forestry THIRD : The organization of Working Group of Climate Change in the Department of Forestry is as follows: Mentor : Minister of Forestry Director : 1. Director General of Forestry Production 2. Inspector General Director General of Land Rehabilitation and Social Forestry 3. Director General of Forest Protection and Natural Conservation 4. Director General of Land Rehabilitation and Social Forestry 5. Director General of Forest Product Development 6. Head of Forestry Research and Development Agency Chair : Director General of Forestry Spatial Planning Executive Chair : Expert Staff of the Minister on Environmental Issues Members : 1. Secretary to Inspectorate General 2. Secretary to Directorate of Forestry Spatial Planning 3. Secretary to Directorate General of Forest Protection and Natural Conservation Page 41 41 4. Secretary to Directorate General of Land Rehabilitation and Social Forestry 5. Secretary to Directorate General of Forest Product Development 6. Secretary to Forestry Research and Development 7. Head of Legal and Organization Bureau 8. Head of Financial Bureau 9. Director for Inventory and Monitoring of Forest Resources 10. Director for Forest Area Planning 11. Director for Natural Forest Development 12. Director for Environmental Services Utilization and Natural Tourism 13. Director for Riverbed Area Management 14. Head of Foreign Cooperation Center FOURTH : To support the ease in implementing the duties of Working Group on Climate Change in the Department of Forestry formed by the Secretariat of Working Group on Climate Change in Department of Forestry FIFTH : The duties, membership formation, work organization, appointment and termination of Working Group sub members as referred to in part Four is determined by the Chief of Working Group on Climate Change in Department of Forestry SIXTH : The Chair of the Working Group on Climate Change in the Department of Forestry shall report their work result once every 3 (three) months to the Minister of Forestry through the Secretary General SEVENTH : All funding necessary for the implementation of the duties of Working Group on Climate Change in the Department of Forestry is borne by the Budget of the Department of Forestry Page 42 42 EIGHT : This Regulation shall come into effect on the date of its enactment Enacted in: Jakarta On December 2, 2008 Minister of Forestry Copy according to the original Head of Legal and Organization Bureau Suparno SH NIP: 080068472 H.M.S. Kaban