Page 1 Utilizing market-based mechanisms for mitigation target in Indonesia 2020 and beyond based on the Indonesia INDC and Paris Agreement

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1 Page 1 Utilizing market-based mechanisms for mitigation target in Indonesia 2020 and beyond based on the Indonesia INDC and Paris Agreement

2 Climate Change Forest and Land use Water Sustainable Cities and Buildings Renewable Energy and Energy Efficiency We are the experts in sustainability Page 2

3 Developing solutions worldwide Page 3

4 Selected clients Page 4

5 South Pole Group 14/01/16 Page 5 Agenda Key Elements of the Paris Agreement Business opportunities after Paris Invest in green projects, go carbon neutral, tackle risks in your supply chain Building on the momentum of Paris - Can cities lead the way to a low carbon future? Q&A Session

6 South Pole Group 14/01/16 Page 6 Key Elements of the Paris Agreement

7 South Pole Group 14/01/16 Page 7 What is the Paris Agreement? The Paris Agreement is the Successor of the Kyoto Protocol after 2020 The agreement legally binds signatories to: Present pledges (Nationally Determined Contributions, NDCs) Use an agreed format to present such pledges Thereby reflect highest possible ambition Participate in global stocktaking every 5 years, to increase ambition Transparency framework to track emissions and progress The agreement also creates a basis for a variety of concepts, such as: Sustainable Development Mechanism Voluntary cooperation Results-based finance for REDD+ (forest conservation) Capacity development Technology transfer Adaptation

8 South Pole Group 14/01/16 Page 8...and what not? The agreement does NOT legally bind signatories: To any particular emission reduction target To any other level of ambition To use any particular type of policy or mechanism To any specific financial commitments The agreement does not contain any sanction mechanisms

9 South Pole Group 14/01/16 Page 9 What makes Paris so special? First: Goal to stay "well below 2 C" and to pursue efforts to limit the temperature increase to 1.5 C above preindustrial levels. Plus a number of stunning elements, which ensure a certain degree of rigor while still enabling global participation: 1. Bottom-up instead of top-down approach (Kyoto) 2. You can choose if you want to be a developing country or not 3. Text carefully tailored to bypass approval by U.S. Senate 4. Creates a transparency framework to be monitored by NGOs 5. Creates carbon markets while avoiding the word markets 6. For the first time explicitly encourages private players to act

10 South Pole Group 14/01/16 Page 10 Business opportunities after Paris

11 Updated baseline emission Indonesia Source: Bappenas 2015 Hasil simulasi jangka panjang menunjukkan trend emisi GRK meningkat cukup signifikan Emission from the energy sector will increase significantly after 2020 terutama Simulation berasal of Indonesian dari sektor baseline energi emission hingga2010 tahun (in thousand PascatCO2e) 2030, emisi diperkirakan

12 South Pole Group 14/01/16 Page 12 Market mechanisms are reinstated as key instrument Two mechanisms: The Carbon Club : Bilateral or multilateral use of ITMOs generated from any sort of mechanism (JCM, NDC, NAMA?) Sustainable Development Mechanism: Reinstatement of a combined CDM&JI mechanism without its shortcomings? Signals to project developers: Markets likely key mechanism Ratcheting up mechanism allows gradual increase in ambition REDD+ PES encouraged, implicitly linked to both mechanisms ( net goals, long term abatement, sinks in Art. 6), PPP encouraged Commitment to 100 Bn USD / year finance Short term support: Transformative Carbon Asset Facility, N 2 O Reduction Initiative, development of markets and PES in some INDCs

13 South Pole Group 14/01/16 Page 13 How can companies take the lead towards low carbon economy? Commitment to 2 C / 1.5º C goal and long term carbon balance : define long term science based emission reduction goals for companies, potentially including internal price on carbon Aim at investment decarbonization Recognition of non-party initiatives highlights importance of private sector initiatives: reduce at home, finance abroad deliver on commitments such as RE100 and improve in CDP reporting SDM requires combining CO 2 reduction and other goals: Invest into REDD+ Use insetting Manage water and Climate risk jointly Fill in the voids: Shipping & Aviation not regulated - offset scope 2 and 3 emissions NDC ambition level is variable get involved with your government

14 South Pole Group 14/01/16 Page 14 Example corporate action: Renewable energy certificates Switch to renewable energy now Secure, globally available renewable energy at your disposal now Reportable according to RE100, CDP, LEED, WindMade, WWF Climate Savers Suitable to reduce your electricity-related emissions according to the GHG Protocol Scope 2 guidelines Our take on renewable energy certificates Based on grid-connected renewable electricity projects in a variety of countries Tradable and non-tangible commodities Sold separately from the underlying electricity source

15 South Pole Group 14/01/16 Page 15 Building on the momentum of Paris - Can cities lead the way to a low carbon future?

16 South Pole Group 14/01/16 Cities role under the Paris agreement Page 16 Paris Agreement: first major climate agreement to acknowledge role of cities in fighting climate change Cities as one of the most active players in the space 600+ cities: pledge to reduce 1 Gt CO 2 ( 3% of global CO 2 ) Copenhagen, S. Francisco, Sydney +10 others go carbon neutral 250+ city-related events at COP21 see cityactions.org

17 South Pole Group 14/01/16 Page 17 South Pole helps cities to reduce their footprint Bike sharing in Mexico City Mobile phone data in the EU Capacity for cities in India Carbon markets for cities in Thailand New financing in Colombia Low-carbon towns in Indonesia

18 South Pole Group 14/01/16 Finance challenge of cities Page 18 CO 2 Finance Cities, 70% Cities, 30% Creditworthiness Yes, 20%

19 USD trillion South Pole Group 14/01/16 Finance under Paris Agreement Page 19 1 out of 3 measures for implementation (Art. 2) Strong signal for wider investment community that investment in low-carbon assets will pay off No real progress on North-South finance ? Global Needs Global Flows N-S flows Copenhagen Paris Paris Sources: IEA, OECD, CPI, UNFCCC

20 South pole group December 9, 2015 Key take aways on cities and finance Page 20 COP21: Cities = key actors to fight climate change (70% CO 2, ambitious pledges) South Pole Group helps cities to get better access to capital (only 20% are creditworthy) Paris: strong signal that investment in low-carbon assets will pay off Financial sector will invest in 2 degrees future, if national government action to implement Paris

21 South Pole Group 14/01/16 Thank you for your attention! Page 21 thesouthpolegroup.com Headquarters Zurich Offices worldwide Addis Ababa, Bangkok, Beijing, Hanoi, Hong Kong, Jakarta, London, Medellín, Melbourne, Mexico City, New Delhi, São Paulo, San Francisco, Stockholm, Sydney, Zurich