The Joint Crediting Mechanism (JCM) Current

Transcription

1 The Joint Crediting Mechanism (JCM) Current Development in Indonesia Dicky Edwin Hindarto Head of Indonesia JCM Secretariat Indonesia Joint Crediting Mechanism Secretariat 2 April 2015 Workshop on Joint Crediting Mechanism: Sharing Experiences in Indonesia Thailand Greenhouse Gas Management Organization (TGO) 1

2 Presentation structure 1. The Indonesia current market mechanism initiatives status 2. Our agreement with Japan on JCM 3. The JCM current development 4. How the JCM works? 5. The JCM financial scheme

3 It s all started from climate change issues Emission Reduction Targets Economic growth increases with GHG emission 7 years to achieve national commitment of GHG emissions reduction by 26% under BAU level in 2020 (up to 41% with international support). Emission reduction is not compromising growth (26/7 vision). Lesson learned: Carbon market instruments such as CDM proved to be effective to spur emissions reduction by industries: 215 projects approved by DNA, 146 projects registered, 37 projects issued CERs (equals to 11 million tco2) Increasing interest and opportunity from voluntary carbon markets, currently 9 projects are already delivered more than 8 million tons. Source: DNPI, 2011 Sector Unilateral Supported Forestry and Peat Waste Energy and Transport Agriculture Industry Total (in GtCO2e) Source: DNPI/2011

4 The JCM and other Indonesia initiatives on market mechanism CDM Giving very high expectation in the beginning, very difficult and complex to be implemented, and suddenly everything was stopped due to the lack of demands, now we have no new project in But still we got a lot of experiences from the CDM projects that we have developed. VCS Relatively small compare to CDM, but still growing smoothly. It s very difficult to escalate the Indonesian business sector involvement in VCS mechanism, and until now only very limited projects that have been developed (one of it is our first REDD+ project). Nusantara Carbon Scheme Still in the preliminary stage. Some of the methodologies had been tested, and so far receive positive responses from the business entities. We hope someday it will be one of the alternative for the market based mitigation actions. The JCM Scheme We need more than three years to develop the agreement, started from 2010 and its finally signed at August The Joint Crediting Mechanism is the most progress mechanism now in Indonesia. It is not only about the bilateral carbon trading, but rather than how to develop and implement the green investment as well as low emission development and technology transfer between the 2 countries. Japan and Indonesia have their own national target on emission reduction to be achieved, and it can be done through JCM. Both countries also need to increase their economic development as well as develop more opportunities for their private sectors to grow.

5 Indonesia-Japan agreement on low carbon development (1) Bilateral cooperation between Indonesia and Japan The JCM refer to another international cooperation and agreement The JCM was developed to achieve low carbon growth at the host country

6 Indonesia-Japan agreement on low carbon development (2) JCM Joint Committee roles The carbon credit can be used to fulfil the national pledge Robust methodology, transparency, and environmental integrity

7 Indonesia-Japan agreement on low carbon development (3) No double counting Bilateral cooperation Non tradable credit Will become a tradable credit The period of agreement Document modification

8 How the JCM scheme works? Japan Government Issuance of credit Notifies registration of projects Report issuance of credits Joint Committee Secretariat Japanese Side Indonesian Side communication Notifies registration of projects Report issuance of credits Indonesia Government Issuance of credit Request registration of projects Request registration of projects Request issuance of credits Submit PDD / monitoring report Third Party Entities Validate projects Verify amount of GHG emission reduction or removal Submit PDD / monitoring report Request issuance of credits Project Participants Implementation & monitoring of projects Inform results of validation / verification Inform results of validation / verification Implement project together May contact TPE and Secretariat through one Contact Entity Project Participants Implementation & monitoring of projects

9 Can be conducted by the same TPE Can be conducted simultaneously Steps in the JCM Project Participant / Each Government Joint Committee Joint Committee Project Participant Third Party Entities Joint Committee Project Participant Third Party Entities Submission of Proposed Methodology Approval of Proposed Methodology Development of PDD Validation Registration Monitoring Verification * Simplicity, practicality and transparency No need to have additionality like CDM Net mitigation reductions Start as nontradable credit type mechanism Joint Committee decides the amount Each Government issues the credit Issuance of credits *PDD: Project Design Document

10 Necessary documents for JCM Overall Rules of Implementation Project Cycle Procedure Glossary of Terms Guidelines for Designation as Third Party Entity (TPE) Guidelines (in developing phase) Joint Committee Rules of Procedures for the Joint Committee Project procedures Developing a PDD Guidelines for Developing PDD and Monitoring Report Validation and Verification Guidelines for Validation and Verification 4 Approved Methodologies AM_001 Power Generation by Waste Heat Recovery in Cement Industry AM_002 Energy Saving by High-Efficiency Centrifugal Chiller AM_003 Installation of Energy-Efficient Refrigerators Natural Refrigerants at Food Industry Cold Storage and Frozen Food Processing Plant AM_004 Installation of Air-Conditioning for Grocery Store 3 Proposed Methodologies being discussed: PM_004 Installation of LED lighting for grocery store PM_006 GHG emission reductions through optimization of refinery plant PM_007 GHG emission reductions through optimization of boiler operation in Indonesia Some national guidelines are being prepared for the JCM implementation, e.g.: Project Monitoring and Evaluation Guidelines Sustainable Development Implementation Guidelines Capacity Building Implementation Procedures Etc

11 From 2010 to 2015 we have conducted 96 FS CCS Low-carbon city Low-carbon city

12 use PIN (Project Idea Note) to submit application (recommended) Steps in JCM Feasibility Studies (FS) to be a JCM project Exact procedures described in application guidelines of respective schemes should be referred to. approved FS Participant Candidates METI/NEDO or MOE Japan apply for FS support scheme not approved need further study FS implementation (1 study or more) No support for FS(*) Feasible Apply for subsidy or entrustment(**) Not feasible Not apply(*) No implementation as JCM project METI/NEDO or MOE Japan approved JCM Project with subsidy or entrustment not approved No subsidy or Entrustment(*) (*) except for FS reapplication (**) PP candidate may apply without conducting FS

13 The JCM projects current development The Project Implementation 3 projects are registered as a JCM project. 12 JCM projects are now in our pipeline, including 2 new projects (in textiles and paper industry). 13 projects on energy efficiency and 2 projects on renewable energy (registered and pipeline). 1 project has withdrawn due to political issues. All projects are being developed with the cooperation between Indonesia and Japan participants. The Registered Projects 1. Energy Saving for Air-Conditioning and Process Cooling by Introducing High-efficiency Registered Centrifugal Project Chiller (first registered project under the JCM) 2. Project of Introducing High Efficiency Refrigerator to a Food Industry Cold Storage in Indonesia 3. Project of Introducing High Efficiency Refrigerator to a Frozen Food Processing Plant in Indonesia The 1 st JCM registered project: Collaboration between Ebara Equipment & Systems and PT Primatexco Indonesia Location: Batang, Central Java Estimated total emissions reduction 799 tco 2 eq. by 2020 Annual 965 MWh energy saving

14 List of JCM implementation projects No Project title Estimated annual emissions reduction, average (tco2/y) 1 Energy Saving for Air-Conditioning and Process Cooling by Introducing High-efficiency Centrifugal Chiller 114 Capacity/estimated energy saving 2 Project of Introducing High Efficiency Refrigerator to a Food Industry Cold Storage in Indonesia MWh 3 Project of Introducing High Efficiency Refrigerator to a Frozen Food Processing Plant in Indonesia MWh 4 Energy saving for air-conditioning at textile factory MWh 5 Energy Savings at Convenience Stores MWh 6 Energy saving for textile factory facility cooling by high efficiency centrifugal chiller MWh 7 Energy saving through introduction of regenerative burners to the aluminum holding furnace of the automotive components manufacturer 8 Energy saving by double bundle-type heat pump at beverage plant Upgrading to Air-Saving Loom Project Introduction to high-efficient old corrugated cartons process factory 14, Energy Saving by Optimum Operation at Oil Refinery Utility Facility Operation Optimization Technology - "RENKEI" Control 58, MWh 13 Power generation by waste heat recovery in cement industry 122, MW 14 Remote Auto-Monitoring System for Thin-Film Solar Power Plant in Indonesia 1,432 1 MW 15 Solar power hybrid System installation to existing base transceiver stations in off-grid area 2, kw ,608 1,935 MWh/ MW

15 Steps in JCM implementation projects Start of project (i.e design, procurement, etc) Technology Implementation Verification by TPE Credit issuance The Embassy of Japan and Indonesia JCM Secretariat will arrange individual meeting with project participants from both sides. If requested, or when obstacles occur (such as location finding or related to government systems), the Secretariat can involve the processes. Submission & Validation of PDD Monitor the development of JCM related programs and implementation of JCM projects, taking into account sustainable development criteria and environmental integrity. (JCM Rule of Implementation Para 14 point (a) article (iii)). The Secretariat and GOI at least will do 1 site visit in this phase. The project participats choose the TPE from the JCM list. The TPE describes all documentation supporting verification and makes such documentation available to the Joint Committee upon request. (JCM Guidelines for Verification and Validation Para 128) The TPE verify emission reduction Together with the project participant, TPE prepare a verification report and submit it to the Government of Indonesia through JCM Secretariat. On the basis of a request for notification to each side for issuance of credits submitted by project participants, the Joint Committee notifies both sides to issue the credits which were verified by the third-party entities. (JCM Rule of Implementation Para 10). The JC then will decide the issuance of the credit, including the credit shares for each involved parties.

16 Initiative from Indonesia project participant Study case: WHR in cement industry Project participants: PT Semen Indonesia & JFE Engineering Company s own initiative to reduce energy consumption from coal Total investment from project: 52 million USD 17% of total investment is covered by MOE subsidy

17 Financial scheme of JCM Project Scheme by MOE Japan International consortiums (which include Japanese entities) Finance part of an investment cost: up to the half Demonstration Scheme by METI Japan International consortiums (which include Japanese entities) Finance part of an investment cost: Based on negotiation Different portion of investment sharing between Indonesia companies and Japan institution New Support Program Enabling Leapfrog Development (Fund/ADB) by MOE MOEJ Subsidy Contribution JICA, other Fund for expansion of low-carbon technologies ADB Trust Fund Finance Finance Supported by JICA, etc. JCM Project Financial assistance/financial investments for overseas and lending Advanced Low Carbon Technologies ADB Project Waste to Energy plant Renewable Energies Water Supply and Sewage Systems Transportation GHG Emission Reduction

18 Financial scheme of JCM Item Construction cost Ancillary work cost Survey and measurement cost Administrative cost Detailed item Cost of material Cost of labor Direct expenses (including electricity cost and water charge for construction and machinery costs etc) Administrative expenses - Investigation cost Design cost Survey and measurement cost Salary of staffs Cost of service operation Cost of Travel Rental cost etc

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20 Thank you! Terima kasih! Kob Khun Krap! Indonesia JCM Secretariat BUMN Building 18th floor, Jl. Medan Merdeka Selatan 13, Jakarta Website: