The Joint Crediting Mechanism (JCM) Experiences in the Energy Efficiency Financing

Transcription

1 The Joint Crediting Mechanism (JCM) Experiences in the Energy Efficiency Financing Dicky Edwin Hindarto Head of Indonesia JCM Secretariat Indonesia Joint Crediting Mechanism Secretariat 7 July 2015 Advancing energy efficiency in Asia through SCP and green finance SWITCH-Asia Networking Conference

2 Presentation structure 1. Energy efficiency development and opportunities in Indonesia 2. JCM current development in Indonesia 3. The JCM financial scheme 4. JCM project implementation

3 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.

4 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

5 RE and EE development using carbon market related financing Energy conservation target by 2025: energy elasticity < 1, reduction of energy intensity 1% per year National Energy Policy (Government Regulation 79/2014): self sufficient and resilient Ministerial Regulation 14/2012 Energy Management: for industries CDM NAMA (seeking support) Smart Street Lighting Initiative Sustainable Urban Transport Initiative Source: National Council on Climate Change Indonesia, January 2015 Source: The VCS Project Database, March 2015

6 Pathway to Energy Mix 2050, INDC National Action Plan on GHG Emission Reduction 26-41% GHG emissions reduction by 2020 (Long-term National Plan) Priority sectors: forestry & peat, energy & transport, agriculture, industry and waste New government and structure Min. of Environment merger with Ministry of Forestry Min. of Energy&Mineral Resources under Coord. Ministry for Maritime Affairs Development of maritime potential as main strategic sector GHG emissions reduction approaching 26% by 2019 Increase electrification from 82% to 96.9% in ,000 MW power generation: 25 MW coal, 10 MW noncoal public and private improve IPPs process, use local component Feed in tariffs already established, Revision of geothermal law

7 Potential mitigation actions in energy sector Goal Accelerate renewable energy Actions Geothermal, hydro power, biomass, solar power, waste to energy, mini CNG, including small and medium scale Promote energy efficient technology Ultra/Super critical coal-fired power plants Combined cycle coal-fired power plants Operation performance revitalization Multipliable technologies Attract investment Private investment schemes e.g. JCM, PPP Public investment Continuous improvement of feed-in tariffs: geothermal, solar, hydro, biomass, waste Exemption of import duties for RE (ongoing) New technology LNG, CCS preparation Increase education and lifestyle Mainstreaming energy-efficient, low-carbon technology into daily life Incentive for energy efficient residential, commercial areas Climate change in higher education Source: Ministry of National Development Planning (BAPPENAS), Indonesian National Committee -World Energy Council, Indonesia JCM Secretariat

8 The JCM projects current development The JCM Project Progress 96 Feasibility Study have been done from projects are registered as JCM projects. 18 JCM projects are now in our pipeline. 19 projects on energy efficiency and 2 projects on renewable energy (registered and pipeline). 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 Centrifugal Registered Chiller Project (first registered project under the JCM worldwide) 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

9 List of JCM implementation projects in Indonesia Projects Name Remote Auto-Monitoring System for Thin-Film Solar Power Plant in Indonesia Energy Saving by Optimum Operation at Oil Refinery Utility Facility Operation Optimization Technology Power generation by waste heat recovery in cement industry Energy Savings at Convenience Stores Demonstration Project Model Project Energy saving through introduction of regenerative burners to the aluminum holding furnace of the automotive components manufacturer Solar power hybrid System installation to existing base transceiver stations in off-grid area Energy saving for textile factory facility cooling by high efficiency centrifugal chiller Energy saving by double bundle-type heat pump Introduction of High efficient Old Corrugated Cartons Process at Paper Factory Reducing GHG emission at textile factories by upgrading to air-saving loom Energy saving for air-conditioning and process cooling at textile factory Installation of CHP (Combined Heat and Power) system in a hotel Energy-saving Project by Utilizing Waste Heat at Hotel Energy Saving for Shopping Mall with High Efficiency Centrifugal Chiller Energy Saving for Industrial Park with Smart LED Street Lighting System Energy Saving for Office Building with High Efficiency Water Cooled Package Air Conditioning Unit Energy saving by introduction of high efficiency once-through boiler system in a film factory Registered Project Energy saving for air-conditioning and process cooling by Introducing High-efficiency Centrifugal Chiller Project of Introducing High Efficiency Refrigerators to a Food Industry Cold Storage in Indonesia Project of Introducing High Efficient Refrigerator to a Frozen Food Processing Plant in Indonesia Expected Emission Reduction tco 2 /year tco 2 /year tco 2 /year tco 2 /year 33 tco 2 /toko/year 856 tco 2 /year tco 2 /year 118 tco 2 /year 170 tco 2 /year tco 2 /year 566 tco 2 /year 117 tco 2 /year tco 2 /year tco 2 /year 925 tco 2 /year 900 tco 2 /year 714 tco 2 /year 428,5 tco 2 /year 114 tco 2 /year 120 tco 2 /year 21 tco 2 /year 21 Projects tco 2 /year

10 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

11 JCM for SME s financing projects, can we do it? Business as usual investment in brown technology JCM project investment in low carbon technology JCM financial support Project participant owned investment Until now, we don t have any scheme similar to CDM Program of Activities (PoA) that facilitate small enterprises to join easily, but some of our project participant were categorized as medium enterprises! Usually, the green investment is higher than business as usual investment. The industry must invest more to be a green industry, although they will get benefit from the investment. For some type of industries, particularly the SME s, very difficult to finance green technology or energy efficient technology. Carbon finance like JCM can be used to reduce the risk of investment for the green project in SMÉ s.

12 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

13 JCM project example 1: Energy efficient refrigerants to cold chain industry Bekasi site: (PT. Adib Food Supplies, PT. Mayekawa Indonesia, and Mayekawa Manufacturing) Installed technology: Compressor (43 kw)and Intelligent Quick Freezer. By using Intelligent Quick Freezer, production capacity in Karawang site has increased from 2 tpd to 4 tpd. Karawang site: (PT. Adib Food Supplies, PT. Mayekawa Indonesia, and Mayekawa Manufacturing) Installed technology: Compressor (2x43 Kw) The chillers were used for the cooling room purposes. For Bekasi site 20% reduction of energy consumption is expected than the reference scenario.

14 JCM project 2 example: Energy efficiency in convenient stores This project is the cooperation of PT. Alfa Midi Utama Indonesia and Lawson Japan. 12 stores of Lawson and Alfa Midi around Jakarta, Tangerang and Depok have been already implemented. Expected GHG reduction: 33.1 tco 2 /store/year. Technologies to be implemented: 1. CO 2 refrigerant chillers; 2. LED lamps; 3. Inverter-controlled AC; and 4. In addition, photovoltaic power generation sytem on the store s rooftop will be implemented. 7.3kW Output Outdoor Unit (CO 2 refrigerant) 1.5kW Output Outdoor Unit (CO 2 refrigerant) Multi-Deck Cases Reach-in Freezer Walk-in Case

15 JCM project example 3: The waste heat recovery power generation in cement industry PT Semen Indonesia Tbk (SMGR) began constructing the power plant by utilizing the exhaust gas (Waste Heat Recovery Power Generation / WHRPG) Tuban I - IV with a capacity of 30.4 MW, which utilizes waste heat produced by the 4 kilns inside the factory to generate steam for the power generator. By this project, PT. Semen Indonesia can increase their factory energy efficiency while reducing the GHG emissions, each year up to 122,000 ton CO2 is expected to be reduced. By using waste heat recovery power generation technology, PT. Semen Indonesia also can save up to 85% of its electricity bill. The project now is in its design and procurement of main equipment stage. This project is expected to finish on December 2016 (RKA).

16 Some of the project participant responses after JCM project development 1. PT Adib Global Food Supplies can increase the frozen time of the fish until more than 10 times. About 30% of the energy saving was achieved for this project. 2. More industries come to us to follow PT. Adib steps in JCM. 3. PT. Alfa Midi Utama investment cost was increased until 5 times than the BaU investment, but by using JCM scheme, the pay back period of the investment can be raised to 4 years. 4. The convenient stores attract more shopper to come because of more comfort and sophisticated than the others. 5. The other cement industries in PT. Semen Indonesia Group will implement the similar projects by using their owned budget.

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