Commodity Booms and Green Growth in Indonesia. Budy P. Resosudarmo Australian National University

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Transcription:

Commodity Booms and Green Growth in Indonesia Budy P. Resosudarmo Australian National University

Index of production 2 Commodity boom: Coal and palm oil 450 400 Palm oil 350 300 Coal 250 200 150 100 50 0 Natural gas Oil 2000 2011

3 Export of CPO 16 14 12 10 8 6 4 2 0 Billion US$ 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Indonesia Malaysia World minus I&M

4 Export of Major Mining Commodities 30 25 Billion US$ 20 15 10 5 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Copper Nickle Bauxite Coal

% of goods exports 5 Contribution to exports 25 20 Oil and gas 15 10 5 0 Coal and palm oil Indonesia the world s largest exports of both coal and palm oil Coal and palm oil prices have fallen during 2012, but export values continue to increase 2000 2011

6 Workers in oil palm plantation 1800 Thousand workers 1400 1000 600 200-200 2007 2008 2009 2010 Permanent workers Employers Temporary workers Unpaid workers

7 Workers in coal mining 300 250 Thousand workers 200 150 100 50 0 2007 2008 2009 2010 2011 Permanent workers Employers Temporary workers Unpaid workers

8 Average hourly wage of permanent workers 18,000 15,000 12,000 9,000 6,000 3,000 2007 2008 2009 2010 Oil Palm Plantation Food Crops Coal Mining Mining excluding Coal All sectors

9 Substantial benefits from the booms Palm oil 1.7 million jobs, 1.6% of total Wages higher than for food crops Large smallholder involvement (42% of oil palm plantation land) Now world s largest exporter Pictures: http://www.greenprospectsasia.com/content/indonesian-small%c2%adholders-get-help-produce-cspo, http://www.energyspectrumindo.com/2012/06/indonesian-coal-miner-toba-bara-cuts.html

10 Substantial benefits from the booms Coal 260,000 jobs, 0.2% of total Wages much higher than average Growing contribution to government revenue Now world s largest exporter Both provide sizeable benefits to local economies, principally off Java Pictures: http://www.greenprospectsasia.com/content/indonesian-small%c2%adholders-get-help-produce-cspo, http://www.energyspectrumindo.com/2012/06/indonesian-coal-miner-toba-bara-cuts.html

Green growth President has made several speeches calling for green growth Pro-growth, pro-job, pro-poor, proenvironment Leading institutions support the concept Picture: http://blog.cifor.org/9657/indonesian-president-makes-speech-at-cifor-on-sustainable-growth-withequity/#.ufp_a5gy1rv The economy has been growing rather well, and so, a good time to conduct the policy Idea is not to slow growth, but to address market failures to decouple growth from environmental damage (i.e. price externalities, don t subsidise pollution, adequately govern open-access resources) 11

12 Greenhouse gas emissions Indonesia one of the largest emitters, mostly from deforestation and peat management Commitment: Reduce emissions by 26% against business-as-usual (BAU) (or 41% with support) by 2020, although BAU not formally locked in Picture: http://www.energyspectrumindo.com/2012/06/pt-kdl-power-plant-project-in-40.html 2011 National Action Plan: Most reductions from forests and peat, but also actions in other sectors Emissions from energy are increasingly quickly (4.4% per annum since 2000), stoked by coal Plan to expand geothermal: 48% of a second crash program of 10,000 MW by 2018 Many challenges, including human capital; energy subsidy is still an issue

13 Forests I will dedicate the last three years of my term as President to deliver enduring results that will sustain and enhance the environment and forests of Indonesia Picture: http://blog.cifor.org/forests-indonesia-feature/#.ufuzezgy1rx President Yudhoyono September 2011

Deforestation 14

% per annum 15 Recent Deforestation 0.8 0.7 0.7 0.6 0.5 0.4 0.4 2011 estimate: 0.5 (Ministry of Forestry) 0.3 0.2 0.1 0.2 0.1 0 Brazil D.R. Congo Indonesia Sudan

REDD+ United Nations Reducing Emissions from Deforestation and Degradation scheme May 2010: Norway committed $1 billion. $30 million disbursed to date President has given strong backing Appointment of UKP4 (President s Delivery Unit for Development Monitoring and Oversight) to manage initial implementation REDD+ Agency proposed >45 demonstration activities, half in Kalimantan Picture: http://blog.cifor.org Pictures: http://www.foodtechnology.co.nz/export?page=1 16

17 Deforestation moratorium Presidential decree in May 2011 Bans new permits to clear primary forests and peatlands Implementation difficult: e.g. Tripa case (Aceh) Exemptions exist (e.g. energy, sugar, rice projects) Clearing of primary forest also continues under existing permits Picture: http://news.mongabay.com/2012/0906-tripa-revoked.html

18 REDD+ challenges International market for emissions credits from avoided deforestation not in sight REDD+ Agency may be weak Picture: http://www.globalcarbonproject.org/news/tropicalpeatlands.html Land tenure, forest monitoring, emissions measurement, local conflicts Might one day be important economic mechanism for sustainable forest management Next President s support crucial Economics of alternative land uses very attractive

Frictions with green growth Oil palm a large contributor to deforestation and emissions from peatland (Oil palm area: 9 million hectares. Large permits for additional expansion in forest areas already provided) Pictures: http://www.foodtechnology.co.nz/export?page=1, http://equal-life.blogspot.com.au/2009/09/united-tractors-completing-due.html 19

20 Plantation areas 10 Million ha Ann.ave. expansion of appr. 400th ha 8 6 4 2 0 1996 1998 2000 2002 2004 2006 2008 2010 Rubber Coconut Oil Palm Coffee Cocoa

Frictions with green growth Oil palm a large contributor to deforestation and emissions from peatland (Oil palm area: 9 million hectares. Large permits for additional expansion in forest areas already provided) One option: Focus expansion on degraded land Pictures: http://www.foodtechnology.co.nz/export?page=1, http://equal-life.blogspot.com.au/2009/09/united-tractors-completing-due.html 21

Frictions with green growth Coal mining also land intensive, mostly in previously forested areas. Reclamation weak. Pollution Pictures: http://www.foodtechnology.co.nz/export?page=1, http://equal-life.blogspot.com.au/2009/09/united-tractors-completing-due.html 22

23

24 Over exploitation? PRODUCTION Proved RESERVED 000 000 tons 000 000 tons 2011 ann.gr. Since 2007 by 2011 China 3,829.5 8.7% 114,500 United States 1,094.3-1.2% 237,295 India 637.1 4.6% 60,600 Australia 435.9 0.3% 76,400 Indonesia 437.4 11.1% 5,529 Russia 371.7 3.9% 157,010 South Africa 281.6 0.8% 30,156 Germany 208.8-1.9% 40,699 Poland 152.6-1.1% 5,709 Kazakhstan 127.6 4.3% 33,600

25 Conclusion Coal and palm oil have been booming in the last 10 years or so These booms do provide large economic benefits: both at national and local levels Green growth: Important concept, and the momentum to do so is right but much to be done in getting prices right and in sustainable management of key natural assets Serious tension the commodity booms and green growth

26 Ref. papers Resosudarmo, B.P., Resosudarmo, I.A.P, Sarosa, W. and Subiman, N.L. (2009) Socioeconomic conflicts in Indonesia s mining industry, in Exploiting Natural Resources: Growth, Instability, and Conflict in the Middle East and Asia, eds R. Cronin and A. Pandya, Henry L. Stimson Center, Washington DC: 33 48. Subiman, N.L., Resosudarmo, B.P. (2010), Tambang untuk Kesejahteraan Masyarakat: Konflik dan Usaha Penyelesaiannya, in Pembangunan Berkelanjutan: Peran dan Kontribusi Emil Salim, eds. I.J. Azis, L.M. Napitupulu, A.A. Patunru, and B.P. Resosudarmo, Kepustakaan Populer Gramedia, Jakarta: 426-459. Resosudarmo, B.P., Nawir, A.A., Resosudarmo, I.A.P. and Subiman, N.L. (2012) Forest land use dynamics in Indonesia, in Land, Livelihood, the Economy and the Environment in Indonesia, eds A. Booth, C. Manning and Thee K.W., Yayasan Obor, Jakarta: 20 50. Burke, P., Resosudarmo, B.P. (2012) Survey of Recent Developments, Bulletin of Indonesian Economic Studies, 48(3): 299-324.