Climate change and Indonesia’s key resources

By Fitrian Ardiansyah, published in Coal Asia, February 22 – March 22, 2014, page 150-151

for the pdf version, please see Opinion Fitrian Ardiansyah_CoalAsia_FebMar2014

Climate change and Indonesia ke resources

In his speech on a recent visit to Jakarta, the US Secretary of State John Kerry calls the world to pursue actions on climate change. This has propelled climate change back on the global news headlines.

With the current negotiation on climate change at the UN level converging toward Paris in 2015, expectedly resulting in a global climate change treaty agreed by all nations, the statement made by John Kerry is like a breath of fresh air since many countries have been waiting for the US examples and leadership in this issue.

A bilateral agreement between China and the US – reached a day before his visit to Indonesia – to cooperate more closely on combating climate change may potentially lead to wider and stronger commitments to curb greenhouse gases (GHG) by both and other big countries.

Any positive movement and actions coming out from the two superpowers are significant steps toward reaching a global commitment.

For Indonesia, actions from the two superpowers and wider global actions, including an agreed treaty, will definitely help and strengthen the country’s existing policies and programs on climate change.

As an archipelagic nation, Indonesia has started to experience climate change impacts, and if not seriously dealt with, these could further put pressure on the country’s economy, society and natural environment, which include extreme and unseasonal weather, droughts, flooding and trans-boundary haze.

At the same time, stronger actions on climate change at the global level are likely to provide a platform for Indonesia to decouple its economy from GHG emissions. Global agreed actions, particularly that include stronger commitments in terms of GHG emissions reduction, can in turn provide economic incentives for both state and corporate actors to reduce their emissions.

Without such incentives, it will be challenging for an emerging economy like Indonesia that has a high and relatively steady economic growth, a huge natural resources base and projected population expansion, to reduce the growth of its GHG emissions.

Sufficient economic incentives added with appropriate policies and programs can assist Indonesia to achieve balanced development – development that ensures economic growth and climate change mitigation.

To be able to attain this, however, the government of Indonesia may require specific interventions at the national and sub-national levels in key sectors such as energy (with key commodities including coal, gas and renewables) and agriculture (with key commodities including palm oil).

In the energy sector, Indonesia has significant resources and reserves of coal and gas, producing more this type of energy sources, not only for domestic consumption but also for meeting theexport demand. The 2012 data of the Energy and Mineral Resources Ministry indicate a persistent growth of production of coal, with the proportion of export reaching above 90 percent in the period of 2007-2009.

The increased domestic use of coal means that emissions from coal, which was minor contribution in 1980s and remained below 10 percent until late 1990s, have spiked in the last ten years. In 2009, according to the Energy and Mineral Resources Ministry, the contribution of emissions from coal was almost 40 percent.

The use of fossil fuels – i.e. coal, gas and oil – appears to continue playing an important role in the country’s energy mix in the future. Yet, to achieve a strong economic growth while ensuring the reduction of GHG emissions, Indonesia needs to dramatically boost investment in renewable energy and energy conservation (e.g. clean technology, eco-efficiency, eco-designs, etc.).

Boosting and attracting investments require policy reforms, especially which relate to energy subsidies and fundamental institutional changes. Many economists believe that huge energy subsidies have hindered the development of Indonesia’s renewable energy and can lead to energy security issues in the future.

In the agriculture sector, Indonesia has a challenging future in terms of providing food for its population. Several projections, for example, reveal that Indonesia’s rice consumption would exceed its production in 2020 and beyond. One of the possible factors causing this is likely to be the issue of land availability.

If climate change impacts are taken into consideration, the agricultural production may fall below these current projected figures. Climate change not only could lead to the reduction of the volume of agriculture commodities produced but may also result in other related damages and costs.

It is crucial, therefore, for the government to formulate policies and programs which ensure that the agriculture sector can cope with climate change challenges.

The current programs initiated by the Agriculture Ministry including by developing crop varieties which can cope with climate challenges (i.e. resilience to drought, flooding and diseases) and improving farmers field education on climate change and
variability, need to be further supported, especially at local level (i.e. ensuring farmers to have support so that they can increase their adaptive capacity).

Such programs and the lessons-learnt resulting from these not only can help Indonesia to develop climate change adaptation in the agriculture sector but also contribute to the negotiation of global adaptation programs and funds.

When it comes to discussing the agriculture sector, palm oil is undeniably one of the most important commodities for Indonesia.

With the skyrocketing demand for palm oil over the past 25 years, the challenge of climate change (both in terms of the future demand for biofuel and issues associated with deforestation) and the increase in capability to produce more, world production of palm oil, including in Indonesia, is expected to nearly double by 2020.

The amount of land given over to oil palms that has multiplied since the mid-1970s would even dramatically increase in the future.

Such increase in palm oil production leads to challenges and opportunities for Indonesia. Immediate and future opportunities for Indonesia, among others, are to show good cases that the country can meet the domestic and global demand by promoting sustainable palm oil production.

Key challenges include applying better land management, including no conversion forest and peat lands as well as the implementation of zero burning activities, and other GHG saving activities, including the use of POME (palm oil mill effluent) for energy and other uses.

The speech made by the US Secretary of State serves as a good reminder for the US itself, China and other big countries, including Indonesia, that all nations have responsibilities toward addressing climate change albeit with different capabilities.

When it comes to Indonesia’s domestic capability, the country needs to focus on its key sectors, resources and commodities. These sectors are both contributors to GHG missions and potentially affected by climate change impacts.

Strategically focusing on these sectors and resources means a further burden for a developing country like Indonesia because it requires huge financial, institutional and social investments.

It, nevertheless, also presents a good opportunity for the country not only to safeguard it against the threat climate change poses to development but also seize the economic opportunity that climate change presents.

Let us hope the current and future governments choose their options wisely.

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The author is climate and sustainability specialist, a doctoral candidate at the Australian National University, the recipient of Australian Leadership Award and Allison Sudradjat Award, and Program Development Director of Pelangi Indonesia.

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Hot, clean and complex: Unlocking Indonesia’s geothermal power

Strategic Review, The Indonesian Journal of Leadership, Policy and World Affairs, January-March 2013, Vol. 3, No. 1, pp 72-85,

by Fitrian Ardiansyah and Adhityani Putri

Geothermal_Strategic Review_FA_2013The first parts of the article can be read below, the remaining section can be read if you are subscribed to Strategic Review http://www.sr-indonesia.com/index.php/subscribe

Indonesia has huge potential geothermal resources, but develop­ment has been slow and speeding it up is considered a herculean task. The high cost of investment and lack of government capac­ity are often cited as hindrances to development, along with familiar concerns from the era of decentralized government about unclear regulatory and institutional frameworks.

Finding solutions to these issues is critical to further unlocking this indigenous, clean and renewable source of power. Success could bring positive benefits to the country’s energy security and climate change mitigation efforts.

Indonesia can no longer depend on fossil fuels, particularly oil, to power its economy. Soaring global oil prices have placed consid­erable strain on the economy. According to the Finance Ministry, energy subsidies – from both fuel and electricity – in 2012 cost the government $18.55 billion (17 percent of government expenditures). This is a significant increase from $9.78 billion in 2010, as shown by several studies.The figure could even be higher since it reportedly underestimates the actual global oil price.

With Indonesia’s projected gross domes­tic product growth to remain steady at 4-6 percent and industrial production to slightly increase over the next couple of years, sev­eral studies, including from the National Council on Climate Change (NCCC) and the Energy and Mineral Resources Ministry (MEMR), have estimated that the power sector is projected to grow from 120 tWh (terawatt-hour) in 2005 to 970 tWh by 2030.

If Indonesia continues to depend on oil, rising electricity needs would lead to the depletion of Indonesia’s domestic oil reserves sooner than expected. A 2012 statement from the energy ministry estimated that the country’s remaining 10 billion barrels of oil reserves will be exhausted in the next 20 years should no new reserves be found. In fact, the country has been a net importer of both crude oil and refined products since 2004.

The formidable task of meeting rising electricity demand requires a funda­mental change in Indonesia’s energy policies, programs and actions. The country could opt for an easier solution, such as utilizing its abundant coal reserves. According to a 2009 World Bank report, the central government already has initiated a “crash program” to bring 10,000 MW (megawatt) of coal-fired power plants online as stipulated in Presi­dential Decree No 71.

Many critics, however, argue that while coal-fired power plants can alleviate short-term supply problems and reduce depen­dency on imported oil, the approach fails to address energy security goals and more im­portantly casts a shadow on the government’s pledge to tackle climate change and reduce emissions.

Key Indonesian stakeholders in­terviewed in 2011 believed that the new coal power plants – purchased at low cost from China – were mostly dirty and inefficient, according to the paper, “An Environmental Perspective on Energy Development in In­donesia” included in the 2012 book “Energy and Non-Traditional Security in Asia.” If the use of coal continues to dominate the power sector, many experts predict that increased CO2 emissions from electricity generation by 2030 could reach 810 million metric tons of CO2 equivalent (CO2e), an increase of nearly seven times the amount in 2005.

To read the complete article: Subscribe now

Fitrian Ardiansyah is a doctoral candidate at the Australian National University.

Adhityani Putri is a postgraduate scholar at the Australian National University.

About Strategic Review:

The Strategic Review is the Indonesian Journal of Leadership, Policy and World Affairs with its editorial board led by Dr Hassan Wirajuda (Former Minister of Foreign Affairs) and its advisory board consists of Prof Juwono Sudarsono (Former Minister of Defense), Let Gen (Ret) Agus Widjojo (Executive Board in the Partnership for Governance Reform), Prof. John Thomas (Harvard Kennedy School of Government USA), Prof. Erhard Friedberg (Sciences Po France) and Prof Arne Westad (London School of Economics UK).

Sustaining Southeast Asia’s forests

Published in East Asia Forum Quarterly Vol. 4, No.4, October-December, 2012, PAGE 18-20

by Fitrian Ardiansyah

for full East Asia Forum Quartelrly pdf, plese see EAFQ-4.4-WEB-FINAL

Sustaining Southeast Asia’s forests

Avoiding and reversing the loss and degradation of forests is a crucial element of any sustainable development and climate change solution formulated in Southeast Asia.

Southeast Asia’s forests contain some of the richest and most valuable resources and habitats on earth. These include the Greater Mekong Subregion that covers 60 million hectares of tropical forests and rivers in Cambodia, Laos, Myanmar, Thailand, Vietnam and China, and the Heart of Borneo that comprises 24 million hectares of equatorial rainforests stretching along the borders of Indonesia, Malaysia and Brunei.

These forests and terrestrial ecosystems have a vital role to play in the fight against global warming. They also have significant economic and ecological value. Hundreds of millions of people depend on the healthy productive capacity of these natural systems to sustain key ecosystem services such as clean water, food and fibre.

These forests are also home to a significant part of the world’s biodiversity and possess a high level of endemism across all groups of plants and animals. Southeast Asia’s forests are the only place on earth where orang-utans, tigers, elephants and rhinoceroses still co-exist and where forests are large enough to maintain viable populations.

Deforestation and forest degradation are making a significant contribution to environmental degradation in this region and overall global emissions of greenhouse gases. In 2009, the Food and Agriculture Organization reported that deforestation rates in Southeast Asia remained high at 3.7 million hectares per annum. In general, forests and terrestrial ecosystems in Southeast Asia, including peatlands, wetlands and rivers, are in a state of rapid ecological decline due to human over-exploitation.

The degradation of forest and wetland habitats affecting hydrological regimes is threatening water supply and the viability of one of the most important freshwater fisheries in the world— including, for instance, in the Tonle Sap fishery in Cambodia where the larger migratory species have declined significantly. The biggest threat to the Mekong River’s ecological system is the long-time deforestation of the river basin.

The island of Borneo, as well as Sumatra and many other places in this region, has also experienced high deforestation rates. According to several studies, between 1985 and 2005 Borneo lost an average of 850,000 hectares of forest annually—roughly a third of the island’s total rainforests—due to indiscriminate logging and forests being cleared for timber and oil palm plantations.

The increasing frequency of forest and land fires between 1997–2007 is indicative of the pressure to deforest. It is a combination of plantation and timber companies, unresolved land tenure disputes and land clearing by a massive number of individuals are the main causes of these fires.

Because of these issues, the governments of Southeast Asia are under pressure to devise smart development strategies that not only promote economic growth but also conserve the areas’ globally important biodiversity, ecosystems and natural resources.

Regional cooperation is emerging. Initiatives include the Mekong River Commission (MRC), which coordinates the formulation and implementation of sustainable development for the Greater Mekong Subregion, and the Heart of Borneo initiative, which facilitates cooperation among parties in protecting, conserving and sustainably managing remaining forests and adjacent areas.

Since 2009, countries in the Greater Mekong Subregion have agreed to use the Biodiversity Conservation Corridors Initiative (BCCI) to accelerate efforts to address conservation and climate change. One BCCI initiative is to channel economic stimulus to the rural poor within the corridors. The aim of this initiative is to strengthen sustainable management of forest and water resources. As the people become poorer and need resources to get out of poverty, there is likely a huge pressure for further and faster natural resource extraction – hence, actions to address poverty tends to have positive results on the environment.

The Heart of Borneo recently launched a ‘green economy’ approach aimed at concretely and seriously tackling threats from unsustainable land-use activities and further improving enabling conditions like good economic policy. This will create positive incentives for stakeholders to employ sustainable practices and foster good governance, clear land tenure and reformed sectoral development.

Reports also show an increase in the private sector’s involvement in the promotion, development and application of sustainability principles in their management of key commodities including forestry (through the Forest Stewardship Council) and palm oil (through the Roundtable on Sustainable Palm Oil).

In November 2007 only 0.8 million hectares of Southeast Asia’s natural forests were certified under the Forest Stewardship Council. Now more than 2 million hectares of natural forests have been certified under a similar scheme. In mid-2011, just three years after certification commenced under the Roundtable on Sustainable Palm Oil, the palm oil industry reached one million hectares of certified production area globally. The biggest contributors were Malaysia and Indonesia.

ASEAN has commenced the Reducing Greenhouse Gas Emissions from Deforestation and Forest Degradation (REDD+) initiative. Since 2008 ASEAN and its member countries have developed programs to improve in-countries’ capacity and have initiated demonstration projects so that stakeholders are ready to implement REDD+.

These efforts to retain the remaining forests of Southeast Asia may nevertheless be inadequate given constant pressures from global and regional demand for commodities like palm oil and timber. A 2010 UN report estimated that the illegal timber trade in Southeast Asia was worth US$3.5 billion.

There is urgent need for ASEAN countries to scale up their collaboration on deforestation so that they are seen as a strong front that can negotiate the channelling of financial and technical support to address deforestation in their region. At the United Nations Framework of Convention on Climate Change, ASEAN is not seen as a strong lobby group that can influence the negotiation of the financial and policy aspects of REDD+.

In setting up a monitoring system for deforestation, countries in the region can learn from Brazil, which is considered to have an advanced deforestation monitoring system. The Brazilian system combines real-time satellite observation and regular ground checking. Using an ASEAN platform, countries in Southeast Asia have the opportunity to replicate such a system in a cost-effective and transparent way.

Stronger collaborative efforts among countries, state and non-state actors in Southeast Asia is the key to significantly reducing deforestation and mitigating its impacts. Further involvement of producers in the REDD+ initiatives through timber concessions and incentives for oil palm plantations could accelerate the implementation of sustainable practices.

Financial institutions in the region and at global level also have a significant role to play. They must develop robust investment screening policies to discourage high-risk investment patterns leading to deforestation. Consumers of related commodities can also help by favoring goods that are produced through certified sustainable operations.

If done properly, efforts like these would lead to fundamental changes in how Southeast Asians manage, protect and sustain their forests. The impact of those efforts will be felt by the global community in the form of emissions reductions, and by people in Southeast Asia through their ability to maintain timber and non-timber forest production, water supply, and other ecosystem goods and services.

Fitrian Ardiansyah is a PhD candidate at the Australian National University and the recipient of Australian Leadership Award and Allison Sudradjat Award.

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Vol.4 No.4: October – December, 2012
Energy, resources and food
About this issue
In this issue we address one of the most important concerns in Asia: security over natural resources or about how to ensure we have sufficient food, water, energy, and other resources at an accessible cost and within tolerable levels of risk now and into the future. Managing resource risks in an insecure world will differ by country, the type and possible magnitude of the risks, and national, regional vulnerabilities. Nevertheless, the multidimensional nature of resource security demands that critically important natural capital stocks be conserved at a regional and global level and that special consideration be given to the particular vulnerabilities of poor countries while following market-based approaches to ensure adequate resource supplies. Whatever the national approach adopted towards resource security, we stress that promoting resource security is not a zero-sum game. All countries can benefit from a multilateral and a sustainable market framework that provides incentives for producers and delivers reliable supply to consumers.

In search for agreed land use solutions

Published in COAL ASIA MAGAZINE, OPINION, SEPTEMBER 22-OCTOBER 22, 2012, PAGE 102-103

by Fitrian Ardiansyah

To see the pdf version, please click: Opinion Fitrian Ardiansyah_CoalAsia_Sep2012

Searching for agreed sustainable land-use management in a developing country like Indonesia is a balancing act. The two recent government regulations issued this year, namely number 60 and 61, provide ample proof on this issue.

As a tropical forest developing nation, rapid development of forests – for forestry, agriculture, infrastructure or mining activities – in Indonesia has led not only to economic growth but also to environmental degradation and greenhouse gas (GHG) emissions.

If no immediate actions taken, the unsustainable economic growth may push the already fragile ecosystems in this country close to its ‘tipping point’ – a threshold in which damages to ecosystems are irreversible and causing unacceptable environmental changes.

This country is home to peatlands, savannas and the third largest of the world’s tropical forests, which are considered among the most valuable ecosystems in the world.

Indonesia is hence considered as one of the mega-biodiversity countries. In the 2010 State of Biodiversity of Asia and the Pacific, however, the UN Environment Program (UNEP) ranked Indonesia second after Australia as having the most threatened plant and animal species in the region. This is due to, among other things, high rates of fragmentation and net loss of forests that have continued between 2000 and 2009.

In 2009, data from the Forestry Ministry show that Indonesia had 132.4 million hectares of forest estates (kawasan hutan) and out of these only 90.1 million hectares were covered by forest vegetation – of this roughly one-third was covered by primary forests, one-third by logged over areas and one-third by vegetation other than forest.

To address the ever declining state of the country’s forests, the Indonesian government has issued the moratorium of forest conversion in 2011 and introduced the overall REDD+ framework – that include efforts to reduce deforestation, forest degradation, conservation, sustainable management of forest and enhancement of forest carbon stock.

Implementing the moratorium, REDD+ and sustainable forest management is of course very challenging given the pressures coming from variety of sectors that have interests in forest and land use – sectors which, furthermore, are often regulated under different ministries and layers of government. These institutions are known to have issued overlapping policies on land use and land use changes, and influenced the issuance of different documents and maps of forest and land use.

These respected sectors are, nevertheless, crucial in the development of the economy of Indonesia. They are the main engine of this so-called emerging economy.

Commercial exploitation of natural forests began in 1967 and was one of the main drivers of the Indonesian economy since then. Billions of US dollars contributed from the export of forest products on a yearly basis consisting of plywood, sawn timber, and processed timber as well as pulp and paper, furniture and other processed timber products.

With regard to agriculture production, especially the palm oil sector, Indonesia in 2009 surpassed Malaysia to become the biggest producer of palm oil in the world, with production accelerating dramatically in recent years. Indonesia’s CPO (crude palm oil) exports and resultant revenues have increased significantly, from 3.8 million tons (valued at US$1 billion) in 1999 to 17.85 million tons in 2010 (US$10.03 billion).

The mining sector also contributes significantly to the country’s revenue. For instance, it is reported that the mining industry accounted for 10.8 percent of Indonesia’s GDP in 2009, with minerals and related products contributing one-fifth of the country’s total exports. This sector looks set to post strong average annual double-digit growth of 11.2 percent in real terms over the forecast period to reach US$149.8 billion in 2015.

To date, many scholars agree when it comes to land use change – including forest cover change – in Indonesia, forestry, palm oil, mining and infrastructure sectors are the most important and influential causes.

Given close association of these development sectors with land use and forest cover change, agreed and appropriate solutions need to be identified and reached so that economic development can still flourish while forest protection is ensured.

The issuance of the two government regulations – the Government Regulation (GR) No. 60 of 2012 on the amendment of No. 10 of 2010 on Procedures for Conversion of Allocation and Functions of Forest Areas and GR No. 61 of 2012 on the amendment of No. 24 of 2010 on Forest Area Utilization – has been perceived as an attempt by the Indonesian government to find such solutions.

As analyzed by one law firm (LGS) in its website, these two regulations have been issued to address a number of outstanding issues with the regulatory framework. This law firm argues that GR No. 60 of 2012 simplifies land replacement for permanent or limited production forests by removing the “adjacent to a forest” requirement, and GR No. 61 of 2012 is intended to provide certainty for borrow to use license holders, allow strategic industries to operate in forest areas, and reconcile conflicts with the Law No. 26 of 2007 on Spatial Planning Law.

There are always two sides of the coin. In the context of GR No. 60, the supporters of this regulation argue that this regulation improves legal certainty for the development activities, especially agriculture plantations, to take place.

This also ensures that plantation activities using particular forest estates need to replace these areas with the same size or bigger. The regulation, furthermore, puts the threshold of forests that cannot be converted in that particular estate (30 percent of the total area) and explicitly mentions about the importance of ensuring the environmental carrying capacity of the estate.

With regard to GR No. 61, this regulation offers improvement of legal certainty for particular mining activities which have been operated or obtain licenses in forest areas.

Many critics, however, claim that this regulation will only jeopardize the future sustainable forest management and forest protection in this country. Some environmental organizations refer to the fact that rapid expansion of oil palm plantations, for instance, has caused the conversion of a significant area of forests and peat lands.

These organizations are backed up by some scholarly studies including the one conducted in 2008 that estimated that palm oil development was responsible for a significant percentage of deforestation in Indonesia.

A similar accusation is labeled against the mining industry. A study conducted in 2000 argues that the development of mining will result in negative impacts including extensive land disturbance, loss of forest cover and habitat, contamination of rivers used for drinking water and food supplies, and increasing social conflict over access to mineral resources.

It is clear that regardless of the issuance these two regulations, conflicting claims and arguments will remain.

The role of the government is critical to ensure that land use processes and outputs resulting from these two regulations are synchronized with the efforts carried out by the process put in place under the moratorium of forest conversion that has resulted in one land use and forest cover map as well as the overall REDD+ process.

Without synergizing these two regulatory and substantive processes, Indonesia will miss the opportunity to provide legal certainty for both economic development and environmental protection.

As a country that has committed to sustainable development agenda, it is important that the country is not just focusing on economic performance but also on the environmental and social aspects of development. This means that the government needs to provide guidance and push for sustainable and responsible practices in the plantation and mining industry’s operations.

Many has argued that plantations and mining operations which overlap with Indonesia’s forests, especially overlaps with areas of high ecological values, have already caused significant impacts on biodiversity and ecosystems.

It is, therefore, important for the players in these sectors, particularly the private sector, to show that they are as much as responsible and willing to improve their practices for the better.

Indonesia is at the cross road in showing whether the country can develop its economy without further harming its environment.

These two recently issued regulations show once again the challenge in achieving that balancing act.

——

Fitrian Ardiansyah

The writer is climate and sustainability specialist, a doctoral candidate at the Australian National University, and the recipient of Australian Leadership Award and Allison Sudradjat Award. He can be reached at fitrian.ardiansyah@anu.edu.au

Balancing energy development and forest protection

Published in COAL ASIA MAGAZINE, VOL. 2, OPINION, AUGUST 17-SEPTEMBER 17, 2012, PAGE 94-95

by Fitrian Ardiansyah

To see the pdf version, please click COALASIA_OPINION_fitrian ardiansyah_energy&forest_Aug2012

As the largest energy producer and consumer in Southeast Asia, Indonesia is currently struggling to cope with the increase in energy demand each year, causing short-term energy shortage and likely leading to worse situation if no immediate actions taken.

Albeit having enormous energy potential, developing energy sources in this country, while desirable, is fraught with hurdles, ranging from regulatory and pricing issues, lack of capacity and investment, to the problematic location of energy sources.

The heavy reliance on subsidized fossil fuels means it has brought about significant problems of energy security and economic issues, especially ever since Indonesia became a net importer of both crude oil and refined products in 2004.

The new extraction of oil, gas and coal as well as the development of new and renewable energy sources has been viewed as a priority by the government but this development faces a number of challenges, such as the fact that some locations of these energy sources overlap with Indonesia’s remaining important and fragile ecosystems, including its forests.

It has been reported by the Forestry Ministry in 2011 that the area of forests within mining concessions, which include for oil, gas and coal activities, covers approximately 2.03 million hectares – based on 842 licenses given for mining related exploration and exploitation between 2005 and 2011.

A number of environmental organizations, such as Mining Watch Canada and Walhi, even claimed a higher number stating that as of 2005, mining activities have encroached on or threatened 11.4 million hectares of forest in Indonesia, including 8.68 million hectares of protection forests and 2.8 million hectares of conservation areas.

A 2008 study conducted in South Kalimantan by M. Handry Imansyah and Luthfy Fatah of Lambung Mangkurat University, published in ASEAN Economic Bulletin, found that a massive coal exploitation without a proper technical handling for reclamation can cause serious water contamination and land degradation, because many mining areas are often left without rehabilitation.

A similar concern may also be said when it comes to the development of renewable energy, namely biofuels and geothermal.

In the case of biofuels development, mainly from palm oil, although considered as one of renewable sources of energy and therefore has the greenhouse gas (GHG) saving potentials, the development of these crops can further increase GHG emissions if the plantation replace forests and peat lands.

A 2011 article written by Gayathri Vaidyanathan in Nature shows that, for example, in North Sumatra and Bengkulu provinces, 38 and 35 percent, respectively, of peat-swamp forest were converted to oil palm plantations by the early 2000s – leading to the release of about 144.6 million tons of carbon from biomass above ground and peat oxidation below ground.

Another study conducted by Lian Pin Koh and David S. Wilcove in 2008, published in Conservation Letters,estimates that over 56 percent of oil palm expansion occurred at the expense of natural forest cover for the period between 1990 and 2005. In addition, according to the 2009 BAPPENAS (National Development Planning Agency) report, as of 2006, plantation licenses (i.e. predominantly for oil palm) on peatlands totalled 1.3 million ha.

With regard to geothermal energy, this type of renewables has a significant potential to contribute to the future electricity generating capability – with 10 gigawatts of total geothermal potential that is presently ready for commercial extraction as reported in 2009 by the World Bank.

If developed appropriately and immediately, geothermal energy can at least reduce the burden of approximately 35 percent of the current total generation capacity in 2035, as argued in a 2012 paper written by a research team from the Christian University of Indonesia, and eventually contribute to climate change mitigation.

Accelerating the development of geothermal energy is likely to be challenging since up to 60 percent of its potentials and reserves are located in the remaining important forest areas, according to a 2009 paper written by Montty Girianna, the Energy, Mineral and Mining Resources Director of Bappenas.

The exploration, extraction and overall activities of oil, gas, coal and geothermal have been previously subjected to the laws regulating the protection and management of pristine forests, including employing stricter conditions under which licenses are to be issued.

A 2011 report by PricewaterhouseCoopers explains that the Forestry Law No. 41 of 1999 (and its amendments No. 1 of 2004 and 19 of 2004) prohibit oil, gas and mining activities in protected forest areas except where a government permit is obtained.

This, however, was gradually altered, particulary since February 2010 when Government Regulation No. 10 of 2010 on Forest Areas Utilization was introduced. According to this regulation, development projects, including oil and gas activities, power plants, mining, transport and renewable energy projects, can take place in protected forests if they are deemed strategically important.

Specifically on geothermal, a presidential decree (No. 28 of 2011) released on 19 May 2011, allows conditional underground mining in protected forest areas, which includes geothermal energy. This decree was later strengthened with the release of the Memorandum of Understanding between the Energy and Mineral Resources Ministry and the Forestry Ministry (No. 7662 of 2011) aiming at accelerating the permit issuance of geothermal energy development in forest areas.

Critics, however, view that these regulations and policies which promote and accelerate energy development in forest areas will also encourage other destructive mining activities to take place since the use of the definition of ‘strategic’ or ‘vital’ development activities can have multiple interpretation.

Furthermore, these critics question the level of seriousness of the Indonesian president’s pledge to reduce Indonesia’s GHG, if many of his government’s policies still incorporate a large number of activities that will lead to deforestation in primary and secondary forests as well as peatlands.

It is, therefore, imperative for Indonesia to find practical and applied solutions to balance energy development and forest protection.

The balanced development of energy and forest protection is also crucial since the pledge made by Indonesia’s President particularly mentioning his commitment to changing the status of Indonesia’s forests from a net-emitter sector to a net-sink sector by 2030 and more specifically, emphasizing the preservation of areas under forest protection as one of key programs.

One immediate step to do this, for example, is by harmonizing and synergizing different regulations and policies that will result in a clearer guidance from the government. Vague words like ‘vital’ or ‘strategic’ development activities need to be clarified so that these will not be used as a loop hole.

Synergyzed policies will not be implementable if data regarding conventional energy sources, renewables and forest areas are not synergized as well. Recent actions taken by a number of government’s institutions to synchronize and agree on a map of forest and land use in Indonesia – adhered to across all sectors and levels of government – are therefore crucial to contribute to balancing energy development and forest protection.

Following these steps, a set of sustainability benchmarks is deemed urgent to be instituted to provide technical directions to mitigate the impacts and risks of energy development on forests.

The sustainability benchmarking – promoting principles of high conservation value forest, effective environmental assessment, management plans and monitoring, and multi-stakeholders participation – is required because not only the actual environmental impacts have to be mitigated but also the perceived risks coming from energy projects on these ecosystems need to be addressed, in which local communities and the public may have substantial interest.

The development and implementation of these benchmarks will also align with other laws regulating forest and biodiversity protection, namely the 2009 Forestry Law, the 1990 Biodiversity Conservation Law and the 2009 Environmental Protection and Management Law.

As an emerging economy with a significant increase in energy demand, supplying energy while reducing environmental impacts is definitely a balancing act.

Finding solutions, as elaborated above, is hence urgently required and if these solutions are applied appropriately, Indonesia is likely to secure its future energy in a sustainable way.

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Fitrian Ardiansyah

The writer is climate and sustainability specialist, a doctoral candidate at the Australian National University, and the recipient of Australian Leadership Award and Allison Sudradjat Award. He can be reached at fitrian.ardiansyah@anu.edu.au

An Environmental Perspective on Energy Development in Indonesia

“An Environmental Perspective on Energy Development in Indonesia”. Authors: Fitrian Ardiansyah, Prof Neil Gunningham, Prof Peter Drahos.

A book chapter (Chapter 5) in M. Caballero-Anthony et al. (eds), Energy and Non-Traditional Security (NTS) in Asia, SpringerBriefs in Environment Security, Development and Peace 1.

Please check this link to access the chapter: http://www.springerlink.com/content/k34716127r953750/

or see the pre-published version of the chapter here: ESDP Vol 1 Ch 5 F Ardiansyah et al Environment Energy Indonesia

Abstract:

Indonesia faces an energy trilemma on the energy security, climate change goals and energy poverty fronts. Policies that focus exclusively on one prong of the trilemma may lead to unacceptable consequences in the others. Conceiving the predicament as a trilemma will encourage a more unified approach to its problem solving. Successful management will require a search for policy complementarities—the likeliest source of which may be the renewable energy sector—that allow the country to move forward on all three fronts. A reform of its bureaucracy to address implementation gaps in its energy policy will also be needed. The reduction in transaction costs associated with the implementation of Indonesia’s energy policy could be used as a broad criterion when considering these necessary changes.

Keywords:  Energy security – Energy poverty – Renewable energy – Biofuels – Climate change – Environmental impacts – Deforestation

Energy and NTS

 

Igniting the Ring of Fire: a Vision for Developing Indonesia’s Geothermal Power

Early July 2012, Published by WWF-Indonesia, Author: Fitrian Ardiansyah and Ali Ahsat.

WWF-Indonesia released a report, co-authored by Fitrian Ardiansyah and Ali Ashat, entitled “Igniting the Ring of Fire: A Vision for Developing Indonesia’s Geothermal Potential” – an essay that elaborates the challenges and opportunities involved in the development of geothermal energy in Indonesia, as well as gives a picture on their possible workarounds.

For the pdf file of the complete report: please read geothermal_report or alternatively click http://awsassets.wwf.or.id/downloads/geothermal_report.pdf

This report discusses economic, social, policy, financial and environmental aspects of geothermal energy development in Indonesia, including balancing geothermal energy development and forest protection, and setting the price right for geothermal investment.