Reducing carbon emissions from Indonesia

1
BAPPENAS REPUBLIC OF INDONESIA
Reducing carbon emissions from Indonesias peat
lands Interim Report of a Multi-Disciplinary
Study Presented at Wetlands International Side
Event 11 December 2009 COP 15, Copenhagen,
Denmark
2
THE STUDY

• The objective of this analysis is to assess the
  potential for reducing emissions from the
  countrys peat lands.
• The analysis assesses
• the present extent, land use and land cover of
  Indonesias peat lands,
• the magnitude of current peat land emissions,
• the possible carbon abatement potentials under
  the three different policy scenarios,
• the economic costs and benefits of specific
  policy options and actions to reduce emissions,
  and
• the potential application of national and
  international policy instruments to achieve GHG
  emission reductions in Indonesias peat land.

3
INDONESIAS PEAT LANDS

• Indonesia has around 21 million hectares of peat.
  Peat more than 3m thick (around 8million
  hectares) is protected by law.
• In 2006, more than 55 of peat land was forested.
  Other peat land covers include cropland (14) and
  shrub/grassland (20)
• Almost ¼ of Indonesias peatland is
  protected/conserved. About 3.3 million of this is
  still forested. As of 2006, forestry
  plantation licences on peat 5.6 million
  hectares.
• Agriculture, plantation timber plantation crops
  cover more than 3 million hectares of land for
  development. Although protected by law, more than
  2.5million hectares of peat land over 3m deep is
  allocated for development.

4
THE EMISSIONS OF PEAT LANDS

• Indonesia has an average annual net emission of
  903 Mt CO2 yr-1 between 2000 and 2006
• This estimate is based on
• Estimates of emissions from oxidation of 220 Mt
  CO2/yr using land use and land cover data from
  2000-2006 and previously published emissions
  factors.
• Loss of Above-Ground Biomass of 210 Mt CO2/yr
  based on past rates of deforestation and carbon
  stock in peat swamp forests.
• Fire emissions estimate of 470 Mt CO2/y, based on
  published data and the Second National
  Communication.
• The majority of the peat emissions result from
  uncontrolled burning (contributing 46 of total
  emissions), peat oxidation (25) and biomass
  removal (24) with the main source regions being
  Sumatra (44) and Kalimantan (40).

5
THE ECONOMICS of PEAT LAND

• Peat land areas contribute to the national
  economy principally through the forestry,
  plantations and agriculture sectors
• Plantations forestry sectors contributed 3
  (USD12.6 billion) 2007
• Oil palm plantation sector contributed 0.85 of
  GDP 3 million jobs.
• But highly carbon intensive
• Peat land contributes approx USD1.06billion (or
  0.26) of Indonesias total GDP yet accounts for
  almost 50 of emissions.
• Carbon intensity of the 7 peat provinces (90
  of Indonesias peat) is 22.1 kg of CO2 / US
  dollar of GRDP.

6
MITIGATION POTENTIAL

• The BAU scenario assumes all peat areas currently
  allocated to companies are developed with fire
  emissions continuing based on historical
  emissions, which provides an estimated increase
  in emissions to 1,387 Mt CO2 yr-1 by 2025.
• The potential emissions under each of three main
  policy measures are estimated and compared to the
  BAU scenario Up to 92 reduction on BAU is
  possible by 2025 through
• Legal compliance and best management practices
  in existing land under production - 338 Mt CO2 or
  24 reduction
• Peat land rehabilitation and prevention of
  uncontrolled fires - 430 Mt CO2 or 31 reduction
• Revision of land allocation, forest
  conservation and land swaps that direct future
  development away from peat land - 513 Mt CO2 or
  37 reduction

7
MITIGATION POTENTIAL
8
THE ECONOMIC OUTLOOK

• Preliminary analysis of the opportunity costs of
  protecting unlicensed peat, and shifting future
  development onto mineral soil
• There is a net positive benefit on GDP, and to a
  lesser extent on tax revenues and local revenues
• In terms of macro impact, unlikely to involve
  opportunity cost due to availability of land at
  national level.
• But an opportunity cost still exists at the local
  level, especially in districts with little
  alternative land available. Here, the cost will
  need to be borne by carbon revenue

9
NET POSITIVE BENEFIT OF REVISING LAND
ALLOCATION, PERMITS
10
THE BUSINESS OUTLOOK

• (1) Implementing Best Practices in Oil Palm on
  Peat
• Comparison of a standard business as usual
  model with a best practice model
• Improving yields and financial performance
  reduces pressure to open up new peat land.
• The average regional GDP (GRDP) produced by a
  best practice plantation is more than double that
  produced on a BAU plantation.
• If 500,000 hectares of peat land plantations are
  upgraded to best practice management, a further
  500,000 hectares would not need to be converted.
• The costs of best practice are 1,405 per
  hectare (discounted at 15). But the benefit is
  worth 4,626 a return on investment of over
  22.

11
THE BUSINESS OUTLOOK

• (2) Land Swaps from Peat Land to Mineral Soils
• Assessment of the economic viability of shifting
  planned plantations to degraded mineral soils
• Net land available for oil palm expansion on
  degraded mineral soils is 8 million ha.
  Sufficient to cover planned increase in palm oil
  production up to 2020.
• Assuming a best practice management, degraded
  land offers superior rates of return (18.6) than
  either unforested (11.3) or forested peat land
  (12.9).
• A strong case to review and consider revised
  business models such as enhanced
  community-business partnership models or
  innovative community-based plantation models.
• A key success factor for working on degraded
  mineral land will be Free, Prior and Informed
  Consent (FPIC) for the participation of local
  communities and farmers as business partners.

12
ENABLING LAWS AND INSITUTIONS

• The current policy, institutional and legal
  environment regarding peat land management in
  Indonesia is currently under review
• Policies are already in place to regulate
  peat-land management including limits on
  developing peat gt 3 metres deep, zero burning,
  and water management
• But to reduce emissions at scale, there is still
  a need for
• A more effective institutional framework for peat
  and lowland, e.g. to address overlapping mandates
• A performance-based framework to promote best
  practice
• A national strategy, plan and finance for peat
  land rehabilitation and fire prevention in
  degraded peat lands
• A comprehensive review of spatial planning e.g.
  to assess scope for shifting future development
  onto mineral soil
• A review of experience on land swaps and the
  potential to scale up experience from pilots to a
  national scale policy and program
• The development of peat land carbon policies and
  their articulation at the international level

13
ACKNOWLEDGEMENTS
This study is commissioned and led by the
Indonesian National Development Planning Agency
(BAPPENAS), with the support of experts from the
Ministry of Forestry, the Ministry of
Agriculture, the Bogor Agricultural Institute
(IPB), and the Indonesian Centre for
Environmental Law (ICEL). The UK Department for
International Development and the Netherlands
Ministry for Development Cooperation have
provided co-funding.
14
Thank you

• Directorate of Forestry and Water Resources
  Conservation
• kehutanan_at_bappenas.go.id