Indonesia

The PMR supports Indonesia in three areas:

• Explore various types of market instruments;
• Build domestic carbon market "infrastructure;" and
• Pilot an MRV framework in the power sector and the cement industry.

Indonesia sees market-based instruments as a cost-effective measure to reduce GHG emissions, if barriers such as high transaction costs, long and complex procedures, not attractive for small-scale economic activities, and the low demand for the voluntary carbon market are overcome. It is important to note that support of market-based instruments in Indonesia’s MRP is seen as a tool to go beyond fulfilling Indonesia’s national mitigation commitment of 26% 

The activities proposed for PMR support focus on the evaluation of the existing data collection processes, especially at installation level in the target sectors, and on achieving international standards of data reliability to allow for market readiness.

In order to set emissions reduction targets in the power generation and industry sectors, the PMR helps identify estimate potential emission reductions, calculate and project baseline emissions, and estimate CO₂ abatement cost of mitigation actions in the target areas.

Indonesia uses PMR support to design and pilot facility-level MRV systems in power generation and cement production.

The PMR MRV work is divided into two tracks: governance and installation. It will support an obligation (Presidential Regulation No. 71/2011) at the sectoral level to calculate and report emissions the energy conservation obligation (Government Regulation No. 70/2009). The results of these sectoral emissions calculation will be passed on to the Ministry of Environment and Forestry as a part of the national GHG inventory. MRV development will be managed by two ministries - Ministry of Energy and Mineral Resources (MEMR) and Ministry of Industry (MoI).

Through the PMR, Indonesia is exploring various market-based approaches to achieving its mitigation goal. The development and implementation of market instruments require a clear regulatory framework that signals the right incentives to covered entities and assign clear responsibilities to support the functioning of the market instruments. As Indonesia identifies market-based instruments to pilot, the PMR is ready to support in the development of a regulatory framework as needed.

Experience with Crediting Programs

Clean Development Mechanism (CDM)

Indonesia has been involved in Clean Development Mechanism (CDM) since 2004 as a party to the Kyoto Protocol. Since Indonesia ratified the Kyoto Protocol in 2004, Indonesia has been active in promoting the CDM and has helped to establish its requirements. In 2005, Indonesia established the National Commission on CDM (KOMNAS MPB) as the Designated National Authority (DNA) and prepared sustainability criteria to evaluate CDM projects. Every CDM project should meet the criteria that consist of environment, economic, social, and technology transfer parameters.

Indonesia has invested in capacity building activities on CDM for government officials, the private sector, academia, and other related sectors. Thanks to these efforts, Indonesia proposed a decision in the 2007 Bali Action Plan to adopt the Nationally Appropriate Mitigation Actions (NAMA), which was adopted at the Bali Conference of Parties (COP) in 2007.

As part of the CDM process, the Indonesian DNA has approved 212 projects. As of March 31, 2013, 128 projects were registered and 7,901,334 CERs were issued for 28 registered projects. Currently, 7.9 million certified emission reductions (CER) have been issued from Indonesian CDM projects.

Joint Crediting Mechanism (JCM)

The Joint Crediting Mechanism (JCM) between Indonesia and Japan was established August 26, 2013. The JCM incentivizes clean technology cooperation between the two countries. JCM experiences may provide knowledge and awareness to support the PMR Implementation Phase.