KADIN – PAKLIM Briefing k „Business and Climate Change in Indonesia“ 7 July 2011 13.04.2015 Seite 1 Overall objective and starting points Objective Intensify the cooperation between GIZ/ PAKLIM and KADIN to jointly work on increasing awareness and engaging Indonesian companies in climate change mitigation activities in Indonesia Starting points PAKLIM’s commitment to strengthen its private sector engagement and Call for Proposals 2011 Kadin’s White Paper on the issues of Climate Change and Green Growth 13.04.2015 Jakarta, JulySeite 2011 2 2 Contents Introduction GIZ / PAKLIM in Indonesia Climate change in Indonesia Integration of climate change into national development planning Private sector involvement in climate change mitigation Focus: The industry sector and climate change PAKLIM portfolio on cooperation with the private sector PAKLIM Call for Proposals Cooperation opportunities between KADIN and PAKLIM 13.04.2015 Jakarta, JulySeite 2011 3 3 Who is GIZ? • • • • • A 100% federally owned, public-benefit enterprise, that supports the German Government in achieving its development policy goals. GIZ’s purpose is to promote international cooperation for sustainable development and international education work. Established on 1 January 2011, GIZ brings together under one roof the long-standing expertise of DED, GTZ und InWEnt. – Implements commissions for the German federal government and other national and international, public and private-sector clients. – Furthers political, economic, ecological and social development worldwide, and so improves people’s living conditions. – Provides services that support complex development and reform processes. Operates in more than 130 countries worldwide. Employs approximately 17,000 staff members worldwide, more than 60% of whom are local personnel. 13.04.2015 Jakarta, JulySeite 2011 4 4 GIZ in Indonesia at a glance 1975 2007 3 priority areas: Indonesian-German development cooperation through GTZ Government negotiations to renew priority areas • Private Sector Development • Good Governance • Climate Change 3 Climate Change programmes: • Environment: “PAKLIM” • Forest: “FORCLIME” • Transport: “SUTIP” 13.04.2015 Jakarta, JulySeite 2011 5 5 PAKLIM (‘Policy Advice for Environment and Climate Change’) What we do? How we work? Our approach • Empowering Indonesian public and private stakeholders to implement climate change strategies and instruments Supporting Indonesian partners through: • Policy advice • Capacity development • Technical assistance • Multi-level • Multi-stakeholder • Cross-sectoral PAKLIM Policy advice Cities and urban areas Industries and industrial estates 13.04.2015 Jakarta, JulySeite 2011 6 6 Climate Change in Indonesia 13.04.2015 Jakarta, JulySeite 2011 7 7 Integration of climate change into Indonesian development strategy MILESTONES: The Government of Indonesia (GOI) puts CC on the political agenda after the Climate Summit in Bali (2007) RPJP/ RPJM Climate Summits Bali Road Map G20Pittsburgh RAN-GRK ICCSR 2009 the Indonesian president announces a GHG emission mitigation target by 2020 The GOI officially launched its Climate Change Sectoral Roadmap (ICCSR) regarding mitigation in March 2010 The National Action Plan for GHG Emission Reduction (RAN-GRK) defines the required measures per sector for reaching the target Nationally Appropriate Mitigation Actions (NAMAs) 13.04.2015 Jakarta, JulySeite 2011 8 8 Scenario of 2020 GHG emission reduction and RAN GRK President commitment G-20 Pittsburgh and COP15 to reduce te GHG emission in 2020 = 41% With international support -15% Unilateral (without international support) -26% Forestry & peat Waste land Waste Agriculture Industry Energy & transport RAN-GRK 13.04.2015 Jakarta, JulySeite 2011 9 9 The role of Indonesia’s private sector in climate change mitigation • • The Private Sector is the driving force for development and growth in Indonesia (Indonesia is said to soon become the 2nd “I” in BRIC) With this growth, however, it is also an increasingly important contributor to Indonesia’s emission levels – E.g. due to the large amounts of energy consumed for companies’ production activities and daily operations, process-related generation of GHG and waste produced in the various industry sectors, commercial land use conversion • The Private Sector is expected to play an essential role in Indonesia’s mitigation regime to achieve the national mitigation targets in the defined RAN GRK sectors Companies predispose of important competences, expertise and largely also financial means for successfully tackling the issues posed by climate change and for helping to reduce GHG emissions by applying the right management and investments approaches 13.04.2015 Jakarta, JulySeite 2011 10 10 Public expectations towards the private sector and ‘routes’ for involvement • Invest in and implement new technologies • Engage in mitigation measures, e.g. energy efficiency improvements, fuel switching, major process modifications • Esp. multinational corporations (MNCs) and large national companies to act as “climate champions” for other (national) businesses • Provide qualified personnel, transfer skills and experiences • Show corporate social responsibility (CSR) • Do research and innovate Routes for involvement Policies and regulations Economic and fiscal instruments Voluntary actions 13.04.2015 Jakarta, JulySeite 2011 11 11 Example: Industry sector in Indonesia and climate change Mitigation Target by 2020 • The industry sector accounts for 35%* of emissions from fossil fuel in Indonesia due to: • Energy consumption (accounting for 48% of overall final energy consumption in Indonesia) • Production processes • Waste • Challenge: balance the two overarching policies objectives: • Improve industry competitiveness • Achieve low-carbon industrial development Largest GHG emitting industry sectors are: • The RAN-GRK defines mitigation strategies in the industry sector with regard to: - Energy efficiency - Alternative energy - Efficient production processes *World Bank (2008): Low carbon development options for Indonesia Cement Iron & steel Pulp & paper Fertilizer/ other chemicals Textiles 13.04.2015 Jakarta, JulySeite 2011 12 12 So far, only few policies instruments targeted to mitigate climate change Mitigation Target byand 2020 Examples of existing regulatory foci and initiatives Energy • Energy diversification (PerPres No. 5/2006) • Energy efficiency and conservation (e.g. gov. reg. No. 70/2009) • Development of green industry Air pollution • Regulate emissions from static and non/static sources (emission standards set for 4 industries and for selected equipment) Waste management • Control waste management activity (esp. hazardous waste) (gov. reg. No. 18/1999) • Waste utilization (gov. regulation No.18/2008) Subsidized loans • Soft loan programmes for green investments from different donors (e.g. Japan, Germany) via MoEnv. Tax subsidies • For customs duty, sales tax (PPN), income tax (Pph) – for energy and industry sectors Fiscal subsidies • For investment in machinery equipment to improve industrial competitiveness • Support for investment in CC mitigation technology A challenge for the GOI, but An opportunity for the private sector to become involved and actively shape the future boundary conditions For instance in partnership with PAKLIM 13.04.2015 Jakarta, JulySeite 2011 13 13 PAKLIM private sector cooperation – Overview Projects/ Initiatives Development Partnerships develoPPP.de integrated DPP PAKLIM Call for Proposals 2011 Private Sector Dialogues • Merck: “Environmentally Sound Management of Chemical Waste”; 12/09-12/12; 1,4 Mio.€ (STA) • OSRAM: “Energy Saving Movement”; 12/09-06/11; 400T€ • Merck customers (e.g. laboratories); KLH • Elementary schools & SMKs, local communities, Indonesian population • Adidas: “Greening Global Supply Chains – Focus on Energy”; 05/11-05/13; 168T€ • OSRAM: “Energy Efficient Street Lighting / LED Street Lighting”; 05/11-12/12; 184T€ • Service providers, local footwear & apparel suppliers; MoI, ESDM • Local government; urban population • “Innovations for a low-carbon future in the Indonesian Industries” • Technology providers (D, EU) • local MNC, SOE, national companies • Empirical study on “Business and Climate Change in Indonesia” • Interviews a.o. with Siemens, SAP, APP, Sinarmas, Martha Tilaar, Chandra Asri, DB Schenker • local CSR networks, associations; KLH • “Green” CSR Policy Advice Partner / Target group • NAMA (overall concept and sectors industry, energy, waste, energy efficiency in urban areas) • Voluntary Partnership Agreements • ICCTF (Indonesia Climate Change Trust Fund), Green Finance • Bappenas, MoI, ESDM, MoHA • MoI; cement industry • Bappenas, MoF; Bank of Indonesia 13.04.2015 Jakarta, JulySeite 2011 14 14 PAKLIM Call for Proposals 2011 “Innovations for a low-carbon future in the Indonesian industries” Development Partnerships with the Private Sector (DPP) 13.04.2015 Seite 15 PAKLIM Call for Proposals 2011 • Aims to establish new partnerships with private companies to jointly develop innovative projects under the title of: “Innovations for a low-carbon future in the Indonesian industries” Realize synergies between public and private interests: PAKLIM • Development of NAMAs (Nationally Appropriate Mitigation Actions) in the Indonesian industry sector • GHG reductions through e.g. increase in energy efficiency, fuel switching, and/ or major process modifications DPP Private Sector • Launching innovative technologies in the Indonesian market • ‘Greening’ the supply chain • Qualified personnel • CSR and good relations with clients and people in the surrounding community 13.04.2015 Jakarta, JulySeite 2011 16 16 Who should participate? National and international companies already active in Indonesia and interested in: • Investing and jointly implementing innovative technologies and energy efficiency measures in their own production sites and supply chains. • Using their CSR funds and experiences for building new climate change business models and with this to help the local community and to become climate 'champions'. Technology providers interested in entering the Indonesian market and applying innovative technological business models for industrial enterprises and/ or industrial estates, preferably in the areas of: • • • Process heat/ heat recovery (CHP), co-generation Efficient boiler and motor systems; automatisation Fuel switching; renewable energy applications; recycling, efficient material use Any company with an innovative proposal for initiating jointly with PAKLIM a model for the implementation of NAMAs in the Indonesian industry sector. 13.04.2015 Jakarta, JulySeite 2011 17 17 Requirements for DPP • • • • • • All companies (local, state, regional, international) can submit their proposal Financial robustness of the company to ensure project funding and sustainability Complementarity: PAKLIM's and the private sector’s contributions must complement each other in such a way that the cooperation enables the two partners to achieve their objectives more cost-effectively, more efficiently and more rapidly Subsidiarity: PAKLIM will provide contribution only if the private partner would not be able to implement the project without PAKLIM as the public partner and the measure is not required by law At least 50% of the costs (prime costs) are borne by the company. PAKLIM will provide input between EUR 100,000 - EUR 200,000 into the project. The proposal may also comprise direct inputs by PAKLIM, such as technical, intercultural or managerial expertise Project start envisaged for early 2012 with a duration of 1,5 to 2 years 13.04.2015 Jakarta, JulySeite 2011 18 18 What are the criteria? Contribution to the achievement of PAKLIM objectives Accordance with development policy Criteria for DPP Joint objectives & substantial contribution of the company Subsidiarity & competitive neutrality 13.04.2015 Jakarta, JulySeite 2011 19 19 How to proceed? • Develop project idea 1 • Fill out entry form • Submitt proposal by August 31st, 2011 2 • Assessment of proposals by PAKLIM • Feedback to applicants by October 2011 • Joint development of full project outline for selected 3 proposal(s) • Agreement and contract signing 4 • Implementation of DPP from early 2012 to end of 2013 dpp@paklim.org www.paklim.org/development-partnerships/call-for-proposals/ 13.04.2015 Jakarta, JulySeite 2011 20 20 PAKLIM: KADIN’s opportunities for cooperation Participate in stakeholder dialogues and workshops representing the private sector Support the Call for Proposals for new development partnerships to support the NAMA strategy (energy efficiency, renewable energy applications, greening the supply chains) Support the public awareness campaigns for a low carbon development Facilitate Voluntary Partnerships (VP) between the MoInd and enterprises Participate in the development of a low carbon growth strategy (East Kalimantan, Java) 13.04.2015 Jakarta, JulySeite 2011 21 21 Contact details Dr. Dieter Brulez Dr. Maren Breuer PAKLIM - Policy Advice for Environment and Climate Change c/o Kementerian Negara Lingkungan Hidup (KLH) Gedung B Lt.5, Jl. DI Panjaitan Kav 24 13410 Jakarta, Indonesia T: +62-21-8517186 F: +62-21-8516110 E: dpp@paklim.org or maren.breuer@giz.de I: www.giz.de ; www.paklim.org 13.04.2015 Jakarta, JulySeite 2011 22 22 Project Examples “Development Partnerships with the Private Sector (DPP)” 13.04.2015 Jakarta, JulySeite 2011 23 23 Indonesia Greening global supply chains – Focus on energy Partners: Adidas Group (Sourcing Ltd. Asia) 05/2011 – 05/2013 Volume: 268.000 € PAKLIM: 133.000 € Challenge The industry sector accounts for high amounts of GHG emissions due to energy consumption, inefficient production processes & industrial waste. High need & potential for energy efficiency (EE) measures. Approach Capacity building for service providers and training & technical assistance for 16 suppliers in the apparel & footwear industries. Energy audits and tools for the measurement, monitoring and reporting of energy performance. Implementation of financially feasible EE measures. Impact Qualified service providers, enhanced capacities of selected suppliers and reduction of the factories’ environmental footprint. Model for the measurement and reporting of climate-related values in supply chains available. 13.04.2015 Jakarta, JulySeite 2011 24 24 Indonesia Energy Efficient Street Lighting / LED Street Lighting Challenge Lack of efficient energy due to outdated technologies in commercial and residential buildings as well as public infrastructural services. High potential for cost and energy savings in urban areas. Approach Partners: PT OSRAM Indonesia Assessment of technical & economic feasibility of LED street lighting. 05/2011 – 12/2012 Volume: 184.000 € PAKLIM: 92.000 € Replacement of conventional lights by LED based on an adequate metering system, lighting management, and a consumption-based payment for the energy used by public street lighting. Identification of financing options for local governments. Development of a handbook for energy, cost and CO2 savings through LED street lighting. Impact Provides a model for NAMA on the energy demand side. Cities are able to properly measure used energy and reduce local energy costs. 13.04.2015 Jakarta, JulySeite 2011 25 25 Indonesia Guideline on Co-processing Waste Materials in Cement Production Partners: Holcim Group, Indocement 11/2006 – 11/2009 Volume: 90.000 € Public (ProLH): 30.000€ Challenge High environmental impacts from waste, unsafe disposal of hazardous waste. Cement industry has high potential to improve waste management by applying co-processing. Approach Development of a guideline with the requirements and standards for co-processing. Transfer of ‘lessons learned’ from developed countries. Capacity building before launching of co-processing. Impact Decrease the environmental impacts of waste. Decrease greenhouse gas emissions. Improve waste management and decrease waste handling costs. 13.04.2015 Jakarta, JulySeite 2011 26 26 Indonesia Energy Saving Movement Partners: PT OSRAM Indonesia 12/2009 – 06/2011 Volume: 400.000 € Public: 200.000€ Challenge > 19% of total energy consumption is attributed to the use of artificial light. Common use of energy wasting light bulbs. Approach Integrated approach that includes an upgrade of lighting systems at selected schools and households combined with educational measures on energy efficiency. Students participate in math and essay competitions with focus on energy saving. Nationwide media campaign about energy efficiency. Impact Energy consumption has successfully been decreased by more than 50 percent. The learning module about energy efficiency is being implemented in vocational schools and will be part of lessons for more than 10.000 students. 13.04.2015 Jakarta, JulySeite 2011 27 27 Indonesia Environmentally Sound Management of Chemical Waste Partners: Merck 12/2009 – 12/2012 Volume: 1.4 million € Public: 700.000 € Challenge Growing volume of chemical waste is creating a challenge for local and national authorities. No management expertise in the prevention of health and environment hazards. Approach Coordination of training units for transfer of expertise at the micro and macro levels. Implementation of chemical waste management systems. Impact Local SMEs are receiving technical support. Meso level organisations are applying innovative chemical waste management strategies. Partner countries are harmonizing their frameworks within ASEAN. 13.04.2015 Jakarta, JulySeite 2011 28 28 Indonesia, Nicaragua, Honduras, Guatemala Co-financing mechanisms for hydropower plants Partners: South Pole 12/2007 – 02/2011 Volume: 900.000 € Public: 440.000 € Challenge The majority of the population, especially in rural areas, has no or just unsteady access to electric energy. Current energy sources are not sustainable. Approach Testing, consulting and training for and documentation of implementation of co-financing mechanisms through Certified Emission Reductions (CER). Impact Small hydropower plants receive financing through CER. Permanent co-financing and improved conditions for Clean Development Mechanisms (CDM). 13.04.2015 Jakarta, JulySeite 2011 29 29 BACKUP 13.04.2015 Jakarta, JulySeite 2011 30 30 Portfolio – Cooperation with the Private Sector on “Environment and Climate Change” Details 13.04.2015 Jakarta, JulySeite 2011 31 31 Cooperation with the Private Sector on Climate Change Mitigation (I) Development Partnerships with the Private Sector (DPP) Integrated DPP (PAKLIM funded) adidas Basics “Greening Global Supply Chains – Focus on Energy” • 05/11-05/13 • 168T€ (PAKLIM 133T €) Osram II “Energy Efficient/ LED Street Lighting” • 05/11-12/12 • 184T€ (PAKLIM 92T €) Facility DPP (develoPPP.de funded) Merck Osram I “Environmentally Sound Management of Chemical Waste” • 12/09-12/12 • 1,4 Mio.€ (STA) (PPP- “Energy Saving Movement” • 12/09-06/11 • 400T€ (PPP-facility 200T €) facility 700T €) Approach Target Group / Partner • Capacity building for service providers and selected suppliers • Implementation of financially feasible EE measures • Pilot testing of EE/ LED street lighting • Handbook for energy, cost & CO2 savings through LED street lighting • Implementation of chemical waste managt. systems • Coordination of training units for transfer of expertise • Upgrade of lighting systems at selected schools &households • Educat. measures & nationwide media campaign on EE • Service providers • Local footwear & apparel suppliers • MoI, ESDM, KLH • Urban population • Local government, KLH • Merck customers (e.g. laboratories) • KLH • Elementary schools & SMKs • Local communities • Indonesian population 13.04.2015 Jakarta, JulySeite 2011 32 32 Cooperation with the Private Sector on Climate Change Mitigation (II) Policy Advice NAMA - Nationally Appropriate Mitigation Actions Support development of the overall strategic concept Give sector specific advice for industry, waste, energy efficiency (EE) in urban areas Voluntary partnership agreements (VPA) Facilitate GOI and selected industries to reduce GHG emissions Policy framework stipulating certain actions, e.g. EE standards or GHG emission limits Economic and fiscal instruments, incentive schemes to ease private sector participation ICCTF (Indonesia Climate Change Trust Fund) as a funding mechanism and facility for mitigation and adaptation Further the transfer of appropriate technologies to be used by the private sector and foster research & development for such innovations in Indonesia itself 13.04.2015 Jakarta, JulySeite 2011 33 33 Cooperation with the Private Sector on Climate Change Mitigation (III) Dialogues with the Private Sector Empirical study on “Private sector involvement in climate change activities in Indonesia” Interviews a.o. with Siemens, SAP, APP, Sinarmas, Martha Tilaar, PT Chandra Asri, DB Schenker, Holcim, PT Indocement, PT Petrokimia Gresik, PT Chandra Asri, PT Semen Gresik “Green” CSR Participation in KLH working group on establishing guideline for “green” CSR and criteria for evaluation and official recognition Initiation of roundtable / stakeholder exchanges on CSR Implementation and communication of pilot projects and best practices Provision of information and technical assistance to the private sector Cooperation with chambers and business associations, e.g. for joint awareness campaigns for a low carbon development 13.04.2015 Jakarta, JulySeite 2011 34 34