East Kalimantan Environmentally Sustainable Development Strategy

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24 growth strategy is to ensure that the people of East Kalimantan do not achieve reduced emissions at the cost of reduced growth. Additional financing will needed to underwrite the considerable investments associated with the transition to a climate-compatible development path. Some of that financing will likely be provided by the domestic government, some by international donor agencies, and some directly by the private sector as companies see the potential to generate positive returns. East Kalimantan can reduce the carbon footprint of its current economy by 60 percent from the business-as-usual trajectory by 2030. This reduction comes mainly from the five priority sectors of palm oil, forestry, agriculture, coal mining, and oil and gas. A total of 22 initiatives in these sectors could reduce the province’s emissions by 184 MtCO2 (an additional reduction of 13.2 MtCO2e could be achieved by activities focusing on other sectors, for example construction) at an average cost of USD 2.0 to 3.1 per tCO2e abated. This represents a reduction of 60 percent from the level of emissions expected in the business-as-usual scenario in 2030. Five abatement initiatives account for 75 percent of all the CO2 reduction potential in East Kalimantan. All five focus on increasing land-use efficiency. The maximum reduction from these initiatives would be 135 MtCO2 by 2030, although a number of challenges would need to be overcome to reach the full reduction. All of the abatement initiatives described in Table 1 are discussed in more detail in Chapter 3, Sector Strategies. East Kalimantan can increase its GDP growth from a business-as-usual rate of 3 percent p.a. to 5 percent p.a. without increasing emissions by moving to higher value-added activities and promoting less carbon-intensive sectors. East Kalimantan has a relatively diverse economy, especially when compared to provinces outside the heavily-populated Sumatra- Java-Bali chain. Yet, with a population of only 2 million, East Kalimantan has only a small domestic market. Much of its abundant resources are exported in raw form to Java, Sumatra and overseas where they are turned into higher-value added goods (e.g., raw logs to Sumatran mills and Javanese furniture manufacturers). East Kalimantan has an opportunity to capture more downstream processing and thus increase the GDP contribution that the province gains from its natural resources. The top five economic initiatives could increase GDP by IDR 50 trillion in 2030, equivalent to IDR 9 million per person (Table 2). These initiatives include developing a new resource (coalbed methane), improving productivity of underutilized sectors (timber plantations and agriculture in particular), and developing downstream activities such as a pulp and paper mill and CPO refinery. Each initiative is described in more detail in the relevant sector strategy. DRAFT This increased growth will require safeguards to ensure that it does not encourage other sources of emissions. Increasing the productivity of HTI and palm oil concessions, for example, could make them more attractive for investors and thus encourage the development of new concessions in forested lands if measures, such as REDD, are not in place to prevent this. Similarly, developing additional pulp and paper processing capacity without first ensuring a sustainable supply of acacia could simply accelerate deforestation by increasing demand for current unsustainable logged timber. Financial safeguards, proper sequencing, and thoughtful spatial planning will all be needed to ensure the shift to environmentally sustainable GDP growth. While GDP is an important and visible indicator of development, it is not the only metric that is important to the people of East Kalimantan. Our official slogan of “Develop East Kalimantan for all” recognizes that too much of the province’s natural resource extraction has benefited a few companies and individuals as opposed to creating jobs and income for the majority. Creating jobs, improving rural incomes, and reducing inequality are also vital parts of our sustainable development strategy. Beyond reducing CO2e emissions, we have important environmental goals to reduce pollution, maintain natural resources, protect fisheries, protect water quality and retain watersheds to reducing flooding. East Kalimantan is home to important biodiversity which we want to protect, represented most notably by a number of rare and beautiful
25 In the BAU scenario, CO 2 e emissions would reach 331 Mt by 2030, however pursuing a sustainable growth path can reduce this by 60 percent 61 Gross emissions are excluding absorption from managed forests and oil palm plantation SOURCE: team analysis 70 76 56 20 16 11 22 DRAFT 331 184 -60% Minor initiatives Major initiatives 13 Agriculture Palm oil Forest & Mining Petroleum Manufacturinstruction Services Con- Total Forest Industry and Refining Share of emissions, 18.5 21.0 22.9 16.8 6.1 4.8 3.2 6.7 100 percent 134 Emissions after abatement East Kalimantan has the potential to reduce CO 2 emissions by up to 184 MtCO 2 e by 2030 at an average cost of USD 2.00 – 3.10 per ton CO2 e abated High cost estimate Low cost estimate Reduction cost 1 USD per tCO 2 e Buyout palm oil 50 concessions Reforestation 40 Minimize Zero burning - methane agriculture 30 28.5 leakage 17.1 20 10.8 14.0 8.9 9.8 10 0.7 1.1 1.1 1.3 3.1 4.0 0 0.2 0.2 0.6 0.7 1.1 0 0 -3.0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 -10 -6.4 Reduction potential 2 -20 MtCO 2 e per year Exhibit 7 Exhibit 8 -30 -28.5 -15.6 Peat rehabilitation - forestry Reduced Impact Logging Degraded land - oil palm 1 Societal perspective implies utilizing a 4% discount rate 2. The width of each bar represents the volume of potential reduction. The height of each bar represents the cost to capture each reduction initiative SOURCE: Indonesia GHG Abatement Cost Curve
Page 1 and 2: East Kalimantan Environmentally Sus
Page 3 and 4: 3 East Kalimantan Environmentally S
Page 5 and 6: 5 Contents Preface 7 Acknowledgemen
Page 7 and 8: 7 Preface A broad global consensus
Page 9 and 10: 9 Acknowledgements The DNPI and the
Page 11 and 12: 11 Executive summary East Kalimanta
Page 13 and 14: 13 1. The development of coal-bed m
Page 15 and 16: DRAFT 15
Page 17 and 18: 17 Kaltim Green Program The Governm
Page 19 and 20: 19 1. The context for East Kalimant
Page 21 and 22: 21 This resource development pathwa
Page 23: 23 Both Berau and Malinau are large
Page 27 and 28: 27 TOP 5 ABATEMENT INITIATIVES Top
Page 29 and 30: 29 Kalimantan’s shift to a climat
Page 31 and 32: 31 The sector’s 57 MtCO2e of net
Page 33 and 34: 33 Outside of the sector’s need f
Page 35 and 36: 35 The greatest expansion is expect
Page 37 and 38: 37 improving water management in on
Page 39 and 40: 39 Including financial transfers fo
Page 41 and 42: 41 after the identified abatement m
Page 43 and 44: 43 The Case of Oil Palm Permits and
Page 45 and 46: 45 Emissions from the forestry sect
Page 47 and 48: 47 across Kalimantan in 1997 and 19
Page 49 and 50: 49 Utilizing concession buyout sche
Page 51 and 52: 51 Pilot Projects Pilot projects ha
Page 53 and 54: 53 GDP Potential The economic decli
Page 55 and 56: 55 Downstream manufacturing would i
Page 57 and 58: 57 downstream manufacturing as it w
Page 59 and 60: 59 Swidden agricultural practiced b
Page 61 and 62: 61 Although East Kalimantan has far
Page 63 and 64: 63 Reaching average national yields
Page 65 and 66: 65 farmers . We have identified sev
Page 67 and 68: 67 Many mining operations are locat
Page 69 and 70: 69 Unlike timber or oil palm planta
Page 71 and 72: 71 exploration and production conce
Page 73 and 74: 73 The Economic Opportunity of Post
Page 75 and 76:
75 Entering downstream value chain
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77 Current Context The oil and gas
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79 granted in 2008-2009 and contain
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81 Emission from flaring is declini
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83 Satellite images can help monito
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85 Under business as usual, relativ
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87 BERAU Berau is the third largest
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89 350,000 ha of Kutai Timur is cat
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91 substantial natural resource ext
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93 Borneo conservation area as well
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95 agricultural processing. As Pena
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97 Range of climate related risks t
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99 predict increased precipitation
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101 In addition to the refinery and
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103 The greatest economic risks fro
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105 change issues. In December 2009
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107 Proposed BFCP governance and ma
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109 the lack of a strong system, th
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111 Carbon Accounting, Standards, a
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113 EXAMPLE INITIATIVES REQUIRING C
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115 for example, includes represent
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DRAFT 117
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119 Sources • 2010, Kesiapan Kali
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121 • Badan Perijinan Dan Penanam
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123 • Daniel Murdiyarso et al, Me
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125 • Marcus Colchester et al, Pr
Page 127 and 128:
127 • Yosep Ruslim et al, STUDY O
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East Kalimantan Environmentally Sustainable Development Strategy

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