East Kalimantan Environmentally Sustainable Development Strategy

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72 team to check on methane release at mining sites. The cost, in present value, required to reduce emissions by reducing methane release from coal mines is around negative USD 2 to 3 per tCO2e p.a. by 2030. Encouraging operational efficiency could capture a reduction of 2.56 MtCO2e. Both emissions from the mining process and the profitability of coal mining are mainly driven by the consumption of fuel and electricity. Expert interviews suggest that East Kalimantan could reduce energy consumption (and hence emissions and costs) by around 20 percent through operational efficiency improvements. One step the provincial government could consider is training a new provincial mining monitoring team to be able to recommend operational improvements during their site visits. The members of the provincial mining monitoring team then will also assess efficiency and suggest improvements to the mining companies. Examples of operational efficiency initiatives include: reduce idle time of shovels, improve control of transport equipment, improve fill factor for shovels, improve haul road, optimize truck dispatch, and improve fuel monitoring and maintenance. Which initiatives are appropriate is dependent on the result of site assessment by the provincial mining monitoring team. The cost, in present value, to implement all these steps to improve operational efficiency is estimated at negative USD 4 to 6 per tCO2e p.a. by 2030. Enforcing proper post-mining reclamation would save 2.01 MtCO2e. Although the environmental impact of open pit mining is inevitable, the damage can be minimized through implementation of best practices for reclamation. In violation of existing regulations, many miners in East Kalimantan, especially the smaller ones, do not implement proper reclamation practices. Interviews with industry participants and mining sector analysts suggest that around 20 percent of big companies and 75 percent of small companies do not implement proper reclamation. Their reasons vary. Many smaller miners don’t have the capital to finance reclamation activities. (An upfront reclamation guarantee fund does exist, however in many cases it is not adequate to cover the full cost of reclamation or it is simply not collected properly.) Some miners do not have the required knowhow and skills to implement reclamation correctly. And, some do not implement proper reclamation because they know that government has limited resources to monitor and control them, and therefore the consequences of violating the reclamation provisions are limited. Box 7 discusses the economic opportunity of post mining reclamation. Three initiatives to enforce proper post-mining reclamation have been identified. First, to address the problem of a lack of skills and knowhow, certified reclamation contractors can be used. Miners with insufficient capability to do reclamation could contract one of the contractors on a recommended shortlist. Second, to address the lack of financial resources, the reclamation guarantee fund system can be adjusted. Instead of requiring applicants for mining permits to pay small upfront guarantees, East Kalimantan can require them to pay the full reclamation costs in advance to any certified reclamation contractor in East Kalimantan and attach the reclamation contract to their permit application. Then, the East Kalimantan government will only need to hold the certified reclamation contractors, instead of the applicants, responsible for implementing proper reclamation. It will be easier for East Kalimantan to manage a few certified reclamation contractors as opposed to thousands of mining companies. Third, to address the issue of lack of enforcement, East Kalimantan could establish a new mine monitoring unit with sufficient resources and regulatory authority. DRAFT To ensure successful reclamation (1) rehabilitation programs should be an integral part of operations from the commencement of mining; (2) lands should be rehabilitated immediately upon the closure of each mining pit; and (3) an extensive consultation process with community stakeholders should start a few years before the closure of a mine. There are several successful reclamation examples in East Kalimantan such as the Petangis coal mine in Paser rehabilitated by PT Kendilo and the PT KEM gold mine in Kutai Barat. The Petangis mine rehabilitated its post mining lands into an eco-tourism park, for which it received the Gold Flag environmental award from the Province of East Kalimantan. To enforce proper reclamation, East Kalimantan will need to add 65 qualified personnel to a provincial mine monitoring team. The estimated total cost, in present value, for these steps to enforce reclamation would be around USD 6 to 22 per tCO2e p.a. by 2030.
73 The Economic Opportunity of Post Mining Reclamation and Rehabilitation While reclamation and rehabilitation is seen as a cost for private mining companies, it is actually an economic opportunity for East Kalimantan overall. Without proper reclamation, soils in mining concessions become degraded and cannot be used for other economic purposes. Another benefit, then, of strictly enforcing post-mining rehabilitation regulations is that it allows other sectors to use the mining concession area after the concession period has expired. Properly reclaimed lands ensure the continued viability of the soil, which could therefore be used for forestry, palm oil, or agriculture. This would result in decreased pressure on the primary forests, higher carbon sequestration than otherwise would be the case, and more job creation. Based on existing reclamation practices, by 2030 under the business-as-usual scenario, only around 137,000 ha of mined lands will become available for either forestry, palm oil, agriculture, or other uses after mining concessions lapse. However, if existing reclamation regulations were properly enforced, an additional 289,000 ha of reclaimed lands would become available for other economic purposes by 2030. Examples of mine reclamations in East Kalimantan Reclaimed PT KEM mine, Kutai Barat SOURCE: Google Earth Rehabilitated PT Kendilo coal mine, Pasir DRAFT Unreclaimed mine, Kutai Kertanegara Unreclaimed mine, Samarinda Box 7 Exhibit 47 Pilot Projects Potential pilots for coal initiatives have been identified in Kutai Kertanegara, Kutai Barat, and Kutai Timur. As 75 percent of miners with KP permits and 64 percent of KP coal concession areas are concentrated in these three districts, the highest emissions and greatest abatement potential are also there. Pilot projects in these three Kutai districts could capture almost 75 percent of the total abatement potential from the coal sector (EXHIBIT 48). Other criteria to be used for selecting the final pilot projects would include: support from districts, support from mining companies, and the availability of biodiversity and HCVF at risk.
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East Kalimantan Environmentally Sus
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3 East Kalimantan Environmentally S
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5 Contents Preface 7 Acknowledgemen
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7 Preface A broad global consensus
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9 Acknowledgements The DNPI and the
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11 Executive summary East Kalimanta
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13 1. The development of coal-bed m
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DRAFT 15
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17 Kaltim Green Program The Governm
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19 1. The context for East Kalimant
Page 21 and 22: 21 This resource development pathwa
Page 23 and 24: 23 Both Berau and Malinau are large
Page 25 and 26: 25 In the BAU scenario, CO 2 e emis
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: 71 exploration and production conce
Page 75 and 76: 75 Entering downstream value chain
Page 77 and 78: 77 Current Context The oil and gas
Page 79 and 80: 79 granted in 2008-2009 and contain
Page 81 and 82: 81 Emission from flaring is declini
Page 83 and 84: 83 Satellite images can help monito
Page 85 and 86: 85 Under business as usual, relativ
Page 87 and 88: 87 BERAU Berau is the third largest
Page 89 and 90: 89 350,000 ha of Kutai Timur is cat
Page 91 and 92: 91 substantial natural resource ext
Page 93 and 94: 93 Borneo conservation area as well
Page 95 and 96: 95 agricultural processing. As Pena
Page 97 and 98: 97 Range of climate related risks t
Page 99 and 100: 99 predict increased precipitation
Page 101 and 102: 101 In addition to the refinery and
Page 103 and 104: 103 The greatest economic risks fro
Page 105 and 106: 105 change issues. In December 2009
Page 107 and 108: 107 Proposed BFCP governance and ma
Page 109 and 110: 109 the lack of a strong system, th
Page 111 and 112: 111 Carbon Accounting, Standards, a
Page 113 and 114: 113 EXAMPLE INITIATIVES REQUIRING C
Page 115 and 116: 115 for example, includes represent
Page 117 and 118: DRAFT 117
Page 119 and 120: 119 Sources • 2010, Kesiapan Kali
Page 121 and 122: 121 • Badan Perijinan Dan Penanam
Page 123 and 124:
123 • Daniel Murdiyarso et al, Me
Page 125 and 126:
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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