East Kalimantan Environmentally Sustainable Development Strategy

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palm oil concessions, though, do overlap with the district’s peatland, and the required drainage of
peat to grow oil palms exposes the peat’s carbon to air; the decomposition releases 7.1 MtCO2e.
The key to reducing Nunukan’s emissions is better management of its peatlands, which
can provide 8.9 out of the 25 MtCO2e abatement potential against 2030 business as
usual. Fortunately, most of Nunukan’s fires are concentrated; the district could capture most of the
total abatement from a zero burningpolicy for agriculture (7.2 MtCO2e) by focusing on just 50,000
ha of peatland. Maintaining water levels and reducing drainage in peatland can reduce emissions
by another 3.6 MtCO2e. Likewise, rehabilitating peatlands in agriculture and forest concessions
can yield 2.1 and 4.0 MtCO2e abatement respectively. There would also be gains from instituting
reduced impact logging in the five current HPH concessions (1.5 MtCO2e potential) and using
some of the district’s 133,000 ha of degraded land for palm oil expansion (1.9 MtCO2e potential).
With a diverse economy, good access from its ports, and proximity to Malaysia, Nunukan
has the potential to move into downstream products as well as increase its economic
productivity. Nunukan should join the efforts to lobby BP MIGAS to improve the regulatory
policies to encourage oil and gas exploration as well as coal-bed methane. While Nunukan is
not part of the massive Kutai Basin that holds most of the province’s oil and gas reserves, it does
partially overlay the Tarakan basin. Nunukan can also benefit from raising the productivity of its
agricultural and palm oil sectors, which make up 14 percent of the district’s economy. And while
the district currently has no HTI concessions, with 133,000 ha of degraded land, it has the potential
to develop acacia plantations without deforestation.
PENAJAM PASER UTARA
Penajam Paser Utara is a relatively small coastal district. It is the smallest district at 330,000
ha, but has a long coastline with 65,000 ha of beaches. With 37 people per square kilometer,
Penajam Paser Utara has the highest population density outside of East Kalimantan’s cities. Its
GDP per capita is equal to that of Samarinda. Oil and gas make up 45 percent of the economy,
but most of the population is engaged in agriculture and fishing, which accounts for 9 percent of
GDP. The district also has a significant manufacturing sector making up 19 percent of GDP, mostly
agricultural processors and industrial manufacturers located near the border with Balikpapan.
The district’s lowland location means its forests are easily accessible and thus have largely been
utilized. Only 19 percent of its forest cover remains, less than any district, yet forest loss continues
with an annual loss of 5,000 ha (equal to 8 percent of remaining forest cover).
DRAFT
With largely degraded lands and a small size, Penajam Paser Utara’s baseline emissions
were only 6.3 MtCO2e in 2005, the lowest in East Kalimantan. The largest source is from
deforestation, from expansion of agriculture and palm oil, at 2.7 MtCO2e. While there are currently
only 27,000 ha of HGU-licensed concessions, palm oil could expand more than four-fold with
130,000 of location permits granted to 14 companies. Additional emissions of 2.1 MtCO2e stem
from logging of the district’s remaining forests.
Abatement potential is estimated to be 6.3 MtCO2e against business as usual identified.
The largest abatement would be from using the district’s 20,000 ha of degraded land for expansion
of agriculture and palm oil, yielding 2.5 MtCO2e in abatement. There is abatement potential from
zero burning and reforestation, but this is small at 0.3 and 0.4 MtCO2e respectively. Reduced
impact logging of the remaining forest is important and could yield 2.6 MtCO2e abatement in 2030.
Penajam Paser Utara has the potential to boost its GDP among its diverse sectors. With
oil and gas contributing so much to GDP, the district can support the province’s efforts to work
with BP MIGAS to accelerate exploration and ensure maximum investments in current fields.
With a substantial part of its population involved in agriculture, aquaculture, and fishing, raising
productivity in these sectors is important and will require support from extension workers and
nucleus farmers. The compact district’s coastal location and proximity to Balikpapan makes it
a prime candidate for high-value niche crops such as oranges as well as a base for downstream