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Carbon into Cash

Vast potential exists for carbon credits — and income — from Indonesia’s unproductive forestland

By Graham Dwyer (gdwyer@adb.org)
External Relations Specialist

Out of Indonesia’s more than 100 million hectares (ha) of forestland—accounting for almost half the forest in Southeast Asia — some 12% is lying idle and unproductive.

Yet potentially, through forestation programs under the Clean Development Mechanism (CDM) of the Kyoto Protocol, these areas could absorb 45–300 tons of carbon dioxide — the main greenhouse gas — per hectare per year.

CARBON INTO INCOME Indonesia’s forests can provide resources beyond wood

To help stakeholders in the country better understand the processes, implications, and potential applications of the CDM, a new Asian Development Bank (ADB) technical assistance project will pilot test carbon sequestration project designs.

Funded by a $700,000 grant financed through the Canadian Cooperation Fund for Climate Change and administered by ADB, it is ADB’s first technical assistance to address carbon sequestration.

Carbon dioxide accounts for about half the total global warming potential from greenhouse gases, which could cause global average temperatures to rise by 1.4–5.8 ^oC between 2001 and 2100 if no preventive action is taken.

Such changes in global temperature would reduce the polar ice cover, raise the sea level, and cause unpredictable weather patterns. The most vulnerable to these changes would be the poor, who often live in the marginal lands that are at the mercy of adverse weather, such as floods, droughts, and storms.

Under the Kyoto Protocol, agreed to in 1997 by the Conference of the Parties of the United Nations Framework Convention on Climate Change, participating developed ountries and economies in transition have agreed to meet, by 2008–2012, greenhouse gas emission reduction targets.

The countries can meet these commitments in many ways—through domestic action, joint implementation of greenhouse gas reduction projects, emissions trading, and the CDM, which allows projects in developing countries to earn certified emissions reduction (CER) units for reducing greenhouse gases.

The CER units must be registered with the CDM Executive Board. The project may then sell, save, or barter the CERs, like a commodity, through private contracts, auction, or exchange markets, providing additional income. Potential buyers and users of the CERs are industries and governments in developed countries. One way of earning CERs is through reforestation and afforestation of denuded land.

ADB’s technical assistance will address some issues, including establishing definitions such as baselines, nonpermanence, leakage, and socioeconomic and environmental impacts, and will apply methodologies acceptable under the Kyoto Protocol for carbon sequestration projects in Indonesia.

The Ministry of Environment, the focal ministry for climate change in Indonesia, will be the executing agency.

Find out more about ADB's activities in Indonesia

Learn about Renewable Energy, Energy Efficiency, and Climate Change - REACH

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