Taking action to cut emissions and boost development

Taking action to cut emissions and boost development

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Date: 25th March 2014
Type: Feature
Tags: greenhouse gas emissions, NAMA

Indonesia’s province of West Nusa Tenggara has been part of a project to design a new type of support programme for its renewable energy industry and to expand access to electricity. Rosmaliati Muchtar of the University of Mataram, Lachlan Cameron of ECN and CDKN’s Mochamad Indrawan report on this idea of ‘NAMAs’ and what could be achieved.

Many countries are grappling with the challenge of what action to take to mitigate, and adapt to, climate change. In 2009, President Susilo Bambang Yudhoyono pledged that Indonesia will reduce its greenhouse gas emissions (GHG) by 26% in 2020 relative to business-as-usual. With international support a further 15% reduction is possible. This ambition was later elaborated in a national climate change action plan (RAN-GRK) and at the provincial level through local action plans (RAD-GRK).

In developing these plans, Indonesia has started to recognise that so-called ‘nationally appropriate mitigation actions’, or NAMAs, are a useful way to think about the implementation of its climate change targets. The concept of NAMAs started at the 2007 Bali negotiations of the UNFCCC. Countries have since been asked to submit mitigation actions and plans (NAMAs), which are also compatible with their development plans and aspirations. They can range from project-based mitigation efforts to economy-wide emissions-reduction objectives.

Supported by CDKN and the German Government, the Mitigation Momentum project aims to demonstrate how central and local governments might fulfil Indonesia’s NAMA goals. In particular, the project focuses on increasing the energy Indonesia supplies from small- and medium-scale (less than 10 MW) renewable energy. Work began in 2012 and will continue until 2015. The first step was to identify provinces that could host pilot projects. In consultation with policymakers and the international partner agencies, the Mitigation Momentum team selected two locations: West Nusa Tenggara (NTB) and North Sumatra. The aim was to examine options for renewable energy in these provinces, with the particular goal of engaging small- to medium-scale independent power producers (IPPs). This article covers the experiences of NTB.

The archipelagic province of NTB has 864 islands, 461 of which are inhabited. Some of the islands are major tourism destinations. Lombok Island, for example, attracts visitors to its mountain, beach resorts and cultural attractions, such as its traditional medicines and cuisine. This island alone welcomed more than one million holidaymakers in 2012. However, the facilities and services enjoyed by tourists in NTB are at odds with those experienced by the locals. NTB is one of the poorest provinces in Indonesia with 18.63% of households considered very poor (BPS, 2012). Poor access to electricity is challenging the development of the local economy and people’s livelihoods.

A research team from Universitas Mataram assessed NTB’s potential to develop renewable energy, along with possible hindrances to doing so. In 2012, only about 10 MW were available for electricity. However, the potential from mini hydro alone is estimated to be more than 100 MW. The Government of Indonesia had already begun reforming policies; for example, the Ministry of Energy and Mineral Resources (ESDM) has released regulations for small and medium scale renewable energy facilities that provide a premium electricity payment, or feed-in-tariff. The fact that PLN systematically purchases renewable energy is attractive to investors who have increasingly sought to develop new generation capacity as IPPs.

IPPs will be a vital part of Indonesia’s energy system in the future. They provide an effective way to grow the electricity infrastructure using private investment, not public budgets, and are a central component of Indonesia’s power planning. Against this background, the Mitigation-Momentum project is working with the government of Indonesia and the province of NTB to develop a NAMA that aims to support IPPs, who have otherwise struggled to successfully develop new projects.

The project held interviews with over 20 project developers and local banks, as well as development partners and government officials. These showed that that the government's feed-in tariff provides a strong incentive, but that IPPs still face a number of barriers that prevent or delay many projects. Multiple challenges range from technical and organisational skills, to availability of project finance and confidence from the banking sector. Analysis shows that existing policies need to be complemented to be effective, and that there is no single solution.

The results of this barrier analysis, as well as recommendations on potential solutions, have been discussed at workshops at both the provincial and national level. It was necessary to decide both what action should be taken and who should play a role. The resulting NAMA concept recognises that more than one solution is needed and has three components covering capacity building, certainty of revenues and financing conditions.

Picture : power lines, Indonesia, courtesy Luther Bailey, flickr.com

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