The Joint Crediting Mechanism (JCM) Experiences in the Energy Efficiency Financing
Dicky Edwin HindartoHead of Indonesia JCM Secretariat
Indonesia Joint Crediting Mechanism Secretariat
7 July 2015“Advancing energy efficiency in Asia through SCP and green finance”
SWITCH-Asia Networking Conference
1. Energy efficiency
development and
opportunities in Indonesia
2. JCM current development
in Indonesia
3. The JCM financial scheme
4. JCM project
implementation
Presentation structure
The JCM and other Indonesia initiatives on market mechanism
CDM• Giving very high expectation in the
beginning, very difficult and complex to be implemented, and suddenly everything was stopped due to the lack of demands, now we have no new project in 2014.
• But still we got a lot of experiences from the CDM projects that we have developed.
VCS• Relatively small compare to CDM,
but still growing smoothly.• It’s very difficult to escalate the
Indonesian business sector involvement in VCS mechanism, and until now only very limited projects that have been developed (one of it is our first REDD+ project).
Nusantara Carbon Scheme
• Still in the preliminary stage.• Some of the methodologies had
been tested, and so far receive positive responses from the business entities.
• We hope someday it will be one of the alternative for the market based mitigation actions.
The JCM Scheme• We need more than three years to develop the agreement, started from 2010 and its finally signed at August 2013.• The Joint Crediting Mechanism is the most progress mechanism now in Indonesia.• It is not only about the bilateral carbon trading, but rather than how to develop and implement the green investment as
well as low emission development and technology transfer between the 2 countries.• Japan and Indonesia have their own national target on emission reduction to be achieved, and it can be done through JCM.• Both countries also need to increase their economic development as well as develop more opportunities for their private
sectors to grow.
How the JCM scheme works?
Indonesia
Implementation & monitoring of projects
Japanese Side
SecretariatIndonesian Side
communication
Project ParticipantsImplementation & monitoring of projects
Project Participants
• Validate projects• Verify amount of GHG
emission reduction or removal
Third Party EntitiesRequest issuance of credits
Request registration of projects
Submit PDD / monitoring report
Inform results of validation / verification
Request registration of projects
Request issuance of credits
Submit PDD / monitoring report
Inform results of validation / verification
Japan
Government
Issuance of creditGovernment
Issuance of credit
Implement project togetherMay contact TPE and Secretariat through one Contact Entity
Notifies registration of projects
Report issuance of credits
Notifies registration of projects
Report issuance of credits
Joint Committee
RE and EE development using carbon market related financing
• Energy conservation target by 2025: energy elasticity < 1, reduction of energy intensity 1% per year
• National Energy Policy (Government Regulation 79/2014): self sufficient and resilient
• Ministerial Regulation 14/2012 Energy Management: for industries
NAMA (seeking support)
Smart Street Lighting Initiative
Sustainable Urban Transport Initiative
Source: National Council on Climate Change Indonesia, January 2015
CDM
Source: The VCS Project Database, March2015
Energy Mix 2050, INDC
2014 2015 2016 2017 2018 2019 2020 2050
National Action Plan on GHG Emission Reduction• 26-41% GHG emissions reduction by 2020 (Long-term National Plan)
• Priority sectors: forestry & peat, energy & transport, agriculture, industryand waste
New government and structure• Min. of Environment merger with Ministry of Forestry • Min. of Energy&Mineral Resources under Coord. Ministry for
Maritime Affairs• Development of maritime potential as main strategic sector • GHG emissions reduction approaching 26% by 2019• Increase electrification from 82% to 96.9% in 2019• 35,000 MW power generation: 25 MW coal, 10 MW non-
coal public and private improve IPPs process, use local component
• Feed in tariffs already established, • Revision of geothermal law
Pathway to 2020
Goal Actions
Accelerate renewable energy Geothermal, hydro power, biomass, solar power, waste to energy, mini CNG, including small and medium scale
Promote energy efficient technology • Ultra/Super critical coal-fired power plants• Combined cycle coal-fired power plants• Operation performance revitalization• Multipliable technologies
Attract investment • Private investment schemes e.g. JCM, PPP• Public investment• Continuous improvement of feed-in tariffs: geothermal, solar,
hydro, biomass, waste• Exemption of import duties for RE (ongoing)
New technology LNG, CCS preparation
Increase education and lifestyle • Mainstreaming energy-efficient, low-carbon technology into daily life
• Incentive for energy efficient residential, commercial areas• Climate change in higher education
Source: Ministry of National Development Planning (BAPPENAS), Indonesian National Committee -World Energy Council, Indonesia JCM Secretariat
Potential mitigation actions in energy sector
The JCM projects current development
Registered Project
The 1st JCM registered project:• Collaboration between Ebara
Equipment & Systems and PT Primatexco Indonesia
• Location: Batang, Central Java• Estimated total emissions reduction 799
tCO2 eq. by 2020 • Annual 965 MWh energy saving
The JCM Project Progress• 96 Feasibility Study have been done from 2010-2015
• 3 projects are registered as JCM projects.
• 18 JCM projects are now in our pipeline.
• 19 projects on energy efficiency and 2 projects on renewable energy (registered and pipeline).
• All projects are being developed with the cooperation between Indonesia and Japan participants.
The Registered Projects1. “Energy Saving for Air-Conditioning and Process Cooling by Introducing
High-efficiency Centrifugal Chiller” (first registered project under the JCM worldwide)
2. “Project of Introducing High Efficiency Refrigerator to a Food Industry Cold Storage in Indonesia”
3. “Project of Introducing High Efficiency Refrigerator to a Frozen Food Processing Plant in Indonesia”
List of JCM implementation projects in Indonesia
Projects Name Expected Emission Reduction
Demonstration Project
Remote Auto-Monitoring System for Thin-Film Solar Power Plant in Indonesia 1.433 tCO2/year
Energy Saving by Optimum Operation at Oil Refinery 3.400 tCO2/year
Utility Facility Operation Optimization Technology 58.000 tCO2/year
Model Project
Power generation by waste heat recovery in cement industry 122.000 tCO2/year
Energy Savings at Convenience Stores 33 tCO2/toko/year
Energy saving through introduction of regenerative burners to the aluminum holding furnace of the automotive components manufacturer 856 tCO2/year
Solar power hybrid System installation to existing base transceiver stations in off-grid area 2.786 tCO2/year
Energy saving for textile factory facility cooling by high efficiency centrifugal chiller 118 tCO2/year
Energy saving by double bundle-type heat pump 170 tCO2/year
Introduction of High efficient Old Corrugated Cartons Process at Paper Factory 14.884 tCO2/year
Reducing GHG emission at textile factories by upgrading to air-saving loom 566 tCO2/year
Energy saving for air-conditioning and process cooling at textile factory 117 tCO2/year
Installation of CHP (Combined Heat and Power) system in a hotel 3.200 tCO2/year
Energy-saving Project by Utilizing Waste Heat at Hotel 1.936 tCO2/year
Energy Saving for Shopping Mall with High Efficiency Centrifugal Chiller 925 tCO2/year
Energy Saving for Industrial Park with Smart LED Street Lighting System 900 tCO2/year
Energy Saving for Office Building with High Efficiency Water Cooled Package Air Conditioning Unit 714 tCO2/year
Energy saving by introduction of high efficiency once-through boiler system in a film factory 428,5 tCO2/year
Registered Project
Energy saving for air-conditioning and process cooling by Introducing High-efficiency Centrifugal Chiller 114 tCO2/year
Project of Introducing High Efficiency Refrigerators to a Food Industry Cold Storage in Indonesia 120 tCO2/year
Project of Introducing High Efficient Refrigerator to a Frozen Food Processing Plant in Indonesia 21 tCO2/year
21 Projects 204.618 tCO2/year
Steps in the JCM
Submission of Proposed Methodology
Approval of Proposed Methodology
Developmentof PDD
Validation
Registration
Monitoring
Verification
Issuanceof credits
Project Participant / Each GovernmentJoint Committee
Joint Committee
Project Participant
Third Party Entities
Joint Committee
Project Participant
Third Party Entities
Joint Committee decides the amountEach Government issues the creditC
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*PDD: Project Design Document
• Simplicity, practicality and transparency
• No need to have additionality like CDM
• Net mitigation reductions
• Start as non-tradable credit type mechanism
JCM for SME’s financing projects, can we do it?
• Usually, the green investment is higher than business as usual investment.
• The industry must invest more to be a green industry, although they will get benefit from the investment.
• For some type of industries, particularly the SME’s, very difficult to finance green technology or energy efficient technology.
• Carbon finance like JCM can be used to reduce the risk of investment for the green project in SMÉ’s.
Business as usual
investment in “brown
technology”
JCM project investment in “low carbon technology”
JCM financial support
Project participant owned investment
Until now, we don’t have any scheme similar to CDM Program of Activities (PoA) that facilitate small enterprises to join easily, but some of our project participant were categorized as medium enterprises!
Financial scheme of JCM
Project Scheme by MOE
Japan
International consortiums
(which include Japanese entities)
Finance part of an investment cost: up to the half
Demonstration Scheme by METI
JapanFinance part of an investment cost: Based on negotiation
Different portion of investment sharing between Indonesia companies and Japan institution
International consortiums
(which include Japanese entities)
New Support Program Enabling “Leapfrog” Development (Fund/ADB) by MOE
MOEJ
JICA, other
Fund for expansion of low-carbon technologies
ADB Trust Fund
Supported by JICA, etc.
JCM Project
Advanced Low Carbon Technologies
ADB Project
• Waste to Energy plant• Renewable Energies• Water Supply and
Sewage Systems• Transportation
Financial assistance/financial investments for overseas and lending
Subsidy
Contribution
Finance
Finance
GHGEmission
Reduction
• Bekasi site: (PT. Adib Food Supplies, PT. Mayekawa Indonesia, and Mayekawa Manufacturing)
• Installed technology: Compressor (43 kW)and Intelligent Quick Freezer.
• By using Intelligent Quick Freezer, production capacity in Karawang site has increased from 2 tpd to 4 tpd.
• Karawang site: (PT. Adib Food Supplies, PT. Mayekawa Indonesia, and Mayekawa Manufacturing)
• Installed technology: Compressor (2x43 Kw)
• The chillers were used for the cooling room purposes.
• For Bekasi site 20% reduction of energy consumption is expected than the reference scenario.
JCM project example 1:Energy efficient refrigerants to cold chain industry
JCM project 2 example:Energy efficiency in convenient stores
• This project is the cooperation of PT. Alfa Midi Utama Indonesia and Lawson Japan.
• 12 stores of Lawson and Alfa Midi aroundJakarta, Tangerang and Depok have been already implemented.
• Expected GHG reduction: 33.1 tCO2/store/year.
• Technologies to be implemented:1. CO2 refrigerant chillers;2. LED lamps;3. Inverter-controlled AC; and4. In addition, photovoltaic power
generation sytem on the store’s rooftop will be implemented.
Walk-in CaseMulti-Deck Cases
Reach-in Freezer1.5kW OutputOutdoor Unit
(CO2 refrigerant)
7.3kW OutputOutdoor Unit
(CO2 refrigerant)
• PT Semen Indonesia Tbk (SMGR) began constructing the power plant by utilizing the exhaust gas (Waste Heat Recovery Power Generation / WHRPG) Tuban I - IV with a capacity of 30.4 MW, which utilizes waste heat produced by the 4 kilns inside the factory to generate steam for the power generator.
• By this project, PT. Semen Indonesia can increase their factory energy efficiency while reducing the GHG emissions, each year up to 122,000 ton CO2 is expected to be reduced. By using waste heat recovery power generation technology, PT. Semen Indonesia also can save up to 85% of its electricity bill.
• The project now is in its design and procurement of main equipment stage. This project is expected to finish on December 2016 (RKA).
JCM project example 3:The waste heat recovery power generation in cement industry
Some of the project participant responses after JCM project development
1. PT Adib Global Food Supplies can increase the frozen time of the fish until more than 10 times. About 30% of the energy saving was achieved for this project.
2. More industries come to us to follow PT. Adib steps in JCM.3. PT. Alfa Midi Utama investment cost was increased until 5 times
than the BaU investment, but by using JCM scheme, the pay back period of the investment can be raised to 4 years.
4. The convenient stores attract more shopper to come because of more comfort and sophisticated than the others.
5. The other cement industries in PT. Semen Indonesia Group will implement the similar projects by using their owned budget.
Indonesia JCM Secretariat
BUMN Building 18th floor, Jl. Medan Merdeka Selatan 13,
Jakarta
Website: www.jcmindonesia.com
Email: [email protected]
Thank you!
Terima kasih!