The Joint Crediting Mechanism (JCM) Experiences in the ... · • PT Semen Indonesia Tbk (SMGR) began constructing the power plant by utilizing the exhaust gas (Waste Heat Recovery

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.

Visit our website at www.jcmindonesia.com

Indonesia JCM Secretariat

BUMN Building 18th floor, Jl. Medan Merdeka Selatan 13,

Jakarta

Website: www.jcmindonesia.com

Email: [email protected]

Thank you!

Terima kasih!