Developing JCM Project Keni Atika Indonesia JCM Secretariat - PowerPoint PPT Presentation

Developing JCM Project Keni Atika Indonesia JCM Secretariat

Presentation outline • Basic concept of JCM • Financing support from the Government of Japan • JCM project cycle

Basic Concept of JCM JCM is a G-to-G scheme and encourage private sector to promote and invest low carbon development projects in Indonesia • For doing that, JCM provides financing support by GOJ • (In return) JCM requests each project to record results of Green house gases (CO2) emission reductions (and transfer some results to GOJ. Results are shared with GOI as well) 3

FINANCING SUPPORT FROM THE GOVERNMENT OF JAPAN

Developing a JCM Project Apply JCM financing Develop programme consortium & develop (Joint methodology Find Venture, etc.) Indonesian Japanese entity submits partner application (in Japanese) Sample document of “Agreement on Develop International Consortium (Example)” business • Through workshop & Secretariat idea • Project Idea Note (PIN) • Secure finance other than JCM or • Find another financial source for the rest of initial cost (JCM financing programs will not cover all cost, e.g. JCM Model Project 5 covers less than half of the investment cost) Source: IGES, 2016

How we accommodate the involvement of private sectors to join us? Private Sectors from Japan Share information to private sectors Secretariat from Japan Side Submit project / study idea (PIN recommended) Private Sectors from Japan Convey to Convey to Indonesia Japan side side Private Sectors from Indonesia Submit project / study idea (PIN recommended) Secretariat from Indonesia Side Share information to private sectors Private Sectors from Indonesia

Types of JCM Financing by GOJ Support for feasibility study • Give subsidy to conduct study on potential JCM projects and survey their feasibility Financing support for implementation of project • Model project from MOE • Demonstration project from METI • Provide finance part of an investment / project cost • Recipients to deliver credits to Government of Japan and Indonesia Capacity building activities • i.e JICA / IGES / MOE / METI, etc organized workshops 7

Feasibility Study in JCM FS Participant Candidates MOE and METI provide 100% financial support apply for FS support scheme for feasibility studies METI/NEDO or use PIN (Project Idea Note) to submit application MOE Japan need further study approved not approved FS implementation (1 study or more) No support for (recommended) FS(*) Feasible Not feasible No implementation as JCM project Apply for subsidy or Not apply(*) entrustment(**) METI/NEDO or (*)except for FS MOE Japan reapplication not approved approved (**)PP candidate may apply without conducting JCM Project with subsidy or No subsidy or FS 8 entrustment Entrustment(*)

JCM Model Project (MoEJ) ※ Includes collaboration with The draft budget for projects Government of starting from FY 2016 is projects supported by JICA and Japan 6.7 billion JPY (approx. USD 56 other governmental-affiliated million) in total by FY2018 financial institute. Finance part of an Conduct MRV and expected to ※ Budget will deliver at least half of JCM investment cost be fixed after approval by the credits issued ( less than half ) Parliament International consortiums (which include Japanese entities)  Scope of the financing: facilities, equipment, vehicles, etc. which reduce CO2 from fossil fuel combustion as well as construction cost for installing those facilities, etc.  Eligible Projects : starting installation after the adoption of the financing and finishing installation within three years. 9 Source: Ministry of Environment Japan, 2016

JCM Forestry Model Project 《 Projects outline 》 【 Background 】 • Deforestation and forest International Finance part degradation in developing of the cost consortiums Government countries • 17 demonstration feasibility (which include of Japan studies from 2011 to 2014 Deliver JCM Japanese entities) credits issued ＊ 【 Expected outcome 】 • Participatory monitoring * At least half or ratio of financial support to project cost of JCM of illegal logging, disaster credits issued are expected to be delivered to the government of prevention, and forest Japan except the amount which is allocated to the partner country restoration based on its legislation. • Provision of alternative ※ These projects may be implemented in cooperation with other livelihoods organizations such as JICA ※ REDD+ (Reducing Emissions from Deforestation and Forest Degradation in developing countries; and the role of conservation, sustainable management of forests and enhancement of forest carbon stocks in developing countries ) Project budget and implementation term Purpose Up to 40 million JPY/year (fixed) Implement activities for REDD+ and use them for contributing to achieve Japan’s emission Eligible Companies reduction target through the JCM. Japanese corporation(the representative of international consortiums) 10 Source: Ministry of Environment Japan, 2016

ADB – Japan Fund for JCM Scheme To provide the financial incentives for the adoption of advanced low-carbon technologies which are superior in GHG emission reduction but expensive in Asian Development Bank (ADB)-financed projects. Purpose To develop ADB projects as the “Leapfrog” developments by the advanced technologies and to show the effectiveness of the JCM scheme by the acquisition of credits of the JCM. JCM Credits GHG Emission ADB Reduction MRV Additional costs with Contribution Grant JFJCM adoption of MOEJ advanced low-carbon (Trust Fund) technologies Loan/ Grant etc. OCR/ADF* Mitigation through Co- conventional financing technologies Loan/ (Selection from Other financial Grant etc. pipeline projects) institutions and funds 11 Project Source: Ministry of Environment Japan, 2016

JFJCM funding scheme Grant & interest subsidy General eligibility Sovereign/public sector Project co-financed with Maximum grant of $10 million or 10% of the an ADB or ADB- project cost, whichever is lower, or $5 million administered funds with if the project cost < $50 million proven advanced low- carbon technologies Non-sovereign-Project Owner Interest subsidy up to $10 million or 10% of Leads to a reduction of the project cost, whichever is lower environmental pollution and/or other social Non-sovereign - Local Financial Institution economic benefits Interest subsidy further reduces financing cost of host country financial institutions (banks, ESCOs, leasing companies) 12 Source: IGES, 2016

JCM Demonstration project (METIJ) Funded by Ministry of Economy, Trade & Industry Japan and implemented by New Energy and Industry Technology Development METI/NEDO Technology provider from Japan Project participant in Indonesia Funding provided up to more than 50% from the investment • Coverage of funding: Cost of the JCM Demonstration project necessary MRV e.g. cost of design, machinery, material, labor travel, etc. • Within certain period, the equipment will be owned by METI, subsequently it will be transferred to the participant • Establishment of Joint Venture is not mandatory

JCM PROJECT CYCLE: WHAT YOU NEED TO KNOW AFTER YOU RECEIVE THE JCM FINANCIAL SUPPORT

JCM Project Cycle Submission of Project Participant / Each Government Proposed Joint Committee Methodology Measurement Approval of Joint Committee Proposed Methodology Development Project Participant Can be conducted by the same TPE * of PDD Can be conducted simultaneously Third Party Entities Validation Reporting Registration Joint Committee Monitoring Project Participant Verification Verification Third Party Entities *PDD: Project Design Issuance Joint Committee decides the amount Document Each Government issues the credit of credits 15

Measuring emission reduction in JCM Indonesia domestic emission reduction Emission reduction credited by JCM JCM utilizes reference emission based calculation 1. In the JCM, emission reductions to be credited are defined as the difference between reference emissions and project emissions. 2. Reference emissions are calculated below business‐as‐usual ( BaU) emissions which represent plausible emissions in providing the same outputs or service level of the proposed JCM project in the host country. 3. JCM approach will ensure a net decrease and/or avoidance of GHG emissions. 4. The value of Reference Emissions in JCM depends on the methodology. Therefore, the value can be equal or different with Baseline Emission.

Methodology in JCM • JCM methodologies should cover these 3 elements: Emission reduction Eligibility criteria Monitoring method measurement method • The methodology is designed according to the type of applied technology. 1 methodology is applicable for many projects which utilize the same technology

SDIP and SDIR Sets out a plan of the JCM project to Sustainable Development contribute to sustainable development Implementation Plan (SDIP) based on ex-ante analysis Sets out the achievement of SDIP Sustainable Development implementation for a particular monitoring Implementation Report method (SDIR) 7 sustainable development items considered in JCM: Environmental Pollution control Safety and health Natural Environment Impact Assessment and Biodiversity Social Environment and Technology Economy Community Participation