New Mechanism Feasibility Study 2011 – Final Report

New Mechanism Feasibility Study on REDD+ and Bio-Fuel Production and Utilisation in Gorontalo Province, Indonesia By Kanematsu Corporation, Tokyo FS Partner(s)

Location of Project Activity Category of Project Activity Description of Project/Activity

Reference Scenario and Project/Activity Boundary

Monitoring Methods and Plan

GHG Emissions and Reductions

Taiju Research Inc. Indonesia-Japan Friendship Association Mitsubishi Research Institute ( REDD+ and MRV ) JIRCAS ( Safeguard ) Kokusai Kogyo Co., Ltd. ( Remote Sensing and Ground Truthing ) Boalemo district, Gorontalo state, Indonesia REDD+ Deforestation drivers and countermeasures; (1) Corn farmers living near the forest frontier slash & burn the forest due to low yield - Capacity building for high productivity agriculture, such as agro-forestry ( coconuts, cacao, etc. ), so that the famers may make more profit without “slash and burn” the forest. (2) Kerosene oil supply is not sufficient. People cut the trees because they cannot afford to buy Kerosene - Crude Bio-fuel program covers the shortage of Kerosene. Project Developer will buy Jatropha seeds etc. from farmers at rational price, and refines crude oil, then, distributes to farmers Indonesia-Japan Friendship Association will coordinate with local Gov., farmers, communities, and the developer. Project Area and Reference Area are selected according to forest map and village border, discussing closely with people of five villages. Project Area : 20,230ha, Reference Area : 155,020ha Project area is still covered by forest, however, the area is under the risk of deforestation. Reference Scenario: Forest area size of Project Area decreases at ▼0.68%/year, and its carbon density declines. Project Scenario: Forest area will continue to be the same size with 2010, and the carbon density will rise. KKC supervises the local government staffs and GIS consultant for the ground truthing, which verifies the satellite imagery analysis. Technology transfer of remote sensing also comes to the local Government. Local people participate the data sampling monitoring to obtain some incentives from the activity, which also contribute to lowering costs and improving the project feasibility. REDD+ Project : Reduction of 19,647 – 61,429 t-CO2e/year by several activities Bio-fuel alternative to Kerosene : 237 t-CO2e/year

＜1＞

MRV System for GHG Reductions

Analysis of Environmental, Socioeconomic and other Impacts (including Securement of Environmental Integrity)

Financial Planning

Introduction of Japanese Technology

“Co-benefits” (i.e. Improvement of Local Environmental Problems) Contribution to Sustainable Development in Host Country

We develop reliable but more simplified methodologies; - Reasonable size of reference area for setting the baseline Application of “ default regional deforestation rate” should be considered. - Simple carbon stock sampling (ground truthing) for monitoring - Setting “standard sampling rates” should be implemented. We provide incentives for local people to participate - Data sampling by local people “Lowering costs and improving environmental awareness” could be expected. - Rewards to forest protection activities (patrol, fire controls etc.) “Monitoring people’s activities & efforts” and “rewarding their efforts” could also contribute to improving the project feasibility. Recovery of vegetation and ecosystem functions will be expected. Sulawesi Island is well known for its abundance in endemic species of animals and plants, and the national park there is endeavoring to preserve its biodiversity. There is a high risk of the ecosystem being damaged and collapsed, so it will be meaningful to perform the monitoring of the situation of not only forests but also its ecosystem Carbon credit revenue will be used effectively as incentive for the REDD+ activities, assuming that credit price will be US$ 12-21/tCO2e during 2013-2022. The credit income US$ 737-1,290k/year shall cover the cost of activities such as remote sensing, capacity building, refinement of crude oil, or forest protection activities etc. As the satellite remote sensing is very important for the monitoring, so we promote introduction of ALOS-2 radar sensor mounted on a satellite, which is scheduled to be launched in fiscal 2013, and is considered to be suitable for REDD+ projects, the existence of cloud always gives influence on the quality of satellite images. Thus, it is important to conduct satellite monitoring that uses SAR images. It is useful for REDD+ project to evaluate the impacts, by monitoring the number of living species, sizes, distribution etc. This kind of measurements will bring co-benefits to preservation of biodiversity and mitigation of climate change. Indonesian government is promoting a sustainable forest management and plantation in local communities. Gorontalo government and its communities are also promoting restoration of vegetation in forest. Thus, our project, we believe, rightly meets the policy of the governments, and will lead to the sustainable development.

＜2＞

1．Organizational structure of the entities to implement the study: • Taiju Research Institute, Inc.: Taiju is to make arrangements for meetings with the central government of Indonesia and the government of the Province of Gorontalo and also conduct assessment of the commercialization of biofuel business and study the feasibility of technology transfer. • Japan International Research Center for Agricultural Sciences (JIRCAS): JIRCAS is to establish a network with the local community by staying in the subject local area for a long period of time, conduct studies related to biofuel business and evaluate various methods for technology transfer and capacity building. • Mitsubishi Research Institute, Inc. (MRI): MRI is to conduct studies on REDD+ methodologies, MRV methods, and various issues relative to preparation of a business plan reflecting the desires/ intentions of local people, in addition to the study of policies of the Indonesian government related to climate change. • Kokusai Kogyo Group (KKG): KKG is to prepare maps required for the preparation of a business plan, conduct remote sensing analyses, perform studies on the ground surface, and analyze data required for quantitative assessment of the amount of achievable CO2 emission reduction. • Kanematsu Trading Indonesia (KTI): This is a subsidiary company in Indonesia of Kanematsu Corporation. KTI is to conduct negotiations with its counterparts in Indonesia and make arrangements for investigations on the subject local area in general.

＜3＞

Ministry of Agriculture and Forestry, Indonesia

林業省

Kanematsu Corporation

Japan International Research Center 国際農林水産業 for Agricultural Sciences

Taiju大樹総研 Research Institute （外注先）

Mitsubishi Research Institute

）

Indonesia-Japan Friendship Association (Mr.Gobel)

Kokusai Kogyo

（ Co.,Ltd. 国際航業

Gorontalo Province ゴロンタロ州

Kanematsu Kanematsu Trading

兼松トレーディング Trading Indonesia Indonesia インドネシア

Governor Forestry Dept. Community 農林局

住民

Fig. 1 Organizational structure to implement the study

2．Outline of our contemplated Project/ activities: (1)

Contents of our contemplated Project/ activities

Our contemplated business project (“our Project”) and activities aim at preserving forest areas by controlling (holding back) the expansion of farmland for corn and other crops in the Project site(s) of 20,230 hectars in the western part of Boalemo Regency in Gorantalo Province on Sulawesi Island, Indonesia. This Project is composed of a REDD+ project (business) aiming at the establishment of a bilateral offset credit mechanism to obtain revenues from the sale of credits and a biofuel business (as a safeguard for farmers) aiming to make up the opportunity cost in controlling the expansion of farmland. In the case of the REDD-plus business, its counterparts are DNPI (Indonesian National Council on Climate Change) and Ministry of Forestry of the central government of Indonesia, Agency of Forestry of Gorontalo Province and Office of Forestry of Boalemo Regency, and in the case of the biofuel business, its counterpart is farmers inhabiting in our contemplated Project site in the western part of Boalemo Regency in Gorontalo Province. ＜4＞

In our Project site, deforestation owing to the swidden/ shifting agriculture aiming at the increase in corn production in particular is quite obvious, and in the reference area, a deforestation by 0.68% per year (base year = 2000) or by 0.83 % (base year = 1990) was confirmed based on the analysis of LANDSAT images taken in 1991, 2000 and 2010. Thus, in order to control the expansion of farmland in our Project site in conjunction with local residents, we undertake activities to increase productivity by adding higher value to agricultural products, increase efficiency through transfers of agricultural technologies from Japan, and provide local residents with economic incentives. In respect of the economic incentives, we assume to use for that purpose a part of the revenue gained from the sale of bilateral offset credits realized through the system of measurement, reporting and verification (MRV) of the result of forest preservation. We also incorporated in our possible activities (as a safeguard for farmers) a business in which we have local residents plant crops to be utilized as fuel such as jatropha and coco-nut palm trees and we buy extracted vegetable oil as an alternative fuel to kerosene which local residents use for cocking. More in concrete, we sell fuel crop seeds which farmers cultivated to vegetable oil producers, which in turn extract oil from purchased seeds and sell such oil to farmers as an alternative fuel to kerosene. If we are able to realize the preservation of forest as we contemplate, it is expected that we attain reductions of CO2 emissions by 61,429t-CO2e from the REDD+ business and of 237t-CO2e from the biofuel business. (2) Situation in host countries: At present, there are a number of REDD+ projects and associated businesses studied and implemented in Indonesia. The main reasons for that are that the deforestation in Indonesia is obvious, and that the control of CO2 emissions is considered to be possible if an appropriate policy framework is correctly introduced to the land use management of this country, despite the fact that the amount of emissions from peat land is significant. In the reduction potential by the year 2030, measures towards peat land and land use, land-use change and forestry (LULUCF) account for 1.8 billion tCO2e or 80 percent of the entire potential of 2.3 billion tCO2e, and we can see that the REDD+ business is an important element of the countermeasures against climate change.

＜5＞

Fig. 2

Places where REDD+ pilot projects are implemented.

From the standpoint of biofuel business, although Indonesia is an oil producing country, it has become an oil importing country since 2004. In order to reduce the degree of dependence on imported oil, the Indonesian government issued “Presidential Decree No. 5 of 2006 on the National Energy Policy” in 2006, and set out their energy mix outlook of the primary energy sources in 2025. In 2007, the government enacted “Law No. 30 of 2007 concerning Energy”, which is a law to administer energy sources in a comprehensive manner. Furthermore in 2009, “General Administration Office for New, Renewable Energy Sources and Energy Conservation” was established in the Ministry of Energy and Mineral Resources in order to promote development of new energy sources as well as energy conservation. This Office established a vision called “Vision 25/25”, which sets a target ratio of 25 percent in 2025 for the new, renewable energy sources in the entire primary energy sources. From this fact, it is understood that the introduction of new, renewable energy sources is considered to be quite important in Indonesia. (3)

Appropriateness of REDD+ business as a new mechanism:

In preparation for our contemplated Project, we intend to proceed with our activities by closely watching and following the policy of the central government on REDD+ projects, and we have confirmed through field surveys that the local government in particular has a high degree of interest in the implementation of our Project. We believe that we will be able to establish an effective implementation plan with a high degree of possibility of realization of our Project, which fully meets the policies of the Indonesian central as well as local governments, by continuing collecting and analyzing concrete information towards the future. In the meantime, the status of the deforestation in our Project area is quite serious, and the government of Gorontalo Province and the government of Boalemo Regency are much concerned that the possibility of the forests being further reduced is quite high. In our Project, we plan to implement such measures as transfers of agricultural technologies and skills, and assistance towards ＜6＞

implementing forest preservation measures (enhancement of capability), and we believe that if we can mitigate the speed of deforestation through these measures, we will be able to demonstrate that such measures are additional and quite effective. In addition, we believe that our Project has a high possibility of realization from the following three reasons and that it is useful to aim at proceeding with a pilot project based on a partnership between the public sector and the private sector. (i) There is a good chance of our getting a strong support from influential people in Gorontalo Province. (ii) We are already undertaking plantation of jatropha and manufacturing biofuel on an experimental basis in Gorontalo Province. (iii) In Sulawesi Island where Gorontalo Province is located, the UN-REDD project and pilot projects by NGO have already been implemented and our Project has a similarity to them and there also exists a possibility of collaboration with them. And, if we can link our Project with the government-run “people’s forest plantation” (HTR) project which promotes plantation by local residents or have our Project relate to the assistance of policy-implementation of the “ecosystem restoration” (RE) project which allows development of forests as farmland but requests certain environmental consideration activities by the concession holders at the same time, we believe that our Project will become an efficient and practicable project. (4)

Measures to promulgate our Project/ activities:

We expect that our Project/ activities can be promulgated to other villages and regencies where a similar type of plantation and social economy as those in Boalemo Regency, Gorontalo Province are confirmed, by applying the same methodology beyond the original boundaries. Accordingly, we desire to promulgate our Project/ activities by applying the results of our feasibility study conducted in Boalemo Regency to other villages and regencies within Gorontalo Province, and by establishing a reference level for the entire Gorontalo Province and contributing to the studies of REDD+ projects. Furthermore, the biofuel business contrived in this feasibility study (F/S) is expected to improve the profitability of farmland in Gorontalo Province and as a result serve as a safeguard for farmers by contributing to the improvement of the standard of living of local farmers. By expanding our scope of work to the northern and central parts of Sulawesi Island including Gorontalo Province and contributing to the sustainable development of the Indonesian-government-run REDD+ project, we believe that we can further spread our Project/ activities drawn up by this F/S.

＜7＞

3.

Contents of our study:

(1)

Focuses of our study:

A.

REDD+ project

The following three points are considered as the main focuses of our study on a REDD+ project. (i) Comprehension of the actual situation of deforestation and forest degradation: In order to correctly comprehend the actual situation of deforestation and forest degradation in our target area, it is necessary to collect and analyze land cover maps, concession-related information, and socio-economic data. (ii) Conformity with opinions and implementing policies of the government: As Indonesia is currently in the process of studying various options and approaches concerning REDD+ projects, it is important to pay attention to the intentions/desires of the central and local governments. Thus, we intend to collect information on the organizational intentions of related governmental agencies by establishing cooperative relations with the Ministry of Forestry and DNPI of the central government. (iii) Understanding and cooperation by local residents: In order to implement our Project, it is indispensable to gain cooperation from local residents. Thus, we study the way of establishing the most suitable organizational structure by which we can promote local residents to actively participate in our Project. B.

Biofuel business

In REDD+ activities, not only the reduction of CO2 emissions but also such matters as the living of local residents, forest governance and biodiversity (, which are all regarded as “safeguards”) are considered important, and it has been determined in COP that we should take account of matters related to these safeguards. Accordingly, our biofuel business undertakes not only such activities aiming at reducing emissions by alternative fuels to fossil fuels but also aims to study whether we can proceed with our business as a safeguard for the REDD+ project. In this study, we conducted a survey of the actual situation of the living of residents, and their activities related to agriculture, fuel use and forests among others, in the region covered by this study, by utilizing the semi-structural interview method and PRA (participatory rural appraisal) investigation techniques. With respect to the PRA investigation in particular, we conducted analysis of problems in two contrasting villages of Rumbia Village and Botumoito Village in our Project site by using a seasonal calendar, resources maps, and the ＜8＞

ranked voting method. We also made a study of suitable fuel crops in the case of our producing biofuel in the subject area. Concrete study subjects are as follows: (i) Study of general features of our Project site: It is necessary to conduct a survey of the actual status of HTR implementation, situation of deforestation, type and scope of agriculture, and problems relevant communities are facing. (ii) Study of Bio-fuel crops: It is also necessary to investigate the actual situation of fuel use and feasibility of fuel crops so as to deepen our knowledge of fuel crops. (2)

Contents of our study:

A.

REDD+ project

(i) Field survey: We conducted our field surveys four times by visiting and making interviews with people concerned within the government and private companies as well as with local residents. We performed analyses utilizing various data (forest resources distribution map, information on forest preservation measures, statistical information, etc.) which we obtained during our field surveys. We also organized workshops on the spot (at Gorontalo University) when we conducted our fourth field survey, and explained the purpose and outline of our business to the participants. We received advice from local stakeholders that the areas designated for the people’s forest plantation (HTR) project and the ecosystem restoration (RE) project will be appropriate as our Project site. (ii) Collection and analysis of related information, including a study of literature: (a) Study of site selection: We reviewed methodologies for site selection as well as selection criteria, and we narrowed down candidate sites by analyzing data from satellite images. (b) Collection of information relative to the government’s REDD+ strategy: We collected the most up-to date information on the direction of the governmental policies and we also studied the situation surrounding the REDD+ strategy by contacting the Japanese Embassy, the Ministry of Forestry of the Indonesian central government and the UN-REDD Programme Office. (c) Study of methodologies: In order to evaluate the effects on deforestation of controlling the expansion of farmland quantitatively, we collected information on a number of methodologies ＜9＞

(such as VCS, RaCSA, etc.) and studied their individual adaptability to our Project. (d) Study concerning the safeguard: We collected information on rural development and plantation projects in Indonesia, in addition to REDD+ projects, and performed a study on the benefit to local residents as well as the mechanism of each project. (e) Analysis of information on the subject area: We collected statistical information concerning Gorontalo Province and Boalemo Regency, and made studies concerning the local residents and social situation in these areas. B.

Biofuel program

Based on the focuses of our study set out in Item A above, we summarized the results of our study as follows: (i) Review of general features of our Project site: (a) Actual status of the implementation of the HTR project: Among the villages about which we conducted a survey, it was only Botumoito Village in which the HTR project has been implemented. We found, however, a number of places where trees had been cut down apparently before the felling season and that such land had been converted to farmland, and thus, it was doubtful whether the project had been proceeded with in accordance with the original plan. Although it is permitted to cultivate agricultural products in areas subject to the HTR project, we realized that the line between plantation and cultivation of agricultural products has not been clearly drawn. (b) Situation of deforestation: In relation to deforestation, we found here and there during our field surveys that quite a lot of forest areas have actually been converted to farmland, but local administrative agency as well as local residents tend to understand that the lands that do not belong to the designated forest region are not part of the forest and thus, they are not subject to forest preservation and that it is not illegal to use such lands for agricultural purposes. Because the division (classification) and the border between forest and farmland are not clearly defined and because horizontal collaboration among different sections in the local government as well as communications between the local government and local residents have not been conducted sufficiently, both the local administrative body and the local community seem to have rather vague consciousness about deforestation. (c) Agriculture: Among cultivated crops, corn and red pepper are typical examples of single-year crops while coco-nut palm trees and cacao are typical examples of multi-year crops. ＜10＞

As income-gaining activities besides agriculture, we can name quite a variety of jobs including processing of black sugar, agricultural labor, honey collection, rattan collection, street vendors, peeling of sugar palm, and transport of lumber. The planting (sowing) season in Indonesia is between May and July (called “Taua”) and the harvesting season is between October and December (called “Hulita”), and the periods other than Taua and Hulita are the farmers’ slack seasons in which farmers are involved in other living activities than agriculture. If fuel crops are to be cultivated in the Project site, it is efficient for farmers to utilize the slack seasons for that purpose. (d) Problems communities are facing: In Rumbia Village, reduced productively of agricultural products, flooding, shortage of kerosene, and poverty (lack of income sources) are ranked high in their facing problems. Since general problems Rumbia Village is facing are deeply linked to deforestation and fuel-related matters, introduction of our Project in this village is considered to be relatively easy. In the meantime, high-ranked problems Botumoito Village is facing are infrastructure (roads) and high-level education, which accounted for about a half of the entire votes of the local residents. Based on such a fact, we assume that the residents of Botumoito Village have a weaker consciousness about deforestation compared to the residents of Rumbia Village. In respect of the communities in which consciousness about deforestation and motivation to cope with the problem are low, it is necessary to give incentives to increase their consciousness and stimulate the motivation of the residents, by incorporating in our Project certain components leading to the improvement of their income level. (ii) Study of fuel crops: (a) Actual situation of fuel use by agricultural villages: In Gorontalo Province, fossil fuels including gasoline are chronically in short supply. The main fuels used by rural residents are firewood and kerosene. In Boalemo Regency, residents are using a lot of firewood because they can buy kerosene only once a week. It is said that residents collect the majority of their firewood not by cutting it in forests away from their homes but rather by picking it up from nearby kebun (farmland). It is common that each home is possessed of both a small kitchen stove for kerosene and a cooking range for firewood. The price of kerosene has been kept low by the subsidy system of the government. By conducting interviews, we found that many people are looking for twice the amount of fuels they are presently getting. They also mentioned that should there exist alternative fuels to kerosene, they were glad to use them. (b) Usability of fuel crops: With respect to jatropha, kemiri, coco-nuts and sago palm which are believed to be usable to produce bio-Diesel and bio-ethanol, we investigated on the spot the possibility of making them as fuel crops, mainly through conducting interviews. As it is difficult to produce bio-Diesel on the subject area due to the difficulty in acquiring necessary materials and equipment and also because the market that ＜11＞

consumes produced BDF is quite far away from the subject area, we found that the most practical way is to produce vegetable oil to replace kerosene which is lacking in the subject area, rather than producing BDF. As the fuel crops that can be used as the raw materials to make vegetable oil, we can expect “coco-nut palm trees”, which exist abundantly on our Project site and “jatropha”, which does not compete with food while its oil and fat is said to resemble kerosene. 4. Results of the study concerning the possible realization of our Project/ activities (1) Effects of implementing our Project/ activities on CO2 emission reduction A.

REDD+ project

In the REDD+ projects, it is important to analyze elements that could cause a threat of deforestation in our Project area and study effective means to eliminate and/or alleviate such a threat. The following are considered to be the main causes of deforestation and forest degradation. Table 1 Cause (Reason)

Illegal Felling

Swidden Agriculture and Spread of Fire

Expansion of Farmland and Increase in Demand for Felling

Main causes (reasons) for deforestation and forest degradation and our proposed countermeasures Outline

Lumber has been cut down (for the purpose of selling) in preserved and protected forest areas illegally.

Swidden agriculture has been conducted to cultivate farmland and to maintain cultivated land. Lumber has been cut down for purposes of increasing agricultural products.

Proposed Countermeasures By Local Residents By Private Companies

By Local and Central Governments - Introduction and enhancement of policies (Countermeasures against illegal felling).

Enhancement of observation and control of illegal felling. - Provision of economic incentives. - Implementation of environmental education - Enhancement of fire prevention measures in forest areas.

- Enhancement of observation and control of illegal felling.

- Enhancement of fire prevention measures in forest areas.

- Introduction and enhancement of policies (countermeasures against forest fire).

Increase in productivity by adding higher value to agricultural products. - Realization of higher efficiency through transfer of agricultural technologies. - Provision of economic incentives.

Possession of concessions (or cooperation with concession-holding companies). Putting into practice of sustainable forest management.

- Introduction and enhancement of policies (issuance and operation of concessions, zoning, etc.) -People’s forest plantation (HTR) project -Ecosystem restoration (RE) project

By implementing these countermeasures, we can expect emission reduction effects associated with the control of deforestation. Furthermore, if we can improve the performance of policies/measures, we can not only get higher effects ＜12＞

of deforestation control but also improve capacity/ capability of responsible staff members in the government. We believe that this kind of supportive approach will lead to a long-term improvement of operational capabilities. B.

Biofuel program

In the biofuel business contemplated in our Project, there are a variety of GHG reduction elements. From each of these elements, we can expect the following GHG reduction effects.

Table 2

1 2 3 4 5

Project elements by which GHG reduction can be expected.

Element by which GHG reduction can be expected Sustainable land management through cultivation of fuel crops. Use of vegetable oil as an alternative to kerosene. Use of vegetable oil as an alternative to kerosene. Production of compost from oil extraction residues and increase in productivity of farmland. Production of compost from oil extraction residues.

Expected GHG reduction effects CO2 absorption by cultivation of fuel crops. CO2 reduction from the use of alternative fuel to kerosene. CO2 reduction associated with transport of kerosene. Prevention of increase in CO2 emission due to reforestation resulting from farmland expansion. GHG reduction as a result of use of chemical fertilizer.

(2)

Establishment of reference scenario and boundaries:

A.

REDD+ project

Reference scenario is established based on the assumption that no countermeasures (such as enhancement of controlling illegal felling, environmental education, addition of higher value to agricultural products, transfer of agricultural technologies, etc.) to control the deforestation in our Project site are taken and that the existing trend of deforestation and forest degradation continues. In establishing the reference scenario, we investigate and combine such factors as (i) deforestation rate of the relevant areas in the past, (ii) current situation of the land cover, (iii) situation of land use and (iv) future land use plan, and we assume, as our basic way of thinking, that the trend of the past deforestation trend should continue. We summarize the features of each data as follows:

＜13＞

Table 3 Type of data (i) Deforestation rate of the relevant areas in the past (ii) Current situation of the land cover (iii) Situation of land use

(iv) Future land use plan

Elements that need to be considered in establishing the reference scenario. Outline We estimate the deforestation rate based on the analytical results of satellite images, the results of past analyses, etc, and use them as the basic data for our reference scenario. We differentiate forest areas from non-forest areas based on the data of the present situation of land cover and use the result of the study as the basic data for further detailed analyses. We investigate and comprehend the current classification of land (such as preserved forest; protected forest; normal, restricted or converted production forest) as well as the present situation of their use, and utilize the results of the study in establishing our reference scenario. We study future forest use plans (issuance of licenses) such as HTR and RE projects and use the data as reference to make a more accurate estimate of the future deforestation rate.

We selected the following four (4) candidate sites in Boalemo Regency for our Project and analyzed them. Table 4 Candidate site

Candidate sites for our Project and the outline of each site Area

Classification of the land

Outline of the site

Option 1

Central part of the Regency

Option 2

Southern part of the Regency

People’s plantation (HTR) forest, ecosystem restoration (RE) forest, etc. Ecosystem restoration (RE) forest, etc.

Option 3

Eastern part of the Regency

Limited forest, etc.

production

Option 4

Northern part of the Regency

Converted forest, etc.

production

This site is close to suburban areas. There are small-scale plantations here and there. There are 3~4 small villages of a size of 100 houses per village. This site is close to suburban areas. There are large-scale plantations on the flat side while afforestation is being implemented on the hill side. There are small villages along the road. There exist many swiddens, bare land, and grass land. There are few plantations and villages. This is a low land near a river and a lot of lumber is cut down in forests. Developed land is being used as farmland.

In determining our Project sites (boundaries), we also considered the following criteria. ・We have the boundaries of our Project site(s) conform to the administrative boundaries to the extent possible. ・We select our Project sites preferably out of ecosystem restoration (RE) forests and people’s plantation (HTR) forests.

＜14＞

As a result, we selected five (5) villages (Ayuhulalo, Botumoito, Hutamonu, Dulangeya and Rumbia）located around Botumoito Village in Boalemo Regency as our Project site(s).

Site

Fig. 3 B.

Land use map in Boalemo Regency

Biofuel program

The baseline of this business is the amount of kerosene used in our Project site, as it is possible to reduce the amount of CO2 emission by replacing kerosene used by local residents with vegetable oil. In addition, since kerosene is being transported from Gorontalo, we believe that the reduction of the amount of fossil fuel used for transportation can also contribute to CO2 emission reduction. Thus, the amount of fossil fuel used for transportation can also be used as a baseline, but we did not take this element into account in our study of this time because we were not able to collect sufficient information on the transport. The amount of kerosene distributed to the subject 5 villages per year amounts to 145,600 litters, and this figure is used as the baseline for calculating the amount of CO2 emission. (3)

Monitoring method and plan:

A.

REDD+ project

In our monitoring plan, we use successor satellites of LANDSAT and ALOS. A successor satellite of LANDSAT equipped with the same spatial resolution and observation wave-length range as the conventional LANDSAT is planned to be launched. Continuity of data is important for a long-term observation, and the range of observation by LANDSAT is most suitable even in the event that we are to decide on deploying our Project on the provincial and national levels in the future. Meanwhile, it is difficult to avoid the possibility of the situation occurring where observation is interrupted by cloud in such tropical rainforest regions as Indonesia. For that reason, we also use SAR data in parallel, which is not affected ＜15＞

by the cloud. With respect to the L-band SAR data in particular, there are many cases where the existence of correlation between backward scattering coefficient and wood volume is demonstrated. In Japan, ALOS-2, which is a successor satellite of ALOS/PALSAR (which is L-band SAR) is scheduled to be launched in fiscal 2013, and the monitoring using data from this satellite is thought to be useful. In order to estimate the amount of carbon, it is necessary to conduct a carbon stock (inventory) study (every-tree-measurement) by way of a field survey, and the number of sample plots for this study was minimal. In order to improve the accuracy of the monitoring, it is necessary to increase the number of sample plots by giving instructions about the survey method to Office of Forestry of Boalemo Regency. If we conduct a survey of 10 plots for each of the 12 zones in total (4 forest zones times 3 forest stratifications), we need to perform 120 surveys in total. It is desirable to conduct the every-tree-measurement every 3 to 5 years in light of the growing speed of forests, and to conduct the monitoring by way of satellite image analysis every year. B.

Biofuel program

The main purpose of the biofuel business is to enhance the effectiveness of controlling the expansion of farmland, by efficiently distributing incentives to poor farmers who are the main player to promote our REDD+ project. Thus, the business is not to aim at gaining BOCM credits from replacing kerosene with biofuel. However, since this business necessarily gives not a little influence on the income and expenses of poor farmers, and is consequently an important business that directly relates to the sustainability of our REDD+ project, we believe it important to utilize the results of this business in our activity plans for the succeeding years, by monitoring the use record and cultivation areas of the land where fuel crops were grown as well as the harvested amount of fuel seeds and the amount of refined crude oil. In concrete, we plan to collect data on the land use through leaders of farmers’ groups, while private companies that are engaged in purchasing will monitor the harvested as well as refined amount of biofuel. (4)

Greenhouse gas emissions and emission reductions:

In our Project, we aim to quantitatively assess the reduction of GHG emissions associated with the control (holding-back) of deforestation and forest degradation, and issue credits in proportion to the reduced amount of GHG emissions. We are going to eventually establish a specific methodology for assessment, by referring to VCS methodologies and the like. Generally speaking, as shown in the Table below, the flow of analysis related to the calculation of emission reductions moves from (i) the establishment of the Project site, to (ii) the establishment of a reference scenario, (iii) the review of business implementation scenario, (iii) the implementation of monitoring and finally to (v) the calculation of emission reductions. ＜16＞

Table 5 (i) (ii) (iii) (iv) (v)

Calculation flow of the amount of reduced emissions

Establishment of the project site Establishment of a reference scenario Review of a business implementation scenario Implementation of monitoring Calculation of emission reductions

The basic unit used for the estimate of carbon stock was established, taking into account the result of forest stratification and every-tree-measurement survey for each forest zone. With respect to the reference area, as the area of our Project site is 20,196 hectars, it is necessary to make the area of the reference site established by the VCS methodology (VMD007) to be more than about 147,000 hectars. Since the dimension of the western part of Boalemo Regency alone is not sufficient to meet the criteria, we added the entire area of Wonosari County and HP (ordinary production forest) in the western side, and established the reference site of our Project at 155,018 hectars. 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000

プロジェクトサイト

4,000,000

リファレンスサイト

3,000,000 2,000,000 1,000,000 0 1991年

2000年

2010年

Fig. 2 (left-hand side) Project site (circled by a blue line) and reference site (circled by a black line) (right-hand side) Change in carbon stock (unit: tC/ha) We further assessed the baseline emissions as well as Project emissions, based on the result of analysis of decrease in deforestation. As a result, we found that the expected emission reduction from our Project will amount to 845,152 [tCO2] in total over the coming 20 years (or 42,258 [tCO2] per year on the average). Table 6

Baseline emissions at our Project site, Project emissions, and expected emission reductions (In 20 years from the start of the Project)

Emission/reduction

Total CO2 emissions ＜17＞

CO2 emissions per year

Baseline emissions Emissions from the Project Expected reductions

389,375 [tCO2] -835,646 [tCO2] 1,228,580 [tCO2]

(average) 19,469 [tCO2] -41,782 [tCO2] 61,429 [tCO2]

(5) Measurement, reporting and verification (MRV) method to determine the effect of emission reduction: We should decide upon an MRV method for our Project so that the method can be used under the new mechanism scheme, by referring to the existing scheme and specifications. In concrete, we examine necessary items to take into account, by referring to VCS methodologies and ISO specifications that are widely acknowledged in the field of REDD+. In deciding upon the most suitable MRV, we should make our examination as versatile as possible, including the examination of costs and procedures, and taking its practicability sufficiently into consideration. A.

Measurement

The effect of emission reduction is calculated based on the idea demonstrated in Fig. 5 below.

Fig. 3

Calculation of the amount of emission reduction

Source:JICA “REDD-plus” http://www.jica.go.jp/publication/pamph/pdf/redd.pdf

The amount of GHG emissions from our REDD+ project is calculated based on the amount of carbon stock estimated from the remote sensing data, while the amount of GHG emissions from biofuel business is calculated based on the amount of distributed kerosene in our Project site. In performing the measurement based on remote sensing, it is necessary to take into account that you should use the same analytical method (classification, etc.) and data (i.e. LANDSAT data in the case of our Project,) throughout the measuring period so as to keep consistency. Regarding the accuracy, it is worthy to increase the number of basic units to improve the accuracy and also add data from ＜18＞

field surveys, while maintaining the high accuracy about the dimension of forest areas and forest stratification by using as clean satellite images as possible with little cloud and noise. B.

Reporting

Based on the understanding (premise) that permits for implementation of our Project need to be obtained from regulators (namely from the Japanese government and the Indonesian government), Project operator assumes that submission of or preparation for certain documents is required, by referring to the existing regulatory systems (J-VER syste, VCS, UN CDM, etc.) ＜Documents assumed to be submitted＞ ・Explanatory document on the Project outline: Materials explaining the outline at the outset of the Project. ・Project plan: Basic material required for the registration of the Project. ・Appropriateness-validation report: This report is used for the registration of the Project, after validating the appropriateness of the Project plan ・Monitoring report: This report is used as the basic material for credit issuance after verification by a third verifier. ・Verification report: This is a report by a third party about the result of verification. C.

Verification

We examined procedures and other items required for validation of appropriateness and verification of emission reduction, by referring to ISO 14064-3:2006: “Greenhouse gases -- Part 3: Specification with guidance for the validation and verification of greenhouse gas assertions”, which is globally acknowledged as a means of reporting calculated GHG emissions. ISO 14064-3:2006 is a “specification/ guidance for validation of appropriateness and verification of accretions with respect to greenhouse gases”, and it describes implementation items required in validating appropriateness of and verifying the results of quantitative assessment of greenhouse gas emissions, and stipulates applicable scope, principles, plans and items required for evaluation procedures. (6)

Ensuring of environmental adequacy

As the environmentally favorable effects expected from our Project, we can name such things as maintenance and recovery of vegetation and ecosystem’s functions and services. More specifically, we can expect such functions as aquifer recharge, prevention of earth and sand inflow, recovery of vegetation and preservation of habitats of rare species. Sulawesi Island where our Project site is located is well known for its abundance in endemic species of animals and plants, and the national park there is endeavoring to preserve its biodiversity. In the meantime, local residents do not seem to correctly recognize the importance of biodiversity, ＜19＞

and thus, there is a high risk of the ecosystem being damaged and collapsed. As means of preventing that from happening, we can to the opportunity of conducting the monitoring of the situation of not only wood/ forests but also its ecosystem simultaneously, and also to the possibility of collaboration with the existing biodiversity preservation activities. On the other hand, as unfavorable effects from our Project, we can think of degradation of the natural environment of surrounding areas and decrease in natural resources. As means of preventing those from happening, it is useful to gain consensus from local residents and to provide them with adequate technological transfer and education, in light of their economic and employment situation. Furthermore, we think it necessary to conduct environmental studies on surrounding areas as well, in addition to our Project site. (7)

Other indirect effects:

As other indirect effects, we can think of competition with existing economic activities of local residents, non-conformity of new agricultural technologies and knowledge with the actual situation, and cultural and religious conflicts with the community. As an example, we can name possible conflicts with mining concessions in forest areas. In order to prevent such things from happening, it is necessary to investigate various aspects of our Project site widely, such as the economic situation, land right situation, religious visions of local residents and so forth, and get consensus/ understanding from the local residents. (8)

Comments from stakeholders

Our REDD+ project is a project to obtain credits by preserving forests and/or planting trees, and because our Project site is vast, it is indispensable to get cooperation from local residents who are running day-to-day life there. Thus, we held workshops at two quite contrasting villages within our Project site and obtained comments from local residents on the feasibility of implementing a project of replacing kerosene with vegetable oil as a safeguard. Both villages were in favor of the idea and they wanted to test its workability, but at the same time, there were voices expressing concerns about the (non-)existence of market, main operator of oil extraction and sales, final owner of fuel crops, initial investment and management of the system. We promised with them that we will examine each of their concerns in detail as the issues to be solved within our Project. (9)

Implementing organization of the Project/ activities

Under the assumption that credits are to be distributed among the central government, the local government and the Project operator, we drew up an implementing structure of our Project as follows: Table 7

Implementing Structure of our Project

REDD+business ＜20＞

Indonesian government

central

Boalemo Regency, Gorontalo Province

Kanematsu Corp., Taiju Research Institute Nihon-Indonesia YukoKyokai (Panasonic Gobel)

Local residents (farmers)

group

Biofuel program Office of Forestry, Boalemo Regency (Office of Energy)

Local residents group Private companies

DNPI manages business registry and credits, while Ministry of Forestry follows up the progress of REDD+ project and administers/stores monitoring data on REDD+ project compiled by Agency of Forestry of Gorontalo Province, in a comprehensive manner. This local government carries out capacity building programs for local residents regarding forest preservation, by organizing workshops, etc. and also undertakes such programs for farmers regarding agricultural production technologies, by dispatching instructors. A part of income from the sales of BOCM credits is used as the fund for such activities. Kanematsu and Taiju create a REDD+ development company (SPC as developer), which undertakes business activities and monitoring in conjunction with Nihon-Indonesia Yuko Kyokai. N-I Yuko Kyokai firstly urges the central and local governments to collaborate in establishing a REDD+ project. It also buys corn in conjunction with local private companies such as food distributing companies, through influential persons who have strong networks in Gorontalo Province. It utilizes a part of income from the sales of BOMC credits as incentives. Local residents are to receive capacity building and technology instructions from Boalemo Regency and decrease the ratio of swidden/moving agriculture while increasing productivity of agriculture and consequently, control deforestation. They prepare for monitoring data for REDD+ project, by taking part in forest carbon stock monitoring and/or performing monitoring of the use record of their own farmland. Office of Forestry undertakes activities to spread/promote cultivation of fuel crops, deliver seedlings to local residents, conduct capacity building programs about the ways to cultivate fuel crops and help increase harvested volume of biofuel (crude oil). Local residents record cultivation areas and harvested volume and submit reports to their group leaders, who in turn report them to Office of Forestry of Boalemo Regency. Private companies purchase seeds from local residents at higher prices than ordinary market prices, produce crude oil by utilizing vegetable oil extraction equipment which they had introduced in the past, and distribute it among local residents at reasonable prices. These companies also monitor/ record sales volume and kerosene-replacing volume, and keep the records as monitoring data for REDD+ project.

(10) Financial Plan: The figures show in the Table below are those calculated based on the information obtained on the spot or from stakeholders through interviews. We will further examine and refine these figures by inquiring the governments of Gorontalo Province and Boalemo Regency about appropriate amounts.

＜21＞

Table 8

Results of trial calculation of financial plan

Project Year Credit Volume(tCO2e) (lower side 10% less) Credit Price(US$/t) (lower side 10% less) Credit Income (worst case) PDD Validation Verification Carbon Stock Monitoring SV Carbon Stock Monitoring Remote Sensing Capacity Building Bio-fuel refinement Total Cost

• • • • •

2012 0 0 0 0 0 0 0

2017 5 61,000 54,900 18 16.2 1,098 889

2022 10 61,000 54,900 21 18.9 1,281 1038

2027 15 61,000 54,900 21 18.9 1,281 1038

-30 -15 -10 -15 -200 -100 -370

-30 -15 -10 -15 -200 -100 -370

-30 -15 -10 -15 -200 -100 -370

2032 Total 20 61,000 1,220,000 54,900 1,098,000 21 18.9 1,281 23,790 1038 19,270

-200 -40

-240

-30 -15 -10 -15 -200 -100 -370

-7705

Carbon Stock Monitoring: Expenses associated with carbon stock monitoring conducted jointly with staff members of Office of Forestry, GIS consultant, and farmers. Capacity Building: Expenses required for capacity building programs regarding agricultural technologies. Incentive for corn price: Costs required to purchase corn at higher prices than ordinary prices. Biofuel refinery: Costs associated with the refinery of crude oil. Incentive for biofuel: Costs associated with purchases of seeds.

(11) Policy of promoting introduction of Japanese technologies: In our Project, we are going to promote introduction of the following sensors scheduled to be launched in Japan in the future, because the monitoring of forests utilizing satellite remote sensing is very important. (1)ALOS-2 (radar sensor mounted on a satellite) ALOS-2, which is scheduled to be launched in fiscal 2013, is a successor satellite of ALOS/PALSAR, equipped with an L-band synthetic aperture radar. In tropical rainforest region including Indonesia, which is considered to be suitable for REDD+ projects, the existence of cloud always gives influence on the quality of satellite images. Thus, it is important to conduct satellite monitoring that uses ＜22＞

SAR images, and there are a number of cases where correlation between backward scattering coefficient (which is the strength of reflection) and wood volume is shown in the case of L-band SAR PALSAR. It is only Japan that possesses (and plans to possess) L-band SAR mounted on a satellite, and we think it very important to conduct monitoring using ALOS-2 data in parallel. (2) ALOS (optical sensor mounted on a satellite) ALOS-3, scheduled to be launched in fiscal 2015, is to be equipped with a panchromatic multi hyper-spectral sensor. Because the spatial resolution of PRISM/AVNIR-2 sensor of ALOS is going to be improved, we can expect that the accuracy of classification of land use including forest and non-forest areas will also be improved. As a result, accuracy of the estimation of forest carbon stocks and emissions is expected to be improved. Furthermore, by utilizing a hyper-spectral sensor in parallel, we will be able to comprehend the situation of forest areas in detail, as a result of improvement of wavelength resolution, despite the fact that the spatial resolution is as rough as 30 meters. By monitoring specific wavelength zones, we will be able to grasp the degree of degradation of forests. (12) Future outlook and issues to be solved: (i) Policy of the Indonesian government on REDD+ projects Indonesia has not yet decided upon distribution rules on credits created from REDD+ projects. It is an important issue in what manner credits are to be distributed among the central government, the local government and the Project operator. The timing of the start-up of the Project is to be determined only after the distribution rules are concretely fixed. (ii) Conformity with NAMAs With respect to NAMAs (Nationally Appropriate Mitigation Actions), which is currently under discussions at the United Nations, the Indonesian government regards the reduction in deforestation rate as a part of NAMAs. Accordingly, we need to review the entire contents of our Project/ activities by taking into account the conformity of the Indonesian government with NAMAs. (iii) Initial investment Without an initial investment, it is difficult to start our Project/ activities. Thus, it is necessary to firstly establish the entire plan of our REDD+ project together with associated biofuel business in a concrete manner, study the feasibility of our Project as a joint approach with stakeholders, and examine if we can get necessary finance from environmental funds and others. 5.

Study results concerning co-benefits

＜23＞

In the “Manual for Quantitative Evaluation of the Co-Benefits Approach to Climate Change” compiled by the Ministry of the Environment, the following three (3) items; i.e. “improvement of water quality”, “improvement of air quality” and “waste management”, are listed as the areas to be assessed, and we can name “improvement of water quality” and “improvement of air quality” from the recovery of forest resources as the co-benefits brought about by the implementation of our Project. In order to comprehend the actual effects, it is necessary to conduct quantitative measurements of versatile functions and preservation effect of forests and also to evaluate negative impacts on the preservation of biodiversity. Regarding the quantitative measurements of versatile functions and preservation effect of forests, we will be able to perform the evaluation by a method with high practicability on the high-priority functions on the Project site. By improving the preservation effect of forests by performing such an evaluation, we can expect improvement of actual flood-prevention measures, and improvement of both water quality and air quality. In the meantime, in the Convention on Biological Diversity, REDD+ projects are considered to be a mechanism to bring about co-benefits to preservation of biodiversity and mitigation of climate change. In concrete, it is useful to evaluate the negative impacts, by monitoring the number of living species, and sizes/ distribution of population. 6.

Study results concerning contribution to sustainable development

The Indonesian central government is promoting a sustainable forest management by publishing “ UNDANG-UNDANG REPUBLIK INDONESIA NOMOR 41 TAHUN 1999”. The government is also promoting plantation in local communities by undertaking a program called ”Sukseskan Penanaman 1 Milyar Pohon tahun 2011” (or “Plan to Plant 1 Million Trees, 2011”). The government of Gorontalo Province understands that deforestation is in progress in Bolemo Regency and the government of Boalemo Regency as well is promoting restoration of vegetation in forest, by publishing “buku_master plan rehabilitasi hutan dan lahan 2009-2013”. Our Project is not only capable of preserving forestry and recovering vegetation but also of strengthening capacity/ capability of local residents (capacity building and empowerment), which we believe rightly meets the policy of the above-said local governments.

＜24＞