Feasibility Study of a New Mechanism: Final Report (Draft
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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) Taiju Research Inc. Indonesia-Japan Friendship Association Mitsubishi Research Institute ( REDD+ and MRV ) JIRCAS ( Safeguard ) Kokusai Kogyo Co., Ltd. ( Remote Sensing and Ground Truthing ) Location of Project Activity Boalemo district, Gorontalo state, Indonesia Category of Project Activity REDD+ Description of Project/Activity 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. Reference Scenario and Project Area and Reference Area are selected according to Project/Activity Boundary 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. Monitoring Methods and Plan 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. GHG Emissions and Reductions 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 We develop reliable but more simplified methodologies; Reductions - 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. Analysis of Environmental, Recovery of vegetation and ecosystem functions will be Socioeconomic and other expected. Sulawesi Island is well known for its abundance in Impacts (including Securement endemic species of animals and plants, and the national park of Environmental Integrity) 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 Financial Planning 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. Introduction of Japanese As the satellite remote sensing is very important for the Technology 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. “Co-benefits” (i.e. Improvement It is useful for REDD+ project to evaluate the impacts, by of Local Environmental monitoring the number of living species, sizes, distribution Problems) etc. This kind of measurements will bring co-benefits to preservation of biodiversity and mitigation of climate change. Contribution to Sustainable Indonesian government is promoting a sustainable forest Development in Host Country 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 Japan International Kanematsu 国際農林水産業Research Center Corporation Taiju大樹総研 Research for Agricultural Institute（外注先） Sciences ） Mitsubishi Research Indonesia-Japan Institute Friendship Association (Mr.Gobel) Kokusai Kogyo （ Co.,Ltd. 国際航業 Gorontaloゴロンタロ州 Province Governor Forestry Dept. KanematsuKanematsu Trading 兼松トレーディング Community農林局 TradingIndonesia Indonesia インドネシア 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,