Deforestation at the Extractive Sector in East Kalimantan : Impact and Progresive Initiatives

GCF ANNUAL MEETING Madre de Dios, Peru, October 1-4, 2013

East Kalimantan has abundant natural resources as capital for public welfare .

Based on Natural Resources and dominated by primary sector

1970

TODAY

Timber Period

Oil & Gas Period

Coal-Oil & Gas Period

Real GDP growth, 2000-2012 IDR Trillion, constant price 2000

East Kalimantans economy has been based largely on oil and gas
103
+3% p.a. 86 88
1

89
1

91
1

94
1

97
1

99
1

Agriculture Palm oil Forestry

82
2

Coal and mining

Construction Manufacturing

Services/others

52 2000
5
SOURCE: BPS

54
01

53 02

53
03

52 04

51 05

50 06

47 07 2008

Oil and gas

Mining Sector : high share in GDP, low in employment absorption capacity

Distribusi Tenaga Kerja dan Produk Domestik Regional Bruto Kalimantan Timur 2010 (%) Share TK Share PDRB

47.9%

28.6% 24.7% 22.9% 19.4% 10.2% 5.9% 5.3% 0.4% 0.3%

Pertanian Pertambangan dan Penggalian Industri Listrik

5.4%

8.1%
2.8%
Perdagangan

4.8% 3.7%
Penganggukan

3.0% 2.3%
Keuangan

4.2%
Jasa-jasa

Konstruksi

Differences of income per capita among the regions is very high

Business-as-usual emissions in East Kalimantan will grow to 331 MtCO2e by 2030, driven by land use activities
East Kalimantan Emissions MtCO2e

1.4% p.a.

331

298
255 Deforestation 44 Forest degradation Peat decomposition Peat fire Extraction & refinery Others1 Absorption 2010
8 1 Includes power, transportation, building, mining, cement SOURCE: East Kalimantan Environmentally Sustainable Development Strategy

Key takeaways:

Land use is the key

driver of emissions

Emissions will
increase by 30% by the end of 2030

42 34 74

69
61 18 14

11

2020

2030

Land use intensive sectors of the economy contribute only 7% of GDP, but account for 75% of emissions
Land-use intensive sectors 7% of GDP 75% of emissions 100% = IDR 329 trillion Agriculture Palm oil/ Estate crops Forestry Coal and mining 1 14
3

255 MtCO2e

Oil and gas

55

Construction Manufacturing Services/others

9
5 1 2

GDP 2012 9
SOURCE: BPS Kaltim; team analysis

CO2 emissions

By using current utilization pattern :

Crude oil reserves : estimated at 11.8 years Natural gas reserves : estimated at 13.5 years

EAST KALIMANTAN ONLY HAVE 28% OF NATIONAL COAL RESERVES, BUT ITS COAL PRODUCTION REACHED 58.94%. WITH FIXED PRODUCTION RATE OF 208 MILLION TONS / YEAR , COAL RESERVES OF EAST KALIMANTAN IS ESTIMATED AT 43 YEARS

10

ABSOLUTE TERMS FOR NATURAL RESOURCE MANAGEMENT FOR WELFARE OF THE SOCIETY

1 The entire natural resources are managed in the right way with the principles of sustainable development 2 Development is done in a fair and equitable outcome for the whole community

= Pertumbuhan Ekonomi = Tingkat Pengangguran = Tingkat Kemiskinan = Emisi Karbon (tonCO2eq/jutaUSD

2030 2020 2015

6-8% 8-10% 4-6%

green economy
3-4%
1000

2013
3-4% 8-9% 6-7% 1514 PERIODE INISIASI

6-7% 4-6% 4-5% 7-8% 1051 5-6% 1458 PERIODE PENGEMBANGAN KAPASITAS PERIODE PENGEMBANGAN INDUSTRI

PERIODE PENGEMBANGAN EKONOMI - INOVASI

SHIFTING OF ECONOMIC POLICY since 2009

1. Develop existing industries (oil, gas, CPO, fertilizer, coal) 2. Establishment of agriculture based industries using cluster approach 3. Mainstreaming of low carbon in regional development planning
Mining Sector
46,06

ACCELERATED

Share PDRB (%)

BAU Agriculture Sector
4,93

AGROINDUSTRY/ AGRIBUSSINESS

2008

FUTURE

Documents related to reduction of greenhouse gas emissions in East Kalimantan to promote Green Economy

August 2012

October 2012

January 2010

May 2011

10/8/2013

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20 priority initiatives in 5 main economic sectors to foster economic growth and reduce emissions in East Kalimantan

Oil & Gas

Coal

Palm oil

Forestry

Agriculture

Accelerate 1 exploration Develop CBM 2 potential

Use methane 5 leakage Revoke 6 concessions in protected areas Enforce good 7 mining practices e.g., rehabilitation Flare/use 8 methane leakage

Raise land 9 productivity Build crude 10 palm oil refinery in East Kalimantan Concessions to 11 degraded lands Zero burning 12
land clearance

REDD 13 readiness Develop 14 2.6m ton capacity pulp & paper and forest products mills/plant Implement 15 reduced impact logging Use degraded 16 land for plantations
X Grow low carbon and high value- add sectors

Raising yields 19 New crops and 20 aquaculture Zero burning 17 policy Rehabilitate 18 opened peat land

Develop new 3 LNG/petrochemical complex

Reduce venting 4 and flaring emissions

SOURCE: East Kalimantan Environmentally Sustainable Development Strategy

X Reduce carbon emissions

East Kalimantan Government

EAST KALIMANTAN ECONOMY COULD NOT FURTHER DEVELOP BASED ON UNRENEWABLE NATURAL RESOURCES AND PRIMARY PRODUCTS...............

We have to transfer our economy into GREEN ECONOMY based on renewable resources

Thank you for your kind attention

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