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Govt eyeing up CDM projects (Jakarta Post)
Dewi Santoso, Jakarta Post (6 Aug 2004)

JAKARTA, INDONESIA: Indonesia is in negotiations to secure two Clean Development Mechanism (CDM) projects in the energy sector as part of the Kyoto Protocol, which the House of Representatives endorsed last month.

Deputy State Minister for the Environment Sudariyono said on Thursday that the Dutch government and German-based drug producer Bayer had shown interest in the projects, which will be in cooperation with state enterprises and cement producer PT Indocement respectively.

"We hope to strike the deal by the end of this year and start the projects soon afterwards," said Sudariyono.

A Memorandum of Understanding (MOU) is now being drafted to provide the basis for the cooperation, which includes the price set for one ton of carbon emissions resulting from the program.

Sudariyono said the Dutch government might agree to pay 5 euro per ton of carbon emission.

The CDM program is part of the Kyoto Protocol, in which advanced countries are required to invest in developing countries to reduce green house gas (GHGs) levels through clean energy power plants and reforestation projects.

Although the protocol will not be legally binding in the world until Russia ratifies it, Sudariyono said many European governments would still utilize the project.

As an international treaty intended to lower greenhouse gas emissions, the Kyoto Protocol was signed by 159 countries in 1997. Of the signatories, 123 countries have ratified it, 40 of them are industrialized nations that agreed to bring down their greenhouse gas emissions by 5.2 percent from their 1990 level by 2012.

By ratifying the protocol, Indonesia expects to open the door for developed nations to "trade" carbon emissions by investing in the use of renewable energy production and the replacement of fossil fuels with renewable sources through clean energy and reforestation.

Reforestation is likely more effective in lowering GHG levels as it absorbs more carbon emission (a total of 28 million tons) as compared to energy sector (8 million tons). But the former is not as attractive to buyers.

"I think the reason is largely because unlike forests, which can cover hundreds of hectares of land, the energy sector is easier to control as it takes place in a limited area," Sudariyono said.

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