Indonesian companies seek guidelines to engage in REDD+

Photo courtesy of Curt Carnemark / World Bank

JAKARTA, Indonesia (29 September, 2011)_Indonesian business leaders have urged the government to clarify guidelines for private sector involvement in REDD+, signaling their readiness to engage in the climate change initiative to protect the nation’s forests and cut carbon emissions.

Speaking at the Forests Indonesia Conference on Tuesday, which drew nearly 1,000 participants from government, civil society and industry, Shinta Kamdani, Vice Chair on Environment and Climate Change at the Indonesia Chamber of Commerce (KADIN), said companies needed to understand how to incorporate REDD+ in their business operations and how they would benefit from the program.

“The private sector finds it very difficult to assess the feasibility of REDD+ projects and how to make them implementable,” Shinta said at the conference hosted by the Center for International Forestry Research (CIFOR). “We need a clear value proposition that businesses can move forward.”

Shinta said the business community was eager to work with all stakeholders to develop a framework for translating REDD+ into “a realistic and workable” plan.

“KADIN wants to be part of this discussion. There is no way the government and civil society can handle this task on their own,” she said, urging the formation of a joint working group among all stakeholders to formulate guidelines for the business community. “We hope that by providing our input and feedback to government and civil society, we can assist in the process of making REDD+ effective.”

The need for private sector involvement to ensure the success of REDD+ was echoed by other speakers at the conference, which drew representatives from Indonesian timber, coal mine and palm oil companies. Attracting private sector investments to REDD+ poses a major challenge for the government as it seeks to launch more than 40 pilot projects across Indonesia.

About 30 percent of Indonesia’s gross domestic product comes from natural resource sectors, according to KADIN, and products from the forest-related sectors are increasingly competitive in global markets. “Our palm oil, pulp and paper industries are perhaps the most competitive in the world,” said Shinta.

CIFOR scientist Daju Resosudarmo said REDD+ projects faced stiff competition for investments from these sectors. Speaking at a panel discussion on business incentives to invest in REDD+, Daju said, “The palm oil and mining markets are firmly established, and demand for these products show an increasing trend. A key challenge for REDD+ is how to compete with these very lucrative ventures.”

Supriatna Sahala, Executive Director of the Indonesian Coal Mining Association, said the biggest challenge for the mining sector was the inconsistent application of laws and policies, especially concerning land tenure. “Here in Indonesia laws and regulations are in place, but the problem is they don’t work in practice,” he said.

This made it difficult, he said, for companies to understand how REDD+ fits into an already ineffectual legal scheme that has caused land tenure disputes over forest concessions.

The Indonesian government is in the process of setting up a REDD+ Agency that will oversee the creation of legal and financing mechanisms to execute its ambitious plan to cut carbon emissions by at least 26 percent within the next 10 years.

Achieving emission reduction targets will require convincing companies that reap the biggest profits from cutting down forests to transform their business models to incorporate sustainable forest management practices. As new markets emerge for environmental friendly products, companies are beginning to respond.

“Demand for sustainable source products will grow and become a more integral part of our narrative,” said Shinta. “We must therefore look to the future and be ready to provide products with lower carbon footprints. We must embark on a solution that will ensure companies in Indonesia a trajectory that is both pro-growth and pro-environment.”