The Contribution of United States Agency for International ...

The Contribution of United States Agency for International Development

(USAID) Foreign Assistance by Winrock International on Capacity for

Indonesian Reduction of Carbon in Land Use and Energy (CIRCLE)

Project: 2011 - 2016

By:

Gede Yoga Prabasetya

016201300061

A thesis presented to the

Faculty of International Relations, Communications and Law

President University

In partial fulfilment of the requirements for

Bachelor’s Degree in International Relations

Major in Diplomacy Studies

2017

ii

THESIS ADVISER

RECOMMENDATION LETTER

This thesis entitled “The Contribution of United States Agency for

International Development (USAID) Foreign Assistance by Winrock

International on Capacity for Indonesian Reduction of Carbon in Land

Use and Energy (CIRCLE) Project: 2011 - 2016” prepared and submitted

by Gede Yoga Prabasetya in partial fulfillment of the recruitments for the

degree of Bachelor in Faculty of International Relations, Communications and

Law has been reviewed and found to have satisfied the requirements for a

thesis fit to be examined. I therefore recommend this thesis for Oral Defense.

Cikarang, Indonesia, December 2017

Recommended and Acknowledged by,

Hendra Manurung, S.IP., MA.

iii

DECLARATION OF ORIGINALITY

I declare that this thesis entitled “The Contribution of United States Agency

for International Development (USAID) Foreign Assistance by Winrock

International on Capacity for Indonesian Reduction of Carbon in Land

Use and Energy (CIRCLE) Project: 2011 - 2016” is, to the best of my

knowledge and belief, an original piece of work that has not been submitted,

either in whole or in part, to another university to obtain a degree.

Cikarang, Indonesia, December 2017


iv

PANEL OF EXAMINER

APPROVAL SHEET

The Panel of Examiners declare that the thesis entitled ―The Contribution of United

States Agency for International Development (USAID) Foreign Assistance by

Winrock International on Capacity for Indonesian Reduction of Carbon in Land Use

and Energy (CIRCLE) Project: 2011 - 2016‖ that was submitted by Gede Yoga

Prabasetya majoring International Relations from the Faculty of International

Relations, Communications and Law was assessed and approved to have passed the

Oral Examinations on 21 December 2017.

Riski M. Baskoro, S.Sos., MA.

Chair – Panel of Examiner

Drs. Teuku Rezasyah, MA., Ph.D.

Examiner

Hendra Manurung, S.IP., MA.

Adviser

v

ABSTRACT

Title : The Contribution of United States Agency for International Development

(USAID) Foreign Assistance by Winrock International on Capacity for Indonesian

Reduction of Carbon in Land Use and Energy (CIRCLE) Project: 2011 – 2016

Author : Gede Yoga Prabasetya

The CIRCLE project is the result of cooperation between Indonesia and the

United States through the United States national agency, USAID. CIRCLE project

focused on the development of palm oil liquid waste technology in the form of

POME to become bioenergy. In its implementation, USAID as a donor agent

appoints Winrock International, a non-governmental organization based in the United

States as the project's implementer. The purpose of this paper is particularly to

describe the results of this CIRCLE project in helping Indonesia achieve its

Millennium Development Goal goals to reduce greenhouse gas emissions and

increase renewable energy use. The background of this writing is because Indonesia

is one of the largest palm oil producers in the world. But with the increase of national

palm oil production, it is also accompanied by the increase of farmland and forest

degradation. Which is contrary to the objectives of President Susilo Bambang

Yudhoyono's declaration at the 15th Conference of Parties in Copenhagen, where he

pledge to reduce Indonesi‘s emissions by 26% or 41% with foreign assistance by

2020. The CIRCLE project in this respect has great potential to help Indonesia

achieve the goal of reducing emissions. However, in its practice, the CIRCLE project

has not been able to achieve its greatest potential due to some obstacles such as the

long duration of licensing from local governments, as well as the interests of the

United States to be maintained by USAID. But it does not mean CIRCLE Project

fails, because this project goal is to provide knowledge and guidance about POME

waste processing system which then hoped could be done independently by palm oil

companies in Indonesia with the help of Indonesia government.

Keywords: Palm Oil, Wastewater Management System, Emission Reduction.

vi

ABSTRAK

Judul : Kontribusi Badan Sumbangan Bantuan Luar Negeri Amerika Serikat untuk

Pembangunan Internasional (USAID) oleh Winrock International dalam Kapasitas

untuk Pengurangan Karbon di Proyek Pemanfaatan Lahan dan Energi (CIRCLE):

2011 - 2016

Penulis : Gede Yoga Prabasetya

CIRCLE project adalah hasil kerjasama Indonesia dan Amerika Serikat

melalui badan nasional Amerika serikat yaitu USAID. CIRCLE project berfokus

pada pengembangan teknologi penanganan limbah cair kelapa sawit dalam bentuk

POME untuk dijadikan bioenergy. Pada pelaksanaan nya, USAID selaku agen donor

menunjuk Winrock International, organisasi non pemerintah yang berbasis di

Amerika Serikat sebagai pelaksana proyek ini. Penulisan karya tulis ini bertujuan

untuk memaparkan hasil proyek CIRCLE ini dalam membantu Indonesia mencapai

tujuan Millenium Development Goalnya untuk mengurangi emisi gas rumah kaca

dan meningkatkan penggunaan energi baru terbarukan. Adapun latar belakang

penulisan ini karena Indonesia adalah salah satu produsen kelapa sawit terbesar di

dunia. Namun dengan meningkatnya produksi kelapa sawit nasional, juga diiringi

dengan meningkatnya lahan perkebunan dan meningkatnya degradasi hutan

Indonesia. Hal tersebut bertentangan dengan tujuan dari deklarasi Presiden Indonesia

Susilo Bambang Yudhoyono pada Conference Of Parties ke 15 di Copenhagen,

Indonesia menargetkan untuk mengurangi emisi sebesar 26% atau 41% dengan

bantuan asing pada 2020. CIRCLE project dalam hal ini memiliki potensi yang besar

untuk membantu Indonesia mencapai tujuannya dalam mengurangi emisi. Namun

pada pelaksanaannya, CIRCLE project belum dapat mencapai potensi terbesarnya

karena terhalang beberapa masalah seperti lamanya perizinan dari pemerintah daerah,

serta adanya kepentingan dari Amerika Serikat yang harus dijaga oleh USAID.

Namun bukan berarti CIRCLE Project gagal, karena pada dasarnya proyek ini

bertujuan untuk memberi pengetahuan dan bimbingan tentang system pengolahan

limbah POME untuk kemudian dapat diterapkan secara mandiri oleh perusahaan

kelapa sawit di Indonesia dengan bantuan dan dukungan dari pemerintah Indonesia.

Kata Kunci : Kelapa sawit, Sistem pengolahan limbah, Pengurangan emisi.

vii

ACKNOWLEDGMENT

Astungkara, finally I can finish my thesis. First, I would like to express my

greatest gratitude to Sang Hyang Widhi Wasa, there is no words that can explain how

grateful I am for His blessing all this time. This thesis writing process is one the most

challenging moments in my life and without Him who always there in my ups and

down, it is impossible for me to finish it.

I dedicate this thesis and degree to my beloved family, to my father I Gede

Eka Budiana, my mother Ni Nyoman Sugani and both of my sisters Kadek Eni

Setyari and Komang Tri Widyari. Thank you for the endless love, support, guidance,

and prayer that you gave me. I may not a perfect son or brother, but I love you and I

will try my best to make you happy and proud.

Hendra Manurung, S.IP., MA. my humble and helpful thesis advisor, thank

you so much for your suggestion, guidance, and patience. I am so fortunate to have

an advisor like you and I cannot expect better thesis advisor than you. Thank you

also for Mr. Haris Rahmat Pratama, who has helped me by sparing his time and

giving suggestion in this thesis writing and all of IR lecturers that I cannot mentioned

one by one, thank you for every valuable knowledge and learning experiences that

you have taught and gave me. Another special thanks to Mr. Michael Naleid as the

Manager of Winrock Indonesia, as well as Ms. Dhiah Karsiwulan as the Deputy

Chief of CIRCLE Project, thank you for provide me such a valuable sources for my

thesis and give me insight regarding the CIRCLE Project . Without data and

information from you, I have been not able to finish this thesis.

For Kadek Ayu Pradita Widyandari, thank you for becoming such a great

supporter and best friend to lean on and especially thank you for your companion,

sharing session, discussion, and suggestion during the thesis writing process and

thank you for Andika, Ardi, Fx Tolan, Sultan, Gladrin, Abdi, Indo, and all of my

friend that I cannot mentioned one by one for all laugh, joy, silliness, bad and good

day in this past 3,5 year of our study in IR. Last thank you for 4th

level family batch

viii

12 thank you for every journey we spend in ups and down, in the good and bad day.

You guys are beyond best friend, you are perfect in your imperfection. You guys

complete me in this incredible university life.

Cikarang, 27 May 2017


ix

Table of Contents

PANEL OF EXAMINER ...................................................................................................... iv

APPROVAL SHEET ............................................................................................................. iv

ABSTRACT ............................................................................................................................. v

ABSTRAK .............................................................................................................................. vi

CHAPTER I ............................................................................................................................ 1

1.1 Background of Study ................................................................................................ 1

1.2 Problem Identification .............................................................................................. 3

1.2.2 Indonesia Palm Oil Production and Forest Degradation ....................................... 3

1.2.2 Millennium Development Declaration.............................................................. 7

1.2.3 Roundtable on Sustainable Palm Oil ................................................................ 8

1.2.3 CIRCLE Project ................................................................................................ 9

1.2.4 Paris Agreement .............................................................................................. 10

1.3 Research Question .................................................................................................. 11

1.4 Research Objective ................................................................................................. 11

1.5 Significance of Study ............................................................................................... 11

1.6 Theoretical Framework ............................................................................................ 12

1.6.1 Liberalism ........................................................................................................... 13

1.6.2 Complex Interdependence ...................................................................................... 14

1.6.3 Strategic cooperation ............................................................................................... 17

1.7 Literature Review.................................................................................................... 18

1.8 Research Methodology ........................................................................................... 23

1.9 Research Instrument................................................................................................ 23

1.10 Scope and Limitation of Study ............................................................................... 24

1.11 Thesis Outline ......................................................................................................... 24

CHAPTER II ......................................................................................................................... 26

International Regime on Environment and Palm Oil .............................................................. 26

2.1 Background ............................................................................................................. 26

2.2 International Regime on Environment .................................................................... 26

2.2.1 Kyoto Protocol (COP 3) .................................................................................. 27

x

2.2.2 Marrakesh Accords (COP 7) ........................................................................... 31

2.2.4 Doha Amendment to the Kyoto Protocol (COP 18) ....................................... 35

2.2.5 Paris Agreement (COP 21) ............................................................................. 41

2.2.6 Millennium Development Goals (MDG‘s) ..................................................... 45

2.3 International Regime on Palm Oil .......................................................................... 49

2.3.1 Importance of Palm Oil in Indonesia .............................................................. 49

2.3.2 Roundtable on Sustainable Palm Oil (RSPO) ................................................. 51

CHAPTER III ....................................................................................................................... 59

Indonesia‘s Achievement on Reducing Carbon Emission and Increasing Renewable Energy

Before CIRCLE Project : 2000-2011 ...................................................................................... 59

3.1 Background ............................................................................................................. 59

3.2 Indonesia MDG timeline......................................................................................... 59

3.2 Before CIRCLE Project .......................................................................................... 60

3.2.1 Science and technology in the field of energy and minerals ........................... 62

3.2.2 Natural Resource Management Development and Environmental Function

Preservation .................................................................................................................... 73

3.3 Indonesia overall emission and energy consumption 2011 .................................... 74

3.3.1 Indonesia Greenhouse Gas emission 2011 ...................................................... 74

3.3.2 Indonesia final energy consumption 2011 ...................................................... 77

CHAPTER IV ....................................................................................................................... 84

Achievement of circle project in Sumatera Cities 2016 ......................................................... 84

4.1 Background ............................................................................................................. 84

4.2 CIRCLE Project ...................................................................................................... 84

4.2.1 USAID ............................................................................................................ 90

4.2.2 Ministry of Home Affairs of The Republic of Indonesia ................................ 91

4.2.3 Ministry of Energy and Mineral Resources .................................................... 92

4.2.4 PT PLN Bangka Belitung .................................................................................. 93

4.2.5 Palm Oil Company ........................................................................................... 94

4.2.6 Regional Plantation Agency ........................................................................... 94

4.2 CIRCLE Project Result ........................................................................................... 98

xi

4.3 Indonesia POME potential .................................................................................... 101

4.4 Economic interest on CIRCLE Project (2011 – 2016) ......................................... 103

CHAPTER V ....................................................................................................................... 111

CONCLUSION ................................................................................................................... 111

BIBLIOGRAPHY ............................................................................................................... 114

APPENDICES ..................................................................................................................... 118

xii

LIST OF ABBREVIATON

BOD Biochemical Oxygen Demand

CIRCLE Capacity for Indonesian Reduction of Carbon in Land Use and

Energy

COD Chemical Oxygen Demand

COP Conference of Parties

CSPO Certified Sustainable Palm Oil

EP Excess Power

GAPKI Gabungan Pengusaha Kelapa Sawit Indonesia

GHG Green House Gas

GW Giga Watt

ICED Indonesia Clean Energy Development

INDC Intended National Determined Contribution

IPP Independent Power Producer

ISPO Indonesia Sustainable Palm Oil

LULUCF Land Use, Land Use Change, and Forestry

MDG Millennium Development Goals

MSW Municipal Solid Waste

MTCO2e Metric Tons of Carbon Dioxide Equivalent

NDA Non-Disclosure Agreement

POME Palm Oil Mill Effluent

RSPO Roundtable on Sustainable Palm Oil

UNFCCC United Nations Framework Convention on Climate Change

USAID United States Agency for International Development

WWF World Wide Fund for Nature

1

CHAPTER I

Introduction

1.1 Background of Study

In1949, the United States establish it first diplomatic relations with

Indonesia. Over the years, Indonesia‘s democratization and reform process

since 1998 has increased its stability and security, and resulted in

strengthened U.S.-Indonesia relations.1 The United States and Indonesia

initiated in 2010 a Comprehensive Partnership to foster consistent high-level

engagement on democracy and civil society, education, security, climate,

maritime, energy, and trade issues, among others. Cooperation under the

Comprehensive Partnership is outlined in a Plan of Action consisting of three

pillars: political and security; economic and development; and socio-cultural,

education, science, and technology cooperation. Six working groups have

been tasked with coordinating strategies and highlighting policy initiatives

and priorities under the Plan of Action. These groups focus on energy,

security, trade and investment, democracy and civil society, education, and

climate and environment.2

Under the Energy Working Group, the United States and Indonesia

cooperate to promote clean energy technologies and policies to help meet

Indonesia‘s growing energy demands, improve energy access, and reduce the

1 U.S Department of State (January 17,2017). “U.S Relation with Indonesia “

https://www.state.gov/r/pa/ei/bgn/2748.htm. Data retrieved on May 19, 2017 2 The White House, Office of the Press Secretary (November 18, 2011). “ Fact Sheet United State-

Indonesia Comprehensive Partnership” https://obamawhitehouse.archives.gov/the-press-office/2011/11/18/fact-sheet-united-states-indonesia-comprehensive-partnership. Data Retrieved on May 19, 2017

https://www.state.gov/r/pa/ei/bgn/2748.htm

https://obamawhitehouse.archives.gov/the-press-office/2011/11/18/fact-sheet-united-states-indonesia-comprehensive-partnership

https://obamawhitehouse.archives.gov/the-press-office/2011/11/18/fact-sheet-united-states-indonesia-comprehensive-partnership

2

growth in Indonesia‘s energy-sector greenhouse gas emissions. This

cooperation includes several projects regarding clean energy and one of it that

later on will be discussed is The United States Agency for International

Development (USAID)‘s Indonesia Clean Energy Development (ICED)

project, which is the base of Capacity for Indonesian Reduction of Carbon in

Land Use and Energy Project (CIRCLE Project) 2011-2016.3

The comprehensive partnership which took place in 2010 was

expected to help Indonesia in achieving its MDGs (Millennium Development

Goals), because that time was still considered as the middle years of

Indonesia MDG‘s timeline. In Indonesia MDGs report 2008, Indonesia

Minister of National Development Planning explained that Indonesia

government still having trouble regarding deforestation, the increase of

greenhouse emission and pollution included water, soil, and air pollution.4

Moreover, the statement of Indonesia President, Susilo Bambang Yudhoyono

in Bangkok Climate Conference 2009, regarding Indonesia voluntary

commitment to reduce emission for 26% by its own effort and up to 41% with

international aid has been carried by Indonesia until it is set in our Intended

National Determined Contribution (INDC) of Paris agreement. Based on

Indonesia 2008 MDGs report can be seen that Indonesia needs a better

strategy in handling with this environmental issue, especially the increase of

carbon emission. Indonesia needs for emission reduction project made

Capacity for Indonesian Reduction of Carbon in Land Use and Energy Project

(CIRCLE Project) seems to be able to help Indonesia. Later in this chapter,

will be explained deeper regarding CIRCLE Project and how it can help

Indonesia dealing with their environmental issues.

3 U.S. Department of State Fact Sheet. 2013. U.S.-Indonesia Comprehensive Partnership. Office of the

Spokesperson. Washington, DC 4 Stalker, Peter. 2008. Indonesia Millennium Development Goals. Indonesia Minister of National

Development Planning. Jakarta

3

1.2 Problem Identification

1.2.2 Indonesia Palm Oil Production and Forest Degradation

Indonesia is one of the biggest palm oil producers in the world. This is

further confirmed by the growing number of production and export of palm

oil every year. With the increasing growth of palm oil industry in Indonesia,

of course, Indonesia is benefited economically because palm oil industry

provides income for the State, and also helps improve the economy of the

people by providing employment. In addition, the location of palm oil

industry in Indonesia, mostly located in rural areas, they also help improve

the economy of the surrounding residents.5

Table 1.1 Palm Farm Area by Farming Category from year 2000 –

2015.6

Year Area (Ha)

Smallholder Government Private

2000 1.166.758 588.125 2.403.194

2001 1.561.031 609.947 2.542.457

2002 1.808.424 631.566 2.627.068

2003 1.854.394 662.803 2.766.360

2004 2.220.338 605.865 2.458.520

2005 2.356.895 529.854 2.567.068

2006 2.549.572 687.428 3.357.914

2007 2.752.172 606.248 3.408.416

2008 2.881.898 602.963 3.878.986

2009 3.061.413 630.512 4.181.369

2010 3.387.257 631.520 4.366.617

2011 3.752.480 678.378 4.561.966

5 Palm Oil Green Development Campaign. 2011. The Economic Benefit of Palm Oil to Indonesia.

World Growth. Virginia. Page 4-6 6 Ministry of Agriculture. 2014. Tree Corp Estate statistics of Indonesia. Directorate General of Estate

Corps. Jakarta. page 3

4

2012 4.137.620 683.227 4.751.868

2013 4.356.087 727.767 5.381.166

2014 4.422.365 729.022 5.603.414

2015 4.575.101 750.160 5.975.109

Based on the data above, the area of palm farm in Indonesia

experience increased over the years without showing sign of stopping.

The demand of palm oil globally has made palm oil industry to be one of

the most profitable industries in Indonesia for both the industry itself and

the government of Indonesia. The table above also shows that the biggest

palm oil industry in Indonesia is hold by private sector, then small holder,

and government come in the second and third place.

With the condition of palm oil industry in Indonesia which is

controlled by the private sector and industry community, it is very

influential on its ability to manage waste. The lack of knowledge about

the waste, as well as the lack of technology that supports the processing of

residual waste, makes this industry as one of the contributors to the

environmental damage around it.

Table 1.2 Palm Farm Area by Region 2013-2015.7

No Region Year Area (Ha)

Smallholder Government Private Total

1 Sumatera

2013 3.406.793 549.059 2.726.376 6.682.228

2014 3.559.898 564.529 2.861.297 6.985.723

2015 3.707.031 580.436 2.998.386 7.285.853

2 Java

2013 7.991 20.069 5.652 33.712

2014 8.350 20.635 5.950 34.935

2015 8.695 21.216 6.252 36.163

3

Bali &

Nusa

Tenggara

2013 - - - -

2014 - - - -

2015 - - - -

4 Borneo

2013 745.710 132.469 2.428.344 3.306.523

2014 779.223 136.201 2.556.419 3.471.843

2015 811.429 140.040 2.686.555 3.638.024

5 Sulawesi 2013 152.067 11.284 155.529 318.880

7 Ministry of Agriculture. 2014. Tree Corp Estate statistics of Indonesia. Directorate General of Estate

Corps. Jakarta. page 9 - 11

5

2014 158.901 11.602 163.732 334.235

2015 165.468 11.929 172.067 349.464

6 Maluku

& Papua

2013 43.526 14.886 65.265 123.677

2014 45.482 15.305 68.707 129.494

2015 47.362 15.736 72.205 135.303

From the table above can be seen that the palm farm in Indonesia is

focusing on two regions which are Sumatera and Borneo, where both of

them are considered as the biggest island in Indonesia, and also the one

that have the biggest tropical forest in Indonesia or even in the world.

Unfortunately our tropical forest situation is increasingly

threatened due to the widespread conversion of forest functions for

settlements and industry. Oil palm plantations are also one of the reasons

for the increased in conversion of forest functions. The fact that the

government has issued several policies concerning restrictions on the

amount of land ownership for plantations such as Regulation of the

Minister of Agriculture Number 26 of 2007, contained in Article 15 which

is about the restrictions on land ownership managed by companies or

groups of companies.8 The government has also defined the division of

Indonesia's forest area according to its functions such as protected forests,

production forests, and conversion able forests. However, many palm oil

industries use bribery to obtain permits for land tenure expansion. In the

statistical report of the Ministry of Environment and Forestry in 2014, in

the period 2012-2013 Indonesia has experienced deforestation of 41,191.1

Ha of protected forest.9 Forest fires and the many practices of forest

burning by companies to accelerate land clearing also cause undesirable

forest destruction. In other cases the lack of corporate responsibility in

8 Ministry of Agriculture. 2007. PERATURAN MENTERI PERTANIAN NOMOR:

26/Permentan/OT.140/2/2007. Jakarta. Page 8 9 Data and Information Centre. 2014. Ministry of Environment and Forestry Statistics 2014. Indonesia

Ministry of Environment and Forestry. Jakarta. Page 92

6

managing their waste of production by simply throwing them off causes

increased levels of soil and water pollution that affect the growth of

surrounding ecosystems.

Based on the statistics of the Ministry of Environment and

Forestry, the water quality of Indonesia from 2010 to 2014 has declining

trend. This is due to several factors such as increased erosion in the forest

area, human activities in the watershed, including waste disposal activities

by factories.

The process of palm oil production by itself will produce waste in

solid, liquid, and gas form. Solid wastes from the production are in form of

empty fruit bunch, palm kernel shells, trunk of the plant, fiber, leaves and

others. Many companies use this solid waste as a energy source of their

boiler's engine by burning, but without realizing the further implication, it

produces other waste in the form of gas, even though the scale of pollution

is still small. When palm oil is extracted and processed, it also produces

liquid waste in the form of effluents with high organic matter, suspended

matter and oil and grease. This waste is commonly called POME (Palm Oil

Mill Effluent) and is considered as waste that has the highest polluting

capability in this production based on BOD and COD indicators. 10 If

POME didn‘t handled correctly, the methane gas inside of it will

evaporate directly into the atmosphere. As a greenhouse gas (GHG),

methane has an effect 21 times greater than CO2.11

These wastes can cause

ecosystem degradation and affects the health of the communities if not

managed properly,

But even in the process of making palm oil produces a lot of waste,

the waste can actually be recycled as a source of energy if supported by

technology and knowledge of its processing, call it POME that can be used

10

Igwe, J.C.I; Onyegbado, C.O; Abia, A.A. 2010. Adsorption isotherm studies of BOD, TSS and colour reduction from palm oil mill effluent (POME) using boiler fly ash. Ecletica Quimica. Sao Paulo. 11

Winrock International. 2015. “Handbook POME to BIOGAS Project”. Pg 5

7

as a medium of cultivation of microorganisms that can produce biofuel in

the form of methane gas Which can be used for renewable energy, and

fuel.

1.2.2 Millennium Development Declaration

The United Nations Millennium Development Declaration is a

declaration as the results of the Millennium Summit on 8 September 2000.12

Where the State of the Participant commits their nations to a new global

partnership to reduce extreme poverty and setting out a series of time-bound

targets, with a deadline of 2015, that then become known as the Millennium

Development Goals.

The Millennium Development Goals (MDGs) consist of quantified

targets to addressing extreme poverty in its many dimensions-income

poverty, hunger, disease, lack of adequate shelter, and exclusion-while

promoting gender equality, education, and environmental sustainability.

They are also basic human rights on the planet to health, education, shelter,

and security.

Each country that has approved this declaration including Indonesia

will make their program plan to meet the goal of the MDGs in 2015. As it is

known, the MDGs covers many aspects ranging from poverty eradication to

promote global partnership for development, It is precisely, in the seventh

point of the frame work, explained about ensuring environmental

sustainability. In this point, contains some specific goals ranging from

carbon emission reduction, increased use of new renewable energy,

restoration of forest areas, and others. In this thesis, the authors will analyze

Indonesia MDGs report to find out the progress of Indonesia in its efforts to

12

United Nations Millennium Project. 2006. http://www.un.org/millenniumgoals/bkgd.shtml . Data Retrieved on May 19, 2017

http://www.un.org/millenniumgoals/bkgd.shtml

8

reduce carbon emissions, which will be discussed more deeply in the next

chapter.

1.2.3 Roundtable on Sustainable Palm Oil

Roundtable on Sustainable Palm Oil (RSPO) is a nongovernmental

organization that unites stakeholders from the 7 sectors of the palm oil

industry including oil palm producers, processors or traders, consumer goods

manufacturers, retailers, banks/investors, and environmental and social non-

governmental organizations (NGOs), to develop and implement global

standards for sustainable palm oil.13

RSPO mission are : advance the production, procurement, finance and

use of sustainable palm oil products, develop, implement, verify, assure and

periodically review credible global standards for the entire supply chain of

sustainable palm oil, monitor and evaluate the economic, environmental and

social impacts of the uptake of sustainable palm oil in the market, and engage

and commit all stakeholders throughout the supply chain, including

governments and consumers, RSPO has developed a set of environmental and

social criteria which companies must comply with in order to produce

Certified Sustainable Palm Oil (CSPO). When they are properly applied,

these criteria can help to minimize the negative impact of palm oil cultivation

on the environment and communities in palm oil-producing regions. Further

about RSPO and its impact in Indonesia palm oil industry will be explained in

the next chapter.

13

Roundtable on Sustainable Palm Oil. 2017. ABOUT RSPO. http://www.rspo.org/about. Data retrieved on 2 June, 2017

http://www.rspo.org/about

9

1.2.3 CIRCLE Project

The USAID-funded Capacity for Indonesian Reduction of Carbon in

Land Use and Energy (CIRCLE) program helps the owners of palm oil mills

produce renewable energy and improve the overall sustainability of their

facilities.14

This project targeted the palm oil production in Indonesia because

Palm Oil industry in Indonesia is also responsible in creating the

environmental issues In Indonesia. The increase in demand of palm oil over

the years has pushed the industry to expand their plantation especially on

Sumatra and part of Borneo. This rapid growth is one of the reason for the

destruction of tropical forest, which also responsible for the reduction of

carbon-rich peat land, not only that, the practice of slash and burn clearance

that done by some company to faster the land clearing and save on their

expenses resulting on another problems which is major forest fire, which also

means the increase of greenhouse gas emission. Further in this chapter the

writer will provided data regarding the palm oil land growth and their

correlation with forest degradation.

Moreover, the dumping of excess from palm oil production by some

company in form of liquid which called POME (Palm Oil Mill Effluent ) also

directly responsible for water and soil pollution. Even though there are many

ways for palm oil production in contributing to environmental destruction,

there is also big possibility of palm oil industry in term of renewable energy.

Palm oil industry excess can produce two type of renewable energy if

managed and supported by proper technology, they can create biodiesel as

well as biogas, which then can be used to create electricity. Based on this

possibility, CIRCLE Project establishing a POME to biogas project which

will be run by Winrock International where they give technological and

technical support for Palm Oil Industry to further manage their waste into

14

Karsiwulan, Dhiah. Deputy Chief of Party – CIRCLE Project. Personal Communication. August 30, 2017

10

renewable energy which then can be used to help the company meet their

energy needs in producing their product. This project expected to be able to

reduce the number of pollution from Palm Oil Mill Effluent as well as

reducing the number of greenhouse emission by the use of renewable energy

in palm oil industry to reduce the amount of fossil-fuel electricity energy used

by the industry. The detail of the project will be explained further in the next

chapter.

1.2.4 Paris Agreement

Paris agreement is the latest legally binding agreement on climate

change. The agreement sets out a global action plan with the main goals to

keeping global average temperature from rising 2o Celsius. The agreement

provides framework for the country to be the base of their strategy in reducing

the greenhouse gas emission, this strategy by each country known as Intended

Nationally Determined Contributions (INDCs).

In this agreement, lies several key elements which are : The

government of the participant states agreed to create a long-term goal of

keeping the increase in global average temperature to well below 2°C above

pre-industrial levels, agreed to come together every 5 years to set more

ambitious targets as required by science and provide report to each other and

the public on how well they are doing to implement their targets as track

progress towards the long-term goal through a robust transparency and

accountability system, agreed to provide continued and enhanced

international support for adaptation to developing countries, and utilizing the

role of non-Party stakeholders in addressing climate change, including cities,

other subnational authorities, civil society, the private sector and others.15

15

European Union. 2016. The Road from Paris: assessing the implications of the Paris Agreement and accompanying the proposal for a Council decision on the signing, on behalf of the European Union, of

11

In accordance to this thesis, the writer will use Indonesia INDC as the

source of information to discover the latest progress of Indonesia in dealing

with their effort in reducing greenhouse gas emission, and also to analyze the

probability of strategic cooperation to be extended especially in this sector to

help Indonesia achieve its INDC goals.

1.3 Research Question

How did USAID foreign assistance through CIRCLE project by Winrock

International contribute to the achievement of Indonesia goal to reduce carbon

emission and development of new renewable energy ?

1.4 Research Objective

- To explain the impact of CIRCLE Project towards Indonesia palm oil

industry sustainability development

- To identify the advantage of Indonesia USA comprehensive partnership

especially the CIRCLE project towards Indonesia, and whether or not it be

extended.

1.5 Significance of Study

Here are the significance studies that will be provided by this thesis:

- To enhance knowledge about international cooperation in general and

Indonesia bilateral relation with U.S especially Indonesia –U.S

comprehensive partnership in specific.

- Provide knowledge on how international cooperation can be established

- Give information on how national interest of a state affecting the result of the

international cooperation

the Paris agreement adopted under the United Nations Framework Convention on Climate Change. European Commission. Brussels

12

- Enrich knowledge on the benefit of international cooperation for the actors

included within it.

1.6 Theoretical Framework

CIRCLE Project Chart

13

1.6.1 Liberalism

Liberalism is a theory in international relations which believe that peace is the

normal state of affairs in which the laws of nature dictated harmony and cooperation

between peoples. In liberal view, the actor in international relation is not only states

but also society. Society, as stated by Andrew Moravcsik, ―according to liberal, is

comprised of individual human agent with autonomous interests and identities, who

seek to form private groups, organizations and arrangements to advance their social

and political goal‖.16

This individuals that have their own interest and identities

which then can involve in various kind of cooperative and collaborative social

actions whether domestic or International. Liberal also believes in economic

interdependency between states that would avoid war for example free trade

agreement to growth cooperation and mutual benefit between each other.17

Scholars during the 1980s and 1990s also emphasized that so-called international

regimes, consisting of agreed-on international norms, rules, and decision- making

procedures, can help states effectively coordinate their policies and collaborate in the

production of international public goods, such as free trade, arms control, and

environmental protection. Where it has been anticipated before by the classical

liberal which stated that international institutions would reduce uncertainty and

improve mutual trust among states, thereby attenuating the security dilemma and

actively promoting international cooperation and world peace.18

As the technology develop, and globalization rising, the cooperation between

states not only based on interest over one or two issues, it has started to cover global

16

Moravcsik, Andrew. Liberalism and Internationals Relations Theory. Center for European Studies, Harvard University. Massachusetts. Page 7 17

Burchill, Scott; Paterson,Matthew; Reus-Smit,Christian.2005. Theories of International Relations Third Edition. Palgrave Macmillan. United Kingdom 18

Badie, Bertrand; Dirk-Berg, Schlosser; Leonardo Morlino. 2011. INTERNATIONAL ENCYCLOPEDIA OF POLITICAL SCIENCE. SAGE Publishing. Los Angeles. Page 1436-1437

14

issues. The existences of global governance also support the interstate cooperation in

term to achieve mutual goals in handling with global issues.

The United States and Indonesia Comprehensive Partnership is an example of a

deeper cooperation between state that not only based on equal partnership and

common interest, but also driven by the need to address global issues.19

As stated by

Indonesia‘s sixth president Susilo Bambang Yudhoyono ―A U.S. – Indonesia

strategic partnership would have to be based on: equal partnership and common

interests. It has to bring about mutual and real benefit for our peoples. It has to be for

the long-term, and have strong people-to-people content...‖.20

From those statement

can be seen that this partnership not only aimed to strengthen the relation between

the states in general but also to engage and strengthen the cooperation between non

state actors and civil society from both states.

1.6.2 Complex Interdependence

The term 'complex interdependence' was developed by Robert Keohane and

Joseph Nye and refers to the various, complex transnational connections

(interdependencies) between states and societies. Complex interdependence

according to Robert O Keohane and Joseph S. Nye in their book ‗Power and

Interdependence: World Politics in Transition‘ has three main characteristic which

are :

Multiple Channels

In international politics there are multiple channels connecting the

societies, including all the interstate, trans governmental, and

transnational transactions. In this complex world of interdependence not

only formal and informal interaction between governmental elites are a

19

The United States-Indonesia Society. 2009. The 2009 U.S.-Indonesia Comprehensive Partnership: Engaging the Non-Government Sector. USINDO. 20

I The United States-Indonesia Society. 2009. The 2009 U.S.-Indonesia Comprehensive Partnership: Engaging the Non-Government Sector. USINDO. Page 2

15

source of connecting societies but informal ties among non-governmental

elites and transnational organizations are gaining more and more

importance. Multinational firms and banks have a great impact on the

domestic as well as interstate relations. These actors, besides pursuing

their own interests, also ―act as transmission belts, making government

policies in various countries more sensitive to one another.‖21

Absence of Hierarchy among Issues

In the world of Complex interdependence, there is no hierarchy

among the issues. The dividing line between domestic and foreign policy

becomes blurred and there is no clear agenda in interstate relations. There

are multiple issues which are not arranged in a clear or consistent

hierarchy. In complex interdependence,‖ sets of issues relevant to foreign

policy with which government are concerned have become larger and

more diverse‖.22

The interstate relation in other sector such as education,

energy, economy, welfare, justice, and many other were increasing; while

the use of military force and power balancing were decreasing (but

remained important). This condition where the use of military power as

policy tool is decreasing, will increase the probability of cooperation

between states.

Minor Role of Military Force

Complex Interdependence assumes that in international relations force

is of low salience. When Complex Interdependence prevails, military

force could be irrelevant in resolving disagreements on economic issues

21

Robert O. Keohane; Joseph S. Nye. 1989. Power and Interdependence Second Edition. Harper Collins Publisher. United States of America. Page : 26 22

Robert O. Keohane; Joseph S. Nye. 1989. Power and Interdependence Second Edition. Harper Collins Publisher. United States of America. Page : 26

16

among members of an alliance, however simultaneously be very

important for the alliance‘s political and military relations with its rival

bloc. According to Keohane and Nye, intense relationships of mutual

influence may exist but force is no more considered an appropriate way of

achieving other goals such as economic and ecological welfare which are

becoming more important, because mostly the effects of military force are

very costly and uncertain. In fact due to modern nuclear, biological and

chemical weapons, all the actors are aware of the maximized costs of war.

Thus, the significance of military force as key policy tool for

resolving disputes has declined in the globalized world. However, its role

as bargaining tool is still important and may vary from issue to issue. Its

role cannot be completely ignored. In an asymmetric relationship, the less

dependent actor may use it as a bargaining tool. In fact the changing role

of force has made the situation more complex.23

Interdependence theorists noted that such relations, particularly economic ones,

were increasing; while the use of military force and power balancing were decreasing

(but remained important). Reflecting on these developments, they argued that the

decline of military force as a policy tool and the increase in economic and other

forms of interdependence should increase the probability of cooperation among

states. Furthermore, interdependence theorists introduced the concept of 'regimes' to

mitigate anarchy and facilitate cooperation.

From the complex interdependence perspective can be seen that strategic

cooperation between states that covers various issues is the result of the decrease of

military power use in the globalized world. Furthermore, the role of non-state actor,

as well as the existence of international regime also give a great impact towards the

cooperation, seeing from the strategic cooperation between Indonesia and USA can

be seen that both of the non-state actor and international regime are taking part in its

23

Robert O. Keohane; Joseph S. Nye. 1989. Power and Interdependence Second Edition. Harper Collins Publisher. United States of America. Page : 27-29

17

establishment. As been stated before, this strategic cooperation is based on the

interest of both country in dealing with global issues especially that based on

international regime in that time which is Millennium Development Declaration. The

role of non-governmental actor also taking part in the creation of this partnership.

The condition of palm oil industry in Indonesia which dominated by private sector

has become one of the consideration of Indonesia government in formulating policy

regarding palm oil industry such as the limitation of farm area can be owned, besides

to aimed to protect the environment, this policy also aimed to protect Indonesian

local farmers.

1.6.3 Strategic cooperation

―Strategic partnership, responding to the condition of the international scene

(forced by the globalization) is a tool of foreign policy of states, that combines both

durability and flexibility‖.24

According to Lucyna, ―To establish a strategic

cooperation, it is enough to find one priority, that is expressed by subjects in an equal

or similar way. no less important for the parties is not to have interests that are utterly

contradictory, especially such interest that are crucial from the partners‘

perspective‖.25

From brief explanation above can be seen that in term to create a strategic

cooperation between states, there need to be a specific priority that express the

interest of both states. Based on that view, if we look into US Indonesia Strategic

partnership, can be seen that both of the states agreed on several goals such as : 1.

expanding educational cooperation, 2. food security cooperation, 3. cooperation on

global climate change mitigation and adaptation, 4. security relationship, and

business cooperation.

24

Czechowska, Lucyna. 2013. The Concept of Strategic Partnership as an Input in The Modern Alliance Theory. Nicolaus Copernicus University. Poland. Page : 51 25

Czechowska, Lucyna. 2013. The Concept of Strategic Partnership as an Input in The Modern Alliance Theory. Nicolaus Copernicus University. Poland. Page : 50

18

In global climate change mitigation and adaptation, Indonesia and the U.S.

are considered two potential world leaders on climate change. Both could serve as

leaders among their respective developed and developing country groupings in the

negotiations toward the Copenhagen Agreement. The Obama Administration has

made it clear that climate change is on the national agenda, and that a cap-and-trade

system may be a primary means of funding a financial crisis stimulus package.

Indonesia has already adopted a National Action Plan to Address Climate Change.

Indonesia and the U.S. could work together to increase renewable and alternative

energy in their respective energy portfolios, advance energy efficiency as a means of

meeting growing energy demand without increasing emissions, support sustainable

forestry and address deforestation, protect ocean resources and define innovative

means for adaptation.26

1.7 Literature Review

In regards with this thesis, the author has read some books, articles and

reports to have a broad knowledge about the relation between environment and

sustainable industry development. Therefore, the author of this thesis came out with

sources from previous research to show the reader more about the importance of

environment aware industrial activity.

International Investment and Climate Change : Energy Technologies for

Development Country.27

A book by Timothy Forsyth which published in 2013 by

Earthscan that explain about the relation between international

investment and climate change, this book highlighted how the growth of

26

The United States-Indonesia Society. 2009. The 2009 U.S.-Indonesia Comprehensive Partnership: Engaging the Non-Government Sector. USINDO. 27

Forsyth, Timothy. 2013. “International Investment and Climate Change : Energy Technologies for Development Country”. Routledge

19

private sector or multinational company in developing country affecting

the energy consumption of the country itself. In this book, the writer also

stated about the importance of private sector contribution towards the

nation‘s public and environmental policy.28

The writer also explained the

importance of energy technologies investment. In this book, the writer

use Indonesia as their research object because Indonesia have formulate

many environmental policy especially regarding renewable energy as

their way to contribute in the reduction of greenhouse gas, besides it also

owns the big number of private company and Multi National Company.

Moreover, Indonesia had already run several projects for renewable

energy with the help from another country and organization, which in this

book the writer compare some of the project, which then end to a

conclusion where he stated that Indonesia is not ready enough to run a

large scale international investment in renewable energy.29

Through this book, the author gains different perspective

towards the correlations between private sector and Indonesia

government, and how dependent one to each other. I also found the

project comparison to be beneficial where as it gives factual data.

POME-to-Biogas Project Development in Indonesia.30

This handbook published by Winrock International which is about

the information bank on POME-to-energy technology and its benefits.

The handbook explained about several point which very important in

broadening the writer knowledge regarding the technology to convert

POME to renewable energy, which included, providing basic information

28

Forsyth, Timothy. 2013. “International Investment and Climate Change : Energy Technologies for Development Country”. Routledge 29

Ibid. 30

Winrock International. 2015. “POME-to-Biogas Project Development in Indonesia”. Winrock International. Jakarta

20

about palm oil mill effluent, biogas, biogas production technologies, and

the process of anaerobic digestion. Explain about the construction and

operation of the technology.31

Provides a step-by-step approach for

assessing biogas production potential and electrical system requirements.

Depending on location, capacity, operation, and wastewater quality, each

mill may have a different biogas potential. Provides examples of analysis

to complete for a feasibility study and the preparation work for biogas

plant operation. Covers the financial perspective, explaining different

ways to fund a project. Discusses sustainability practices and standards

associated with the palm oil industry, and also the environmental benefits

of POME-to-energy technology. Discusses the emission along palm oil

production supply chain, how to identify the sources and explains how to

calculate greenhouse gas emissions from plantation and palm oil, as well

as potential reductions from a methane capture project and biogas plant

installation.32

The author found this book to be useful whereas this book

giving the author broader knowledge towards the specific project

which is the study case of this thesis. This book also provide reliable

and detail information regarding how the project work.

Ministry of Environment and Forestry Statistics 2014.33

This report which published by Ministry of Environment and

Forestry Indonesia on December 2015 providing data and information

regarding Living Environment Quality Index which consist of water

31

Winrock International. 2015. “POME-to-Biogas Project Development in Indonesia”. Winrock International. Jakarta 32

Ibid. 33

Indonesia Ministry of Environment and Forestry. 2015. “Ministry of Environment and Forestry Statistics 2014”. Ministry of Environment and Forestry. Jakarta

21

quality index, air quality index, and land coverage quality index.34

This

report also provides the data of deforestation in Indonesia in 2004 which

I found really important in supporting this thesis. This report also

broadening the author knowledge in the differences of forest in Indonesia

based on the function as regulated in Indonesia law No.41 years 1999

about forestry.35

Moreover, this report provides specific data regarding

the progress of forest area release for Agriculture. This statistics is really

helpful in providing reliable source of data and information regarding the

condition of Indonesia forest and environment especially in 2004 and

several years after and before.

Tree Corp Estate Statistic of Indonesia (Palm Oil) 2013 – 2015.36

The report by Directorate General of Estate Corps, Indonesia‘s

Ministry of Agriculture in December 2014 which provide data regarding

Palm Oil production as well as the growth of palm oil plantation in

Indonesia. This report provide data that used by the author in regards to

support this thesis which are : palm oil farm area and production by

farming category from 1968 – 2015, palm oil farm area by province from

2013 – 2015, from the data provide by this report, the writer gain trusted

information regarding the growth of palm oil plantation in Indonesia

which is really helpful in giving general vision towards the growth of

Indonesia palm oil Industry itself.37

34

Indonesia Ministry of Environment and Forestry. 2015. “Ministry of Environment and Forestry Statistics 2014”. Ministry of Environment and Forestry. Jakarta 35

Ibid. 36

Directorate General of Estate Corps. 2014. “Tree Corp Estate Statistic of Indonesia (Palm Oil) 2013 – 2015”. Indonesia Ministry of Agriculture. Jakarta 37

Ibid.

22

The Economic Benefit of Palm Oil to Indonesia.38

A report by World Growth, an international non-governmental

organization with goals to bring balance to the debate over trade,

globalization, and sustainable development by doing research which

ranging from forestry research, palm oil research, development research,

free trade research, and climate change research. In this report entitled

The Economic Benefit of Palm Oil to Indonesia, World growth explained

about the role of palm oil industry in global economy as general and

towards Indonesia national economy in specific.39

What the writer found to be interesting in this report is the

perspective of World Growth in seeing the relation of palm oil industry

and poverty in Indonesia, as stated by the report, half of Indonesia‘s

population lives in rural areas, of which over 20 percent live below the

poverty line, in this case the palm oil industry provides an incomparable

means of poverty alleviation.40

This report also explained about their

perception in looking at other sustainable palm oil frame work which in

this case carried by The World Bank in 2010, where in those frame work,

there is a term of ―Non-Conversion‖ which refers to the restriction of

conversion on forest are. Conversion on forest area had been seen as a

bad practice in palm oil industry, but this report see the other side of it, as

in this report stated, Restriction on the conversion of forest area will

negatively impact economic growth and will directly impact those living

in poverty. Through this report, the writer gain broader knowledge and

new perspective in seeing the role of palm oil industry in Indonesia.

38

World Growth. 2011. “The Economic Benefit of Palm Oil to Indonesia”. World Growth. Arlington 39

Ibid. 40

Ibid.

23

1.8 Research Methodology

The thesis research will used Qualitative Research method which is

primarily an exploratory research. A qualitative research is an interpretative approach

concerned with understanding the meanings of certain phenomena or actions through

observation techniques by participants and interviewing. This method examines,

analyzes and interprets observations to discovering the meaning and patterns that

does not involve mathematical models but provides explanation of reasons and

associations between social variables.

Moreover, the author used Library research as a tool such as books,

journals, theories and researches to be examined. From this tool, the author finds

several books, article, and report regarding the importance of renewable energy

towards the future of sustainable industry development, as well as the advantages of

energy technologies investment for developing country.

In accordance to this thesis, the author also use Secondary data which come

from annual report which included Indonesia annual MDG‘s report, academic

journal, legal agreement such as agreement on the international regime of

environment and palm oil.

The author used Primary data as a tool which the author invites related

institutions to be asked some questions in order to give the writer a proof of the

Library research. Those institutions is Winrock International.

1.9 Research Instrument

Internet: The internes is a tool which the author used to find official websites,

documents, press release and speeches for collecting data and information that

are provided through cyberspace.

Book: There are several books that provided deep explanation about

environmental protection and international cooperation that helps the author to

better understand more about the case that is being discussed.

24

Journal, Article and Reports: There are many researches that have analyzed

about the international cooperation, international regime on environment, palm

oil industry in Indonesia and Indonesia effort in reducing GHG emission and

increasing the use of renewable energy. Therefore, those journals, articles and

reports are very helpful to the author to have a better understanding about the

case.

Interview: The author will use interview to gain a concrete source and more data

from related institutions and real actors of the case that is discussed.

1.10 Scope and Limitation of Study

The scope and limitation study of this thesis is based on the problems and the

purposed of the case that is being discussed which the research will focused on

showing the establishment of CIRCLE project from Indonesia – U.S comprehensive

partnership, and discuss the impact of CIRCLE project in Sumatera Cities in the year

where the project ended in 2016.

1.11 Thesis Outline

The thesis will consist of five chapters with understanding about the CIRCLE

project in Indonesia as one of the cooperation project under US-Indonesia

Comprehensive Partnership, and how this project affecting Indonesia clean energy

development through the utilization of sustainable palm oil industry practice :

Chapter I : Introduction

This chapter will introduce the reader about the topic of research that includes

background of study, problem identifications, statement of problems, theoretical

framework, research objectives, research methodology, literature review, significant

of study, scope and limitation of study, definition of terms and thesis outline.

Chapter II : International Regimes on Environment and Palm Oil

25

In this chapter the writer will discuss and provide deeper explanation

regarding the International regime on environment and Palm Oil Industry as well as

the dynamics within each international regimes, specifically about Kyoto Protocol,

Marrakesh Accord, Doha Amendment on Kyoto Protocol, Millennium Development

Goals under UN Millennium Declaration, Paris Agreement, and Roundtable on

Sustainable Palm Oil.

Chapter III : Indonesia MDG‘s timeline before CIRCLE Project

In chapter three, the writer will provide an overview of Indonesia MDG

timeline before the establishment of CIRCLE project. Further in this chapter, the

writer will provide the programs which created by Indonesia government alone in the

field of bio fuel production included the establishment of law to support the use of

bio fuel. In this chapter, the writer will also give the basic line of Indonesia GHG

emission in year 2011 and the total energy mix of Indonesia in 2011 which then

could be comparable with the condition after the establishment of CIRCLE Project.

Chapter IV : Achievement of CIRCLE project in Sumatera Cities 2016

This chapter is the main part of this thesis. The writer will examine, analyze and

interpret the data and document that the writer get to show the impact of CIRCLE

project towards Indonesia clean energy development. In this chapter, the writer will

also provide the in depth explanation about CIRCLE Project, the diagram of

cooperation in which will explain the actors included in the Project as well as the

national interest which lay within the project itself.

Chapter V : Conclusion

In this last chapter, the writer provides conclusions of the whole thesis that hopefully

can be benefit for the future.

26

CHAPTER II

International Regime on Environment and Palm Oil

2.1 Background

This chapter will give a deeper understanding of International regime

especially on environment and palm oil. This chapter will further explain the

establishment of Kyoto Protocol as well as another international treaty on

environment that marks the international effort in combating climate change. In this

chapter, also explain the statement from Indonesia‘s sixth President, Susilo Bambang

Yudhoyono regarding Indonesia initiatives in reducing the national emission by

2020. This statement that then underlined the further collaborative cooperation

between Indonesia and United States of America in climate change mitigation.

2.2 International Regime on Environment

International regime as stated by Stephen D. Krasner ―are defined as sets of

implicit or explicit Principles, norm, rules, and decision making procedures around

which actor expectations converge in a given issue area of international relations‖.41

Moreover, according to Krasner, ―principles are beliefs of fact, causation, and

rectitude, Norms are standards of behavior defined in terms of rights and obligations,

rules are specific prescriptions or proscriptions for actions, and Decision making

procedures are prevailing practices for making and implementing collective

choice‖.42

Regime is defined as something more than agreement which considered as

temporary arrangement that may change following the shifts in power and interest.

Regime aims to facilitate agreement by providing frameworks of rules, norms, and

negotiation procedure.

41

Krasner D., Stephen. 1982. Structural causes and regime consequences : regimes as intervening variables. Massachusetts Institute of Technology. USA. Pg. 185 42

Ibid Pg. 186

27

According to regime theory above, International regime on environment is

defined as sets of principles, norm, rules and decision making procedures among

actors related to environmental issues. Below will be explained several international

regimes on environment, namely:

2.2.1 Kyoto Protocol (COP 3)

Kyoto Protocol is the first legally binding international agreement on

climate protection, which was adopted in Kyoto, Japan, on 11 December 1997 at the

3rd

UNFCCC COP and entered into force on 16 February 2005.43

Kyoto protocol was

created based on the international concern in that time, 1997 regarding the increase

number of Carbon dioxide emission which turned out to be 4 times bigger than the

level of emission in 1950 which also still increasing at a rate of nearly 300 million

tons annually. The increased of fossil fuel usage in the early industrial era, as well as

the increased number of population known to be the reason of the increased

emission.44

Kyoto Protocol major feature is that it has mandatory targets on the amount of

emission that a party may emit, in term to meet the emission target set to that

particular states to be achieved during 2008-2012 which also known as first

commitment period. Kyoto Protocol requires industrial countries which listed in

Annex I to limit their greenhouse gas emission especially carbon dioxide.

Industrialized countries according to Kyoto Protocol, considered responsible in

increase of global greenhouse gas emission due to the increase of their economic

growth which in line with their used of fossil fuel. Annex I countries committed

themselves to reducing their GHG emissions by 5.2 % on average below aggregate

1990 emission levels during the commitment period 2008-2012 (UNFCCC 1997).

43

United Nations Framework Convention on Climate Change. “Kyoto Protocol”. http://unfccc.int/kyoto_protocol/items/2830.php. Data retrieved on July 16, 2017 44

United Nations Secretary General. 2001. Road map towards the implementation of the United Nations Millennium Declaration. United Nations

28

Table 2.1 BASELINE EMISSIONS AND EMISSION REDUCTION TARGETS

FOR ANNEX I COUNTRIES

However, the agreement will not enter into force, until two conditions which

known as double trigger are fulfilled, which are: First, at least 55 Parties to the

Convention must ratify the treaty by their national parliaments. Second,

industrialized countries among ratifying Parties must account for at least 55 % of the

total 1990 CO2 emissions from this group.45

Even though this agreement set a binding target for its parties, it also gave

flexibility on how the states may meet their target, for example states can compensate

their target through doing reforestation that may be accomplish either on their own

45

Bohringer, Christoph. Kyoto Protocol : A Review and Perspectives. Center of European Economic Research. Page 10

29

territories or in other countries, the protocol also allows their parties to pay for

foreign projects that can result on greenhouse gas emission cut.46

However, in 2001 United States under Bush regime, explicitly declined to

ratify this protocol due to their assessment on the economy impact that will be

brought by this agreement, since in that time USA economy is still growing, it needs

to be support by big amount of energy which occurred from fossil fuel. US refused to

sacrifice the growth of their economy to participate in reducing global greenhouse

gas emission.47

Another aspect of Kyoto protocol which also refused by USA is the

exemption of developing countries from binding emission targets. Even though USA

declined the ratification of Kyoto protocol, it turns out to show good results, based on

data from the European Environment Agency 2013 can be seen Greenhouse gas

emission trends and projections in Europe 2012 tend towards a positive direction,

which can be seen from the graphic below48

:

46

United Nations. 1998. Kyoto Protocol To The United Nations Framework Convention On Climate Change. Page 6-7. Article 6 47

BBC news. 2001. “Kyoto: Why did the US pull out?”. BBC News. Data retrieved from http://news.bbc.co.uk/2/hi/americas/1248757.stm. Data retrieved on July 16, 2017 48

European Environment Agency. 2013. “Annual European Union greenhouse gas inventory 1990–2011 and inventory report 2013”. EEA. Copenhagen

http://news.bbc.co.uk/2/hi/americas/1248757.stm

30

Can be seen through the graph above, some countries such as France,

Slovenia, Netherlands, Finland, Italy, Belgium, Denmark, Sweden, Czech Republic,

Slovakia, Estonia, Bulgaria, Ukraine, Lithuania, And Latvia showed a reduction in

their emission during the period 1990 to 2013. Indonesia itself however, showed poor

results in the change of emissions gap for the same period, based on data from WRI

CAIT 2.0 2017, Indonesia has increased the Green House Gas (GHG) emission by

43%.49

Indonesia itself just ratified the Kyoto protocol in December 2004, after a

long process of ratification initiated in August 2002 involving relevant agencies, the

Department of Foreign Affairs, the Ministry of Justice & Human Rights, the State

Secretariat, the Department of Energy and Mineral Resources, the Ministry of

49

USAID. 2017. “Greenhouse Gas Emissions in Indonesia”. USAID. Pg 1

31

Agriculture, the Meteorology and Geophysics Agency and other relevant agencies

until June 28, 2004 Through the Plenary Session of the House of Representatives

approved the Kyoto Protocol constitution plan by all the factions. Susilo Bambang

Yudhoyono as Indonesia president in that time then signed Law No. 17 of 2004,

dated July 28, 2004, State sheet of the Republic of Indonesia No.72 years 2004 ,50

Supplement to the State sheet of the Republic of Indonesia Number 4403. In Law

No.17 of 2004 itself contained Indonesia's consideration in the ratification of the

Kyoto Protocol, such as the importance of controlling the increase of greenhouse gas

concentrations in accordance with the principle of collective responsibility

differentiated by taking into account the social and economic conditions of each

country, the vulnerability of Indonesia as the country with the second longest

coastline in the world to the impacts of climate change, Sea level, the need for the

development of Indonesian industry with low emission clean technology, and the

important role of Indonesia as the tropical country with the second largest forest in

the world in influencing the earth's climate.51

The ratification of Kyoto is very crucial for Indonesia as well as the further

policy process of climate protection. Thus it has established a broad-based

international mechanism that provides a valuable starting point for efficient climate

policies in the future.52

2.2.2 Marrakesh Accords (COP 7)

Regardless the withdrawal of US from Kyoto Protocol, in November 10, 2001

the 7th

Conference Of the Parties (COP7) of The United Nation Framework

Convention on Climate Change (UNFCCC) took place in Marrakech, Morocco. The

main agenda in this convention was to announce the further detail rules for the

50

Undang Undang Republik Indonesia Nomor 17 Tahun 2004 Tentang : Pengesahan Kyoto Protocol To The United Nations Framework Convention On Climate Change 51

Undang Undang Republik Indonesia Nomor 17 Tahun 2004 Tentang : Pengesahan Kyoto Protocol To The United Nations Framework Convention On Climate Change 52

Bohringer, Christoph. Kyoto Protocol : A Review and Perspectives. Center of European Economic Research. Page 21

32

implementation of Kyoto Protocol under the name of Marrakech Accord. Through

this accord, the parties have completed the negotiation on the outstanding legal text

for the operating rules of Kyoto Protocol.

Through this accord, UNFCCC also adopted the Kyoto Protocol Land Use,

Land Use Change and Forestry (LULUCF) activities, by providing 4 LULUCF

activities that can be chosen by the parties to help them meet their emission target

which are Forest management; Cropland management; Grazing land management;

and Re-vegetation. Furthermore, the accord also set the rule on the extent to which

Parties can account for emissions and removals from specific LULUCF activities, for

the first commitment period, which is limited by the following four-tier capping

system:

Tier 1: If a Party‘s afforestation, reforestation and deforestation activities

result in more emissions than removals, then the Party may offset these emissions

through forest management activities, up to a total level of 9 megatons of carbon per

year for the five-year commitment period.53

Tier 2: The extent to which forest management activities can be accounted for

to help meet emission targets beyond 9 megatons of carbon per year is subject to an

individual cap for each Party, specified in an appendix to the decision on LULUCF.

This cap includes joint implementation projects involving forest management.54

Tier 3: Emissions and removals from cropland management, grazing land

management and re-vegetation can be accounted for to help meet emission targets on

a net basis (e.g. changes in carbon stocks during 1990, times five, will be subtracted

53

United Nations Framework Convention On Climate Change. “LULUCF- Developments at past COP and SB sessions”. http://unfccc.int/land_use_and_climate_change/lulucf/items/3063.php. Data retrieved on July 17, 2017 54

Ibid.

http://unfccc.int/land_use_and_climate_change/lulucf/items/3063.php

33

from the changes in carbon stocks during the first commitment period, in the lands

where these activities will take place).55

Tier 4: Only afforestation and reforestation projects are eligible under the

clean development mechanism. Greenhouse gas removals from such projects may

only be used to help meet emission targets up to 1% of a Party‘s base year emissions

for each year of the commitment period.56

Through this accord, UNFCCC was able to put Kyoto protocol to operation,

and set a strong international framework on environmental protection, moreover this

accord through its LULUCF activities provided more flexibility for the parties in

regards to plan their action to achieve their emission target.

Since the adoption of the Kyoto Protocol, the government and private entities

in Indonesia have hosted a number of Activities Implemented Jointly (AIJ) projects

and feasibility studies covering three sectors which are energy, forestry, and waste

with funding from various agencies. The ministries of Indonesia which involved

were the Ministry of Environment, Ministry of Energy and Mineral Resources,

Ministry of Industry and Commerce, and Ministry of Forestry, and also office of the

National Focal Point for the UNFCCC, with its supporting unit in the Ministry of

Environment. Several project that have been done are mostly small-scale energy

projects which at COP 7 in Marrakesh in 2001 have been agreed to be eligible for

fast-tracking, the list of the project can be seen in the table below57

:

55

55

United Nations Framework Convention On Climate Change. “LULUCF-Developments at past COP and SB sessions”. http://unfccc.int/land_use_and_climate_change/lulucf/items/3063.php. Data retrieved on July 17, 2017 56

United Nations Framework Convention On Climate Change. “LULUCF-Developments at past COP and SB sessions”. http://unfccc.int/land_use_and_climate_change/lulucf/items/3063.php. Data retrieved on July 17, 2017 57

Institute for Global Environmental Strategies. 2004. “International Review for Environmental Strategies Vol. 5, No. 1”. IGES. Pg. 147



34

Besides those project that have been carried out by Indonesia, There are also

potential project for Indonesia on Clean Development Mechanism which are58

:

58


35

From the table above, can be seen that Indonesia have done several project with

another country in regards as the effort to reduce greenhouse gas emission such as

solid waste management with Australia and Japan, Solar energy Project with

Australia, etc. Beside those projects which have been done, Indonesia Ministry of

Environment in 2002 also revealed Indonesia potential project on Clean

Development Mechanism. One of the potential projects is on Palm Oil Waste

management to generate electricity with total emission reduction probability of 153

Kilo tones CO2/year.59

2.2.4 Doha Amendment to the Kyoto Protocol (COP 18)

The 2012 UN Climate Change Conference took place in Doha, Qatar, from

28 November until 7 December. The meetings included the 18th session of the

Conference of the Parties to the UN Framework Convention on Climate Change

(COP 18) and the 8th session of the Conference of the Parties serving as the Meeting

of the Parties to the Kyoto Protocol (CMP 8). Five subsidiary bodies also convened:

the Subsidiary Body for Implementation (SBI), Subsidiary Body for Scientific and

Technological Advice (SBSTA), Ad Hoc Working Group on Annex I Parties‘

Further Commitments under the Kyoto Protocol (AWG-KP), Ad Hoc Working

Group on Long-term Cooperative Action under the Convention (AWG-LCA) and Ad

Hoc Working Group on the Durban Platform for Enhanced Action (ADP). The main

objectives of the negotiations in Doha were to adopt the second commitment period

of the Kyoto Protocol and complete the work of the AWG-KP; to complete the work

of the AWG-LCA; and to advance negotiations under ADP. Major concerns were

how to fill the gap between mitigation pledges and what is required to achieve the 2o

C target, given the low level of ambition expressed so far by developed countries,

and how to secure adequate financing – securing financial flows to 2020 following

up on the fast-track financing that expires in 2012 and long-term financing from

2020, commensurate with the target of mobilizing $100 billion per year from 2020 to

59


36

support developing countries. The outcome of two weeks of negotiations was the

―Doha Climate Gateway‖, the elements of which were as follows:

Adoption of amendments to the Kyoto Protocol and establishment of the

second commitment period for an 8 year term (2013-2020). The amendments

included new annex B to the Kyoto Protocol, and replace the list under the heading

―Greenhouse gases‖ in Annex A to the Protocol.

Agreement to terminate the AWG-LCA and to move outstanding issues to

permanent bodies of the Convention (SBI, SBSTA, COP, CMP). Among the issues

discussed by AWG-LCA and agreed was to consider loss and damage, such as an

institutional mechanism to address loss and damage in developing countries that are

particularly vulnerable to adverse effects of climate change.

Agreement on the ADP‘s plan of work until completion in 2015, including

under its work stream 1 (related to pre-2020 ambitions, including on mitigation) and

work stream 2 (related to the 2015 agreement concerning the post-2020

arrangement).60

Besides the Doha climate gateway, in this 18th

COP, parties also agreed on

amendment of Kyoto Protocol which can be seen in the table below

Table Doha Amendment on Kyoto Protocol61

NO Kyoto Protocol Doha Amendment

1 Annex B

table

Consist of list of parties and their

Quantified emission limitation or

reduction commitment (percentage of

base year or period)

- Added Quantified

emission limitation or

reduction commitment

(2013–2020)

60

Report of the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol on its eighth session, held in Doha from 26 November to 8 December 2012 61

United Nation. Report of the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol on its eighth session, held in Doha from 26 November to 8 December 2012. Pg 12

37

(percentage of base

year or period),

Reference Year,

Pledges for the

reduction of

greenhouse gas

emissions by 2020

(percentage of

reference year).

- Added Belarus,

Cyprus, Kazakhstan,

and Malta to the list.

Remove Canada62

,

Japan63

, New

Zealand64

, and

Russian Federation65

from party list.

2 Annex A Consist of Green House Gases type Added Nitrogen

62

On 15 December 2011, the Depositary received written notification of Canada’s withdrawal from the Kyoto Protocol. This action will become effective for Canada on 15 December 2012. 63

In a communication dated 10 December 2010, Japan indicated that it does not have any intention to be under obligation of the second commitment period of the Kyoto Protocol after 2012. 64

New Zealand remains a Party to the Kyoto Protocol. It will be taking a quantified economy-wide emission reduction target under the United Nations Framework Convention on Climate Change in the period 2013 to 2020. 65

In a communication dated 8 December 2010 that was received by the secretariat on 9 December 2010, the Russian Federation indicated that it does not intend to assume a quantitative emission limitation or reduction commitment for the second commitment period.

38

List which are Carbon dioxide (C02),

Methane (CH4), Nitrous

oxide(N20),Hydrofluorocarbons

(HFCs),Perfluorocarbons(PFCs),

Sulphur hexafluoride (SF6)

trifluoride (NF3)

3 Article 3,

paragraph 1

The Parties included in Annex I shall,

individually or jointly, ensure that

their aggregate

anthropogenic carbon dioxide

equivalent emissions of the

greenhouse gases listed in Annex A

do not exceed their assigned amounts,

calculated pursuant to their quantified

emission limitation

and reduction commitments inscribed

in Annex B and in accordance with the

provisions of this

Article, with a view to reducing their

overall emissions of such gases by at

least 5 per cent

below 1990 levels in the commitment

period 2008 to 2012.

- Inserted article 3,

paragraph 1 bis after

paragraph 1 of Article

3.

- Inserted Article 3,

paragraph 1 ter after

Article 3, Paragraph 1

bis.

- Inserted Article 3,

Paragraph 1 quater

after Article 3

Paragraph 1 ter.

4 Article 3,

paragraph 7

In the first quantified emission

limitation and reduction commitment

period, from 2008

to 2012, the assigned amount for each

Party included in Annex I shall be

equal to the percentage

inscribed for it in Annex B of its

- Inserted Article 3

Paragraph 7 bis after

Article 3 Paragraph 7


Paragraph 7 ter after


bis

39

aggregate anthropogenic carbon

dioxide equivalent emissions

of the greenhouse gases listed in

Annex A in 1990, or the base year or

period determined in

accordance with paragraph 5 above,

multiplied by five. Those Parties

included in Annex I

for whom land-use change and

forestry constituted a net source of

greenhouse gas emissions

in 1990 shall include in their 1990

emissions base year or period the

aggregate anthropogenic

carbon dioxide equivalent emissions

by sources minus removals by sinks in

1990 from land-use

change for the purposes of calculating

their assigned amount.

5 Article 3,

Paragraph 8

In paragraph 8 of Article 3 of the

Protocol, the words:

calculation referred to in paragraph 7

above

substituted by:

calculations referred

to in paragraphs 7 and

7 bis above

Inserted Article 3,



6 Article 3,

Paragraph

12

Any certified emission reductions

which a Party acquires from another

Party in accordance with the




40

provisions of Article 12 shall be added

to the assigned amount for the

acquiring Party.


Paragraph 12 ter after


bis

7 Article 4,

Paragraph 2

The Parties to any such agreement

shall notify the secretariat of the terms

of the

agreement on the date of deposit of

their instruments of ratification,

acceptance or approval of this

Protocol, or accession thereto. The

secretariat shall in turn inform the

Parties and signatories to the

Convention of the terms of the

agreement.

Added the following

words to the end of the

first sentence of

paragraph 2 of Article

4 of the Protocol:

, or on the date of

deposit of their

instruments of

acceptance of any

amendment to Annex

B pursuant to Article

3, paragraph 9

8 Article 4

Paragraph 3

Any such agreement shall remain in

operation for the duration of the

commitment period specified in

Article 3, paragraph 7.

The words:

, paragraph 7

shall be substituted by:

to which it relates

All parties show their acceptance to commit in this amendment by submitting

its instrument of acceptance to the Depositary. Indonesia as one of the developing

country that agreed upon this amendment had deposited its instrument of acceptance

on 30 September 2014, by deposited it, Indonesia joins another 17 countries that have

already submit it namely: Bangladesh, Barbados, China, Djibouti, the Federated

States of Micronesia (FSM), Honduras, Kenya, Mauritius, Mexico, Monaco,

41

Morocco, Norway, Peru, Singapore, Solomon Islands, Sudan, the United Arab

Emirates (UAE).66

Indonesia decision in ratifying the Doha amendment and joining the second

commitment period of Kyoto protocol will help Indonesia to stay on track to achieve

its voluntary pledged to reduce emission as been stated in 2009 by Indonesia

president Susilo Bambang Yudhoyono in Climate Change Talks Conference in

Bangkok, Thailand which is to reduce emission by 26% on its own efforts, and up to

41 % with international support.67

Moreover, the decision that taken in this

convention which is to make further progress towards establishing the financial and

technology support and new institutions to enable clean energy investments and

sustainable growth in developing countries, will surely help Indonesia in achieving

its target.

2.2.5 Paris Agreement (COP 21)

On 12 December 2015, 196 Parties to the UN Framework Convention on

Climate Change (UNFCCC) adopted the Paris Agreement, a new legally-binding

framework for an internationally coordinated effort to tackle climate change.68

The

Paris Agreement was adopted as part of a decision of the Conference of the Parties

(COP) to the UNFCCC. Together with the Paris Agreement, the COP also adopted a

decision that guides pre-2020 action and sets out implementation details for the Paris

Agreement before its entry into force (the Decision).69

The Paris Agreement

establishes the main framework for cooperative action on climate change beyond

2020 and will replace the Kyoto Protocol. The Agreement is a treaty as a matter of

66

International Institute for Sustainable Development. 2014.”Indonesia Accept Doha Amendment”. http://sdg.iisd.org/news/indonesia-accepts-doha-amendment/. Data retrieved on July, 16 2017 67

Kementrian Lingkungan Hidup Republik Indonesia. 2009. “Antara : Target Emisi Karbon Indonesia Disambut Positif Negara Lain”. http://www.menlh.go.id/antara-target-emisi-karbon-indonesia-disambut-positif-negara-lain/. Data retrieved on July 16, 2017. Indonesia National Action Plan on GHG emission reduction has been stipulated in President Regulation No 61/2011 and GHG inventory in President Regulation no 71/2011. 68

Ginzky, Harald. 2017. “International Yearbook of Soil Law and Policy 2016”. Springer International Publishing. Pg 108 69

Climate Focus. 2015. “The Paris Agreement Summary”. Climate Focus. Amsterdam. Pg. 2

http://sdg.iisd.org/news/indonesia-accepts-doha-amendment/

http://www.menlh.go.id/antara-target-emisi-karbon-indonesia-disambut-positif-negara-lain/

http://www.menlh.go.id/antara-target-emisi-karbon-indonesia-disambut-positif-negara-lain/

42

international law, which means that ratifying countries will be bound to one another

by its terms when it comes into effect. Paris Agreement Is a fresh air for multilateral

climate change diplomacy after the failure of COP 15 in Copenhagen in 2009 in

agreeing on a global climate regime. Paris Agreement aimed at limiting global

temperature rise below 2 ° C and agreed by 195 countries.

The Paris Agreement aims to hold global temperatures ‗well below 2°C above

pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C‘

(Art. 2.1.(a)).70

Each Party shall prepare, communicate and maintain successive National

Determined Contributions (NDCs), with an NDC communicated at a minimum every

five years. Developed countries should adopt economy wide absolute emission

reduction targets immediately, and developing countries should aim for this over

time (Art. 4.4).71

Each sub section of NDC will have to represent the progress over

the party‘s last NDC. However, implementing NDCs is not a part of the Paris

Agreement. It is the Paris Agreement and COP Decision to provide binding,

procedural rules for the preparation and assessment of NDCs not their execution.72

The Paris Agreement that adopts the principle of applicable to all Parties

(applicable to all Parties), provides considerable homework for developing countries.

Developing countries, which are referred to as non-Annex countries, must take part

in global efforts to mitigate greenhouse gas (GHG) emissions and at the same time

have to adapt to the effects of climate change. Therefore, these countries must

transform rapidly, towards low-carbon development and resilient to the impacts of

climate change.73

70

Climate Focus. 2015. “The Paris Agreement Summary”. Climate Focus. Amsterdam. Pg. 2 71

Ibid. Pg. 3 72

Ibid 73

Ribera, Teresa. “How to finance low-carbon and climate-resilient development ?” working paper. IDDRI. Pg. 14

43

For non-Annex nations with emerging economy status like Indonesia, the

more serious challenge lies in the aspect of climate change funding support, given

that climate change priorities will be mostly allocated to countries in the Least

Developing Countries (LDCs) and Small Island Developing States (SIDS).74

Before the Treaty of Paris was adopted by all States Parties incorporated in

the UNFCCC, there was a consideration that it would take a considerable long

amount of time before the new Agreement enter into force. This is based on the

experience of the Kyoto Protocol adopted, adopted on December 11, 1997, but

entered into force in 2005. That is why, in the initial negotiations, the year 2020

became a mutually agreed deadline for enacting the Paris Agreement. However, in

Paris it was agreed that the Paris Agreement would be enforceable by at least 55

countries representing 55% of global greenhouse gas emissions ratifying this

agreement.75

In fact, the ratification goes fairly quickly. As of October 4, 2016, 62

countries have ratified the Paris Agreement, with total emissions of 51.89% of the

required 55%.76

Ratifying the Paris Agreement can actually help Indonesia to ensure

action on climate change mitigation and action adaptation to be truly planned and

planned into the national development plan.

The Paris agreement sets out a periodic review process. Thus NDCs

communicated to the UNFCCC will be reviewed together every five years. From this

process it is expected that the efforts or ambitions of each State Party will increase

over time. That is why it will be easier for Indonesia to develop NDCs with reference

to existing long and medium term planning. For example, energy sector mitigation

targets and actions in the NDC are developed by considering and referring to the

74

UNFCCC. 2006. “United Nations Framework Convention on Climate Change: Handbook”. Intergovernmental and Legal Affairs, Climate Change Secretariat. Pg. 25 75

United Nations. Reference: C.N.735.2016.TREATIES-XXVII.7.d (Depositary Notification). Paris Agreement : Entry Into Force 76

Paris Agreement. Stattus of Ratification. Data retrieved from : http://unfccc.int/paris_agreement/items/9444.php. Data retrieved on July 17, 2017

http://unfccc.int/paris_agreement/items/9444.php

44

National Energy Policy and the General Plan for National Energy (Rencana Umum

Energi Nasional (RUEN)), the Long Term Development Plan (RPJP) and considering

the results of the implementation of the National Action Plan for Greenhouse Gas

Emission Reduction (Rencana Aksi Nasional untuk Pengurangan Emisi Gas Rumah

Kaca (RAN GRK)).

Indonesia Intended National Determined Contribution (INDC) itself is finally

published in 2016. According to Directorate General of Climate Change Control at

the Ministry of Environment and Forestry of Indonesia, Indonesia INDC consist of

important development components which consists of (1) poverty reduction, (2)

maritime development, (3) sustainability of food, water and energy, and (4) building

archipelagic Climate resilience.77

Based on the target in 2010 of the Government of

Indonesia pledged to reduce emissions by 26% (41% with international support)

against the business as usual scenario by 2020, but at INDC this target is increased to

29 % By 2030. At the first Indonesia INDC, Indonesia is also targeting emissions

reductions from different sectors that can be seen in the table below78

:

77

Directorate General of Climate Change Control at the Ministry of Environment and Forestry of Indonesia. 2016. “PERUBAHAN IKLIM, PERJANJIAN PARIS,DAN NATIONALLY DETERMINED CONTRIBUTION”. Jakarta. Pg. 33 78

Republic Of Indonesia. 2016. “FIRST NATIONALLY DETERMINED CONTRIBUTION REPUBLIC OF INDONESIA”. Pg. 9

45

Besides emission reduction target set by Indonesia, Indonesia President Joko

Widodo in COP 21 in Paris also stated its commitment in achieving 25 % renewable

electricity energy sources, which then formulated through our first INDC which can

be found in page 3 of our first INDC that stated ―new and renewable energy at least

23% in 2025 and at least 31% in 2050‖.79

2.2.6 Millennium Development Goals (MDG’s)

Millennium Development Goals (MDG‘s) is a global partnership adopted in

United Nation Millennium Declaration which contain set of time-bound target

regarding global issues ranging from addressing extreme poverty to environmental

sustainability.80

Over all MDG‘s consist of 8 goals and 18 targets which can be seen

in the table below:

Goal 1 : Eradicate extreme

poverty and hunger

Target 1 : Halve, between 1990 and 2015, the

proportion of people whose income is less than one

dollar a day

Target 2 : Halve, between 1990 and 2015, the

proportion of people who suffer from hunger

Goal 2: Achieve universal

primary education

Target 3 : Ensure that, by 2015, children

everywhere, boys and girls alike, will be able to

complete a full course of primary schooling

Goal 3: Promote gender

equality and empower women

Target 4 : Eliminate gender disparity in primary

and secondary education preferably by 2005 and to

all levels of education no later than 2015

Goal 4: Reduce child Target 5 : Reduce by two-thirds, between 1990 and

79

Republic Of Indonesia. 2016. “FIRST NATIONALLY DETERMINED CONTRIBUTION REPUBLIC OF INDONESIA”. Pg. 3 80

United Nations Millennium Project. 2006. http://www.unmillenniumproject.org/goals/. Data Retrieved on July,16 2017

http://www.unmillenniumproject.org/goals/

46

mortality 2015, the under-five mortality rate

Goal 5: Improve maternal

health

Target 6 : Reduce by three-quarters, between 1990

and 2015, the maternal mortality ratio

Goal 6: Combat HIV/AIDS,

malaria and other diseases

Target 7 : Have halted by 2015 and begun to

reverse the spread of HIV/AIDS

Target 8 : Have halted by 2015 and begun to

reverse the incidence of malaria and other major

diseases

Goal 7: Ensure environmental

sustainability

Target 9 : Integrate the principles of sustainable

development into country policies and programs and

reverse the loss of environmental resources

Target 10 : Halve, by 2015, the proportion of people

without sustainable access to safe

drinking water

Target 11 : By 2020, to have achieved a significant

improvement in the lives of at least 100 million

slum dwellers

Goal 8: Develop a global

partnership for development

Target 12 : Develop further an open, rule-based,

predictable, non-discriminatory trading and financial

system Includes a commitment to good governance,

development, and poverty reduction – both

nationally and internationally

Target 13 : Address the special needs of the least

developed countries Includes: tariff and quota free

47

access for least developed countries' exports;

enhanced program of debt relief for HIPC and

cancellation of official bilateral debt; and more

generous ODA for countries committed to poverty

reduction

Target 14: Address the special needs of landlocked

countries and small island developing States

(through the Program of Action for the Sustainable

Development of Small Island Developing States and

the outcome of the twenty-second special session of

the General Assembly)

Target 15: Deal comprehensively with the debt

problems of developing countries through national

and international measures in order to make debt

sustainable in the long term

Target 16: In co-operation with developing

countries, develop and implement strategies for

decent and productive work for youth

Target 17: In co-operation with pharmaceutical

companies, provide access to affordable, essential

drugs in developing countries

Target 18: In co-operation with the private sector,

make available the benefits of new technologies,

especially information and communications

48

From the table above, can be seen at the 7th

goals about ensuring

environmental sustainability, specifically in its 9th

target, MDG‘s aimed to integrate

the principles of sustainable development into country policies and programs and

reverse the loss of environmental resources. Moreover, MDG provide indicators to

monitor the progress of the state which are proportion of land area covered by forest,

ratio of area protected to maintain biological diversity to surface area, energy use (kg

oil equivalent) per $1 GDP , Carbon dioxide emissions (per capita) and consumption

of ozone-depleting CFCs , and proportion of population using solid fuels.

Indonesia, as one of the states who owned large area of tropical forest, and

developing country that search for development growth surely aware of

environmental degradation. According to the Indonesia Ministry of Forestry, we have

127 million hectares of "forest area", which is about two thirds of our area. However,

during the period 1997 to 2000, Indonesia had lost 3.5 million hectares of forest per

year, or as large as the province of South Kalimantan. This is because development

in Indonesia has sacrificed the natural environment. The practices of tree cut down

resulting in damaging the land, flood the rivers and waterways and polluted the

atmosphere. We have many other natural resources with which the lower economic

people can survive, especially the oceans that serve as jobs for 3 million people. In

fact, marine resources in Indonesia have also been affected by deforestation.

The purpose of the seventh MDGs is to block all such damage. The

government of Indonesia expected to integrate the principles of sustainable

development into state policies and programs and end the destruction of natural

resources.81

In regards to assess the success in achieving this MDGs goal, there needs

to be indicators as measurement. In this 7th

point of MDGs, those indicators are : the

ratio of actual forest cover to total land area based on the review of satellite imagery

and serial photographic surveys, carbon dioxide emission, primary energy

consumption, energy intensity, energy elasticity, energy mix for renewable energy,

81

Sekretariat Nasional Forum Indonesia Untuk Transparansi Anggaran (SEKNASFITRA). 2009. Strategi Akselerasi Pencapaian Target MDGS 2015. SEKNASFITRA. Jakarta. Pg. 8-9

49

total consumption of ozone depleting substances, proportion of fish stock within safe

biological limit, the ratio of terrestrial areas protected to maintain biological diversity

to total terrestrial area, and the ratio of marine protected areas to total territorial

marine area.82

Furthermore, in the next chapter the writer will analyze Indonesia

MDG‘s timeline to better known Indonesia progress especially their specific action

through several project to analyze their achievement. In regards with this, the writer

focusing only on two indicators which are Carbon Dioxide emission and energy mix

for renewable energy.

2.3 International Regime on Palm Oil

2.3.1 Importance of Palm Oil in Indonesia

The palm oil industry has the potential to generate significant economic and

social development in Indonesia. Palm oil is Indonesia‘s second most successful

agricultural product, after rice paddy, and largest agricultural export. It provides a

means of income and economic development to a large number Indonesia‘s rural

poor. The palm oil industry is a significant contributor to rural income in Indonesia.

In 2008, over 41 percent of oil palm plantations were owned by small land holders,

producing 6.6 million tons of palm oil. With over half of Indonesia‘s population lives

in rural areas—of which over 20 percent live below the poverty line—the palm oil

industry provides an incomparable means of poverty alleviation. Limiting the

conversion of forest to agriculture or palm denies considerable prospective economic

benefits and improvements in living standards to the rural population, condemning

them to declining standards of subsistence.83

82

Bappenas. 2010. “Report On The Achievement Of The Millennium Development Goals In Indonesia 2010”.Bappenas. Jakarta. Pg. 97 83

World Growth. 2011. The Economic Benefit of Palm Oil to Indonesia. World Growth. Pg. 4

50

The growth of Indonesia palm oil industry can be seen from the graphic of

palm oil production below.84

From graphic above, can be seen Total world production of palm oil has

increased almost threefold over the past 3 decades to 20091. In 2009/10, total palm

oil production was estimated at 45.1 million tons with Indonesia and Malaysia

accounting for more than 85 percent of the world total. Indonesia and Malaysia each

produced over 18 million tons of palm oil. In 2008, Indonesia exported over $14.5

billion in palm oil related products.

The Indonesian palm oil industry has experienced significant growth in recent

years with approximately 1.3 million ha of new area dedicated to palm oil plantations

since 2005, reaching almost 5 million ha in 2007 (representing 10.3 percent of the

48.1 million ha of agricultural land).17 This substantial expansion is due to higher

returns driven by stronger demand. The majority of Indonesia‘s palm crop is located

in Sumatra, with over 75 percent of total mature palm area and 80 percent of total

palm oil production. In 2008, approximately 49 percent of palm oil plantations were

owned by private plantations, 41 percent by small shareholders and the remaining 10

84

World Growth. 2011. “The Economic Benefit of Palm Oil to Indonesia”. World Growth. Pg. 7

51

percent by Government plantations. Private plantations represent the largest

producers of palm oil in Indonesia, producing over 9.4 million tons of palm oil

valued in 2008. In the same year smallholder plantations produced 6.7 million tons of

palm oil and Government plantations produced 2.2 million tons of palm oil.85

Significant growth in the palm oil industry, has also led to palm oil becoming

component of economic activity in regional economies. In certain regions, palm oil is

the dominant estate crop and major contributor to economic development. In the past

decade, the palm oil plantation areas of Kalimantan and Sulawesi have experienced

strong development, averaging 13 percent and 8 percent annual growth rates,

respectively.23 The plantation and harvesting of oil palm is labor intensive, as such,

the industry contributes a significant portion of employment in many regional areas.

In 2006, it was found that around 1.7 to 2 million people worked in the palm oil

industry.86

2.3.2 Roundtable on Sustainable Palm Oil (RSPO)

Palm oil is the most consumed oil in the world due to its wide variety of use

ranging from food ingredient, beauty product, to cooking oil. According to European

Palm Oil Alliance (EPOA), in 2015 palm oil have been consumed for more than 60

million tons from total 204,3 million tons of world consumption of oil and fat.

Moreover, according to EPOA in 2016, major consumers of palm oil are India,

China, European Union, Indonesia, and Malaysia, which can be seen in the table

below87

:

85

World Growth. 2011. The Economic Benefit of Palm Oil to Indonesia. World Growth. Pg. 10 - 11 86

World Growth. 2011. The Economic Benefit of Palm Oil to Indonesia. World Growth. Pg. 13 87

European Palm Oil Alliance. “Palm Oil Consumption”. Data retrieved from : https://www.palmoilandfood.eu/en/palm-oil-consumption . Data retrieved on July 16, 2017

https://www.palmoilandfood.eu/en/palm-oil-consumption

52

Table . Consumption major users of palm oil (oil world 2016)

The RSPO was established on April 8, 2004 in Zurich in accordance with

Article 60 of the Swiss Civil Code which made RSPO governed by Swiss Law, and

in June 2012 RSPO had almost 900 companies from 50 countries as their members.88

With the main purpose in promote the production and use of sustainable palm oil for

people, planet, and prosperity as well as to unite stakeholders from seven sectors of

the palm oil industry ranging from oil palm grower, palm oil processors and traders,

consumer goods manufacturers, Environmental NGOs, Social NGOs, Bank and

Investors, and Retailers to develop and implement global standards for sustainable

palm oil. This multi-stakeholder non-profit group was founded by Aarhus United UK

Ltd., Karlshamns AB (Sweden), Malaysian Palm Oil Association (MPOA), Migros

Genossenschafts Bund (Switzerland), Unilever NV (Netherlands), and Worldwide

Fund for Nature (WWF).89

RSPO is a global guideline for sustainable palm oil production. Based on the

environmental destruction that caused by the growth of palm oil plantation, RSPO

sets its target to ensure fundamental right of previous landowners, local communities,

plantation workers, smallholders and their families to be fully appreciated, that no

primary forest or high conservation value areas have been cleared for palm oil

production since November 2005, and that owners of barns and plantations reduce its

environmental footprint. This global standard is set down in the Principles and

88

RSPO. 2015. The Statutes of The Roundtable On Sustainable Palm Oil. RSPO General Assembly. Malaysia 89

RSPO. RSPO Factsheet. RSPO Indonesia Liaison Office (RILO).

53

Criteria on Sustainable Palm Oil Production (a list of requirements to help ensure that

palm oil production is economically viable, environmentally appropriate and socially

beneficial), which members are required to comply with.

The Roundtable on Sustainable Palm Oil has created two certification

systems based on P & C RSPO: one to ensure sustainable palm oil, and another one

to ensure the integrity of sustainable palm oil trade where palm oil sold as sustainable

oil is in line with palm oil produced on certified plantations. Both systems involve

third party certification bodies. Thanks to a rigorous certification system, palm oil

processors and consumers can be confident that their products support sustainable

palm oil.

Through this RSPO certification, its member can get several advantages

which are : They will be able to increase their product competitiveness, as well as

able to market their product in a bigger market in another country, besides giving

advantages towards the palm oil industry, RSPO also help saving the environment by

reducing emission of greenhouse gases, better waste management, reduced usage of

pesticides, improved compliance with regulatory requirements, reduction of work

place accidents, and enhanced productivity. Environmentally and socially responsible

buyers willing to pay a premium for responsibly produced products. Some of them

have even forsworn dealing in non-certified products and only sourcing through

traceable supply chains. In short, any benefit would be for the mill or facility to

accrue itself – as a responsible palm oil producer or supplier verified by the RSPO.

Key social and environmental NGOs lend their sighting to the processes for greater

transparency and credibility. As all the members are bound to accept RSPO

certification on each other, the value of the status is quite universal.

Indonesia through its representative Indonesia Palm Oil Association

(GAPKI), is one of the member of RSPO since before RSPO inaugurated as

International Organization in 2004. GAPKI was chosen as Indonesia representative

in RSPO due to the fact that GAPKI is the biggest palm oil association in Indonesia

54

which the member is not only from local and international privates sector but also

state owned enterprises. The first relation between Indonesia and RSPO can be seen

back in years 2000. In that time, the chairperson of GAPKI, Derom Bangun received

a letter from Angela Bowden under United Kingdom Oil Organization. The letter

was aim to questioned was the forest fire in Indonesia still happening. In this letter as

well, she claim that many parties in UK will not hesitate to boycott Indonesia palm

oil product, if the forest fire still happening. The forest fire in Indonesia in that time

indeed considerably big, and has happened since 1998. Many issues are emerging in

connection with the cause of the fire, and many parties cornered the organizers of oil

palm plantations because it is considered to have a big contribution in this forest

fire.90

Later in 2001, Derom Bangun, still as his capacity as chairperson of GAPKI

attend a workshop held by WWF together with some representatives from

stakeholder countries that are related to oil palm. In that workshop, the representation

of each party‘s country asked to sign a statement of intention to create cooperation in

sustainable palm oil development. Of course, there are many different interests which

carried by each parties in that time, some of the plantation parties suspected that this

was an attempt by the westerners side to regulate and control oil palm companies in

Malaysia and Indonesia for their own trade interests. Due to this different, the

workshop ended with no deal.91

In 2003, the workshop held again and re-discuss the initiatives of the previous

event. In this time, the workshop take places in Malaysia already under the name of

RSPO. The workshop discuss deeper about the goal, organization, and principle

which will be the guideline for the future development. In this workshop, put forward

the principle of 3P which are Planet, People, and Profit. People, refer to social aspect

needed to be done responsibly without demeaning human rights and dignity. Planet

means in doing plantation or palm oil industry needs to be accompanied by

90

Bangun, Derom. 2010. “Derom Bangun : Memoar Duta Besar Sawit Indonesia”. Kompas Media Nusantara. Jakarta. Pg. 41 - 42 91

Ibid. Pg. 42 - 43

55

sustainability and continuity of the environment. Profit means the company needs to

be economically reliable. The 2003 workshop that then resulted in an establishment

of international organization which is also a certification body of palm oil

certification called RSPO. In the same event, the parties then formulate executive

board which consists from representatives of each member party. Later in the general

assembly on the second roundtable conference which held in Indonesia, the

chairperson of GAPKI, Ir. Derom Bangun chosen as the second vice president of

RSPO.92

From brief explanation above, can be seen the factor that influence GAPKI to

become the member of RSPO which are: external push from European market that

can affect the export of Indonesia palm oil in that time, and internal push from the

willingness of GAPKI in protecting Indonesia palm oil industry, GAPKI also see

RSPO was created with the principle of good faith to solve environmental problems.

However in 2011, GAPKI decided to withdraw from RSPO due to several

reasons which are : GAPKI wanted to give full commitment in supporting Indonesia

palm oil certification namely Indonesia Sustainable Palm Oil (ISPO), that they see

will have better binding power due to its legal basis which is fourth amendment of

the 1945 Constitution Article 3 paragraph (4): "The national economy is organized

on economic democracy, with the principle of togetherness, efficiency, justice,

sustainable, environmental friendly, independence and by maintaining the balance of

national economic progress. ISPO is one of Indonesia program which aimed protect

Indonesia palm oil industry that was created by Indonesia Ministry of agriculture,

and already applied since March 2011.93

Moreover, according to experts of the

Director General of Agro Industry at the Ministry of Industry, Timbun Aritonang,

Tuesday, October 4, 2011 in an interview with Tempo stated that ―the existence of

92

Bangun, Derom. 2010. “Derom Bangun : Memoar Duta Besar Sawit Indonesia”. Kompas Media Nusantara. Jakarta. Pg. 43 - 44 93

RSPO. 2017. Members. http://www.rspo.org/members/page/12?keywords=&member_type=&member_category=&member_country=Indonesia. Data retrieved on July, 16 2017

http://www.rspo.org/members/page/12?keywords=&member_type=&member_category=&member_country=Indonesia

http://www.rspo.org/members/page/12?keywords=&member_type=&member_category=&member_country=Indonesia

56

ISPO could be a tool to increase foreign investment to invest in Indonesia‖.94

Up to

now, twenty companies have carried out ISPO certification trials. In March 2012 all

oil palm companies, large and small, are obliged to carry out an ISPO audit, with an

estimated completion of this process in 2014. In 2017, ISPO have covered 12% out

of 11.9 million hectares of oil palm plantations in the country, or about 1.428.000

hectares. Besides to support ISPO, another reason of GAPKI withdrawal are their

view that RSPO benefits consumers more than producers. It can be seen from

unfulfilled promise of RSPO to set premium prices for fresh fruit bunches and palm

oil that has RSPO certificate. This condition occurs due to the consumer

unwillingness to pay for premium price. Besides the cost to get RSPO certification is

too high, and make small enterprise unable to get the certification.

Moreover, a study conduct by Yusuf Basiron and Foong Khew Yew entitled

The Burden of RSPO Certification Cost on Malaysian Palm Oil and National

Economy proves that RSPO certification creating economic losses and also

increasing carbon emissions. The study found that the cost incurred to certify 5.9

million hectares of Malaysian oil palm plantations was RM 851 million. These costs

include RSPO membership fees, pre-certification, certification and corrective action

fees. While the incentives gained from the sale of certified CSPO / CSPKO certified

palm oil are only RM 93 million, thus creating economic losses due to RSPO

certification amounting to RM 758 million per year. In addition to the economic loss,

RSPO certification is also considered to increase carbon emissions which is very

contrary to its sustainable principle. In the process of RSPO certification involves

many activities and experts including from abroad who all use fossil energy. In fact,

environmental improvements or reductions in carbon emissions do not occur with the

certification because the certification process only compares what farmers have done

with what is the RSPO standard. By calculating the carbon footprint, carbon

94

Sedayu, Agung. 2011. “Indonesia Keluar Dari RSPO, Ekspor Tak Terpengaruh”. Tempo . Data retrieved from https://m.tempo.co/read/news/2011/10/04/090359864/indonesia-keluar-dari-rspo-ekspor-tak-terpengaruh. On July, 16 2017

https://m.tempo.co/read/news/2011/10/04/090359864/indonesia-keluar-dari-rspo-ekspor-tak-terpengaruh

https://m.tempo.co/read/news/2011/10/04/090359864/indonesia-keluar-dari-rspo-ekspor-tak-terpengaruh

57

emissions from fossil fuels spent in the implementation of RSPO certification

resulted in carbon dioxide emissions of 81.4 kg CO2 for each ton of CPO certified.95

If the same method is used to assess Indonesia's oil palm, the potential RSPO

certification economic loss for 10 million hectares of oil palm plantation is around

Rp 4.2 trillion per year. This economic loss is certainly not small. If the economic

losses are used to overcome poverty in Indonesia then about one million of the

population is free of poverty every year. The increase in carbon emissions resulting

from RSPO certification for Indonesia's 32 million tons of CPO reached 2.6 million

tons of CO2. The increase in carbon emissions due to RSPO certification is certainly

contrary to the intent and purpose of certification of sustainable palm oil, among

others, reducing carbon emissions. Contrary to international efforts to reduce carbon

emissions in every country. In addition, the increase in carbon emissions due to

RSPO certification is also counter to the Government of Indonesia efforts to reduce

carbon emissions with or without international assistance.96

However, GAPKI didn‘t obligate its members that already became member of

RSPO to withdraw as well because it is their own rights as member of RSPO.

Indonesia until 2017 has 114 member of RSPO. RSPO in the other hand also have

certified about 1,718,558 hectares of Indonesia palm oil plantation. Indonesia still see

RSPO as legal certification for companies and should be able to walk together with

ISPO, due to this view, government of Indonesia in 17 February 2016 launched a

joint-study between the Indonesian Sustainable Palm Oil Standard (ISPO) and the

Roundtable on Sustainable Palm Oil (RSPO) which marking a milestone for closer

and effective cooperation between Indonesian and global palm oil sustainability

standards.

95

GAPKI. 2016. Sertifikasi RSPO Rugikan Ekonomi dan Naikan Emisi Karbon Sawit ?. GAPKI. Data retrieved from https://gapki.id/sertifikasi-rspo-rugikan-ekonomi-dan-naikkan-emisi-karbon-sawit/ on July 26, 2017 96

GAPKI. 2016. Sertifikasi RSPO Rugikan Ekonomi dan Naikan Emisi Karbon Sawit ?. GAPKI. Data retrieved from https://gapki.id/sertifikasi-rspo-rugikan-ekonomi-dan-naikkan-emisi-karbon-sawit/ on July 26, 2017

https://gapki.id/sertifikasi-rspo-rugikan-ekonomi-dan-naikkan-emisi-karbon-sawit/

https://gapki.id/sertifikasi-rspo-rugikan-ekonomi-dan-naikkan-emisi-karbon-sawit/

58

Since the establishment of the Kyoto Protocol, the environmental issue,

especially the reduction of global warming, has become one of the global issues that

raised as main agenda of many countries in the world. This is more strengthen by the

establishment of international treaty by the Conference of Parties as the continuity

and development of Kyoto protocol. Indonesia and the United States are the two

countries that are very concerned about this environmental issue because: 1.

Indonesia is one of the countries with the largest forest area in the world but also

with a high rate of deforestation, 2 United States is one of the largest emitting

countries in the world. The similarity of interest in this environmental issue which

then helps the establishment of cooperative relations between the two parties which

will be the background of the creation of Indonesia USA comprehensive partnership

which is the umbrella of CIRCLE project.

59

CHAPTER III

Indonesia’s Achievement on Reducing Carbon Emission and

Increasing Renewable Energy Before CIRCLE Project : 2000-2011

3.1 Background

This chapter will explain about Indonesia effort and achievement in reducing

national emission and increasing the use of renewable energy by its own within years

2000 – 2011 which classified by the writer as ―before CIRCLE project timeline‖. The

writer separate Indonesia MDG‘s timeline into two parts which are before CIRCLE

project and after CIRCLE project to compare the achievement from each parts by

using Indonesia MDG‘s report from the relevant years as the benchmarks. In this

chapter will show Indonesia achievement in reducing emission and increasing use of

renewable energy seen from Indonesia 2010 MDG report.

3.2 Indonesia MDG timeline

Indonesia is one out of 189 countries that adopted the United Nations

Millennium Declaration, in September 2000, at the United Nation Summit in New

York. Indonesia, which in that time was under the presidential era of Abdurrahman

Wahid. In his speech at the UN Summit in New York, he stated the importance of

United Nations in addressing the world‘s problem, he also stated: ―the third

millennium is important because in this millennium we will be able to coordinate and

to work together for the benefit of mankind as a whole‖.97

From his speech can be

seen the support of Indonesia government towards global cooperation not only to

address global problems, but also to help Indonesia development.

97

United Nations. 2000, September 8. United Nations General Assembly Fifty Fifth session official record. Retrieved from http://www.un.org/ga/search/view_doc.asp?symbol=A/55/PV.7. Pg. 8. Retrieved on July, 17 2017

http://www.un.org/ga/search/view_doc.asp?symbol=A/55/PV.7.%20Pg.%208

60

According to Sri Mulyani Indrawati, the then State Minister for National

Development Planning/Head of National Development Planning Agency (Bappenas)

in 2005, she stated that ―MDGs have become an important reference in the

development implementation in Indonesia, from the planning phase as it is stated in

the Medium term National Development Plan (RPJMN) to its implementation. In

spite the constraints, the Government of Indonesia has committed to achieve its

MDGs. Therefore, hard work and cooperation with all parties, including civil society,

private sectors and donor community, are needed‖.98

In this chapter, the writer will explain the programs of Indonesia government,

within the time line of Indonesia MDGs which can be seen in the figure below, in

term to see the impact given by certain program towards Indonesia MDGs

achievement.

3.2 Before CIRCLE Project

The time frame of ―before CIRCLE project‖ refers to years 2000-2011 which

is included the first half of MDG progress. In behalf as a signatory to the Millennium

Development Declaration, Indonesia produced its first Progress Report on The

Achievement of the Millennium Development Goals in February 2004. In this report,

Indonesia showed their current progress of its achievement towards the MDGs from

98

BAPPENAS. 2005. Summary – Indonesia Progress Report on the MDGs. BAPPENAS. Jakarta. Pg. 1.

2000 2001 2003 2002 2004 2005 2006 2007 2008 2008 2009 2010 2011 2012 2013 2014 2015 2016

MDGs

Before CIRCLE

CIRCLE

Project SDG

Indonesia MDGs Timeline

61

1990 to 2003. The report used 1990 or the closest data, wherever available, as a

baseline to establish consensus and reach agreement on Indonesia‘s progress with its

MDG targets and to set benchmarks for future work.99

From those report, especially the specific goal number 7, about ensuring

environmental sustainability, government of Indonesia have suffered several

challenge and problem such as the reduction of forest areas to land proportion which

reduced from 67.7 percent in 1993 to 63.0 percent in 2004, the increase in ratio of

energy usage per domestic product which can be seen in the graphic below.100

According to this first MDGs progress report of Indonesia, the act of illegal

cutting of trees in national parks, illegal logging and the violation of borders of

conservation areas has lead Indonesia to increase the deforestation rate from 1.6

million hectares per year during the period of 1985-1997 to 2.1 million hectares

during the 1997-2001 periods. This deforestation plus the increase of energy demand

from industry, as well as the lack of non-renewable energy that then leads to the

increase of Indonesia greenhouse gas emission. The forestry itself is expected to

contribute 11-13 % to the total emission.101

99

BAPPENAS. 2005. Summary – Indonesia Progress Report on the MDGs. BAPPENAS. Jakarta. Pg. 1. 100

Ibid. Pg. 27 101

BAPPENAS (Badan Perencanaan Pembangunan Nasional). 2005. Summary – Indonesia Progress Report on the MDGs. BAPPENAS. Jakarta. Pg. 28

Commercial energy use per million rupiah

GDP

62

In dealing with such issues as well as to support our effort in achieving

MDGs goal, Indonesia government formulates their National Long Term

Development Plan (RPJPN) for 2005 – 2025 periods. RPJPN then divided in four

separate Medium Term Development Plans (RPJMNs) which all have a life span of

five years, started from 2005 – 2009 as its first RPJMN. In this RPJPN, the

government of Indonesia point out 9 development goals to be achieved which are :

political, defense and security, law and state administration, social culture, human

resources, economy, regional, infrastructure, and natural resources and environment

development.102

In the time period of 2005 – 2009, especially in development related to

Indonesia effort in reducing emission and clean energy development, Indonesia has

done several program which are :

3.2.1 Science and technology in the field of energy and minerals

Science and technology development is very influential on the welfare of the

nation and also to advance the civilization of the nation. Technology and science is

one significant factor in improving the quality of life in a country. In this era of

globalization, the development of technology and science can also serve as an

indicator of the strength of the nation, because the development of science and

technology can foster an innovation climate that can encourage the growth of creative

and high quality human resources.103

In the field of development of science and technology itself, throughout 2005-

2009 Indonesia has conducted several programs one of them in the field of energy

and minerals, namely the development of biofuel design technology (biodiesel and

bioethanol). Some examples of the realization of this program are: bioethanol

processing technology research program from palm juice by Coconut and Other Palm

102

BAPPENAS. 2005. Visi dan Arah Pembangunan Jangka Panjang (PJP) Tahun 2005 – 2025. Kantor Menteri Negara Perencanaan Pembangunan Nasional. Jakarta. Pg. 1-16 103

Peraturan Presiden Republik Indonesia Nomor 7 Tahun 2005 tentang Rencana Pembangunan Jangka Menengah Nasional Tahun 2004 – 2009. Section IV.22-1. Pg. 178

63

Research Institute, Manado, and research on the strategy of developing coconut

based biodiesel industry in Maluku by Center for Assessment and Development of

Agricultural Technology

In the research of bioethanol processing technology engineering from palm

juice, the result is it has produced bioethanol processing machine which is practically

applied mainly by farmer group and medium scale industry. This machine can

produce bioethanol which later can be used as alternative fuel to replace fossil fuel.104

Utilization of bioethanol itself to be used as vehicle fuel can be done by mixing

bioethanol with fuel oil. By mixing bioethanol on vehicle fuel, in this case Premium

with a ratio of 50:50, emissions of carbon dioxide gas produced as residual burning

showed a reduction of 3.66%.105

In addition to reducing carbon emissions, the use of

biodiesel as an oil fuel mixer is also proven to save fuel usage, with a 90:10 mixed

ratio, fuel efficiency savings could reach 12.5% - 29%. This is because bioethanol

itself has a higher octane value than Indonesia's fuel oil products which is

premium.106

Meanwhile, the research on the development strategy of coconut based

biodiesel industry in Maluku examines the process of making coconut biodiesel,

biodiesel weakness and advantages, SWOT analysis on biodiesel development in

Maluku, biodiesel industry development strategy, and government policy support,

especially from Maluku Local Government.107

Biodiesel itself is one type of biofuel

which is a fuel engine made from renewable materials such as vegetable oils and

104

Lay, A. 2009. Jurnal Litbang Pertanian : Rekayasa Teknologi Alat Pengolahan Bioetanol dari Nira Aren. Balai Penelitian Tanaman Kelapa dan Palma Lain. Manado. Pg. 100-103 105

Fauzi Mukhamad. 2015. Pengaruh Bioetanol Terhadap Lambda Dan Emisi Gas Buang Pada Sepeda Motor Empat Tak Satu Silinder Berbahan Bakar Premium. Universitas Negeri Semarang. Semarang. Pg. 37 - 38 106

Lay, A. 2009. Jurnal Litbang Pertanian : Rekayasa Teknologi Alat Pengolahan Bioetanol dari Nira Aren. Balai Penelitian Tanaman Kelapa dan Palma Lain. Manado. Pg. 109 - 111 107

Bustaman, Sjahrul. 2009. Jurnal Litbang Pertanian : Strategi Pengembangan Industri Biodiesel Berbasis Kelapa Di Maluku.Balai Besar Pengkajian dan Pengembangan Teknologi Pertanian. Bogor. Pg. 46 - 52

64

animals that are devoted to use on diesel engines.108

Maluku was chosen as a place to

develop coconut based biodiesel based on the consideration of the availability of raw

materials and area. Based on data from the Central Bureau of Statistics of Maluku

2007, Maluku Province has a community coconut area of 90,310 ha with production

of 69,184 t / year.109

The coconut area is spread in almost all regions , namely Southeast Maluku

144.69 ha, Southeast Maluku 15,775 ha, Central Maluku 10,398 ha, Buru 13,449 ha,

Aru Islands, 4,825 ha, West Seram 12,823 ha, East Seram 16,399 ha, and Ambon

2,172 ha. Coconut plantation area of 90,310 ha has the potential to produce coconut

oil 242,80 million / year or equivalent 218.50 million / year biodiesel.110

Development of plantation commodities including coconuts is still widely open in

Maluku. According to Agroecology Zone map scale 1: 250.000 there are

1,263,575.40 ha of area that appropriate for coconut farm. The area is spread in West

Southeast Maluku regency (399,199,40 ha), Southeast Maluku (61,906,90 ha),

Central Maluku (165,847 ha), Buru (34,923.40 ha), West Seram (97,052,60 ha),

Seram East (332,328.50 ha), and Aru Islands (232,317.70 ha).111

The development of

the coconut of the people is directed at Aru Islands District, West Southeast Maluku

and Southeast Maluku because in that region, coconut has a higher comparative

advantage compared to other plantation commodities.112

However, although the biodiesel potential in Maluku is large, plus the

Ministry of Energy and Mineral Resources Regulation No. 20 of 2014 on mandatory

utilization of biodiesel as a mixture of fuel oil, which is 10% for transportation,

108

Haryanto, Bode. 2002. “Bahan bakar alternatif biodiesel”. Universitas Sumatera Utara Digital Library. Sumatera Pg. 1 109

Bustaman, Sjahrul. 2009. Jurnal Litbang Pertanian : Strategi Pengembangan Industri Biodiesel Berbasis Kelapa Di Maluku.Balai Besar Pengkajian dan Pengembangan Teknologi Pertanian. Bogor. Pg. 48 110

Ibid. 111

Ibid. 112

Bustaman, Sjahrul. 2009. Jurnal Litbang Pertanian : Strategi Pengembangan Industri Biodiesel Berbasis Kelapa Di Maluku.Balai Besar Pengkajian dan Pengembangan Teknologi Pertanian. Bogor. Pg. 48

65

industry and 20% for electricity in 2014.113

The absorption of biodiesel in Maluku

has not been able to show good results. Based on the statistics of New Renewable

Energy and Energy Conservation (EBTKE) until 2014, bioenergy utilization in

Maluku that shows good result comes from the development of bioenergy steam that

comes from the palm oil and sugar cane industry by generating a total of 22 MW of

electricity.114

Meanwhile, for the use of biodiesel as a mixture of fuel, cannot show

results. This is due to the lack of facilities for the fuel mixing process. Director of

Bioenergy at the Ministry of Energy and Mineral Resources Dadan Kusdiana in a

discussion of the National Energy Board at the Hotel Borobudur, Thursday

(21/8/2014) said, "We have not been able to distribute biodiesel in eastern Indonesia

to Maluku is 0%, so does Papua".115

Although in the eastern part of Indonesia, the use of biofuel is still not

effective, the development of biofuel in Indonesia as a whole, especially in the field

of electricity until 2011 showed a positive result. Some of the indications are :

Increased in installed Capacity on Grid : Biomass , Biogas, and Municipal Waste

Power Plant from 2001 to 2011.

On Grid's electrical system is a power distribution system whereby a power

plant other than Perusahaan Listrik Negara (PLN)'s power plant works together

with PLN's network to meet daily electricity needs. Another power plant is

usually a natural power plant built by the state with the help of private parties.

On Grid electrical system is considered more efficient than Off Grid system

because of its ability to determine the origin of electrical energy based on the

power needed at a certain time, for example: if installed On Grid Solar Power

113

Indonesia Ministry of Energy and Mineral Resources Regulation No. 20 of 2014 114

Directorate General of New,Renewable Energy and Energy Conservation. 2015. Statistik Energi Baru Terbarukan dan Konservasi Energi (EBTKE) 2015. Indonesia Ministry of Energy and Mineral Resources. Jakarta. Pg. 19 115

Yazid, Muhammad. 2014,August 21. Pemanfaatan biodiesel di Maluku dan Papua 0%. Data retrieved from http://industri.kontan.co.id/news/pemanfaatan-biodiesel-di-maluku-dan-papua-0. Retrieved on July 17, 2017

http://industri.kontan.co.id/news/pemanfaatan-biodiesel-di-maluku-dan-papua-0

66

Plant (PLTS) connected to a house, then the need for electricity during the day of

the house can be filled only by the PLTS, it is because the average electrical load

during the day is lower than at night. While at night where the household

electrical load usually increases, then in select the flow of electricity that comes

from PLN power plant to meet the electrical load of the house.116

An increase in On Grid's installed capacity from renewable energy can

certainly help replace the electrical energy generated from environmentally

damaging coal-fired power plants, which means that they are more

environmentally friendly, thereby directly helping to reduce carbon emissions.

The increase in on grid capacity installed in 2001 to 2011 can be seen in the table

below. 117

116

Solar Surya Indonesia. 2012, November 21. “Sistem Off Grid, On Grid PLTS”. Data retrieved from http://solarsuryaindonesia.com/info/sistem-off-grid-on-grid-tie. Retrieved on July 18, 2017 117

Directorate General of New,Renewable Energy and Energy Conservation. 2015. Statistik Energi Baru Terbarukan dan Konservasi Energi (EBTKE) 2015. Indonesia Ministry of Energy and Mineral Resources. Jakarta. Pg. 17

No Company Name Year Contract

Type Location PLN Region

Biomass

Type

Contract

(MW)

1 PT Riau Prima Energy 2001 EP Riau PLN Wilayah

Riau

Palm

Waste 5

2 PT Growth Sumatera 1 2006 EP North

Sumatera

PLN Wilayah

Sumut

Palm

Waste 9

3 PT Listrindo Kencana 2006 IPP Bangka PLN Wilayah

Bangka

Palm

Waste 5

4 PT Indah Kiat Pulp &

Paper 2006 EP Riau

PLN Wilayah

Riau

Palm

Waste 2

5 PT Belitung Energy 2010 IPP Belitung PLN Wilayah

Babel

Palm

Waste 7

Installed Capacity on Grid : Biomass , Biogas, and Municipal Waste Power Plant

http://solarsuryaindonesia.com/info/sistem-off-grid-on-grid-tie

67

Based on the table above can be seen the use of palm waste as a source of

electrical energy dominate the development of electricity until 2011. Development

centered on the area of the largest palm grower area indicates the government's

efforts in exploiting the different potential of each region. The amount of electricity

generated from the biomass-based on grid system has significantly increased from

2006 to 2010 which can be seen in the graph below.118

118


6 Permata Hijau Sawit 2010 EP Riau PLN Wilayah

Riau

Palm

Waste 2

7 PT Pelita Agung 2010 EP Riau PLN Wilayah

Riau

Palm

Waste 5

8 PT Growth Sumatera 2 2010 EP North

Sumatera

PLN Wilayah

Sumut

Palm

Waste 10

9 PT Growth Asia 2011 EP North

Sumatera

PLN Wilayah

Sumut

Palm

Waste 10

10 PT Navigat Organic 2011 IPP Bekasi PLN Dist Jabar MSW 6

EP : Excess Power

IPP : Independent Power Producer

MSW : Municipal Solid Waste

68

Source : Directorate General of New,Renewable Energy and Energy Conservation. 2015. Statistik Energi

Baru Terbarukan dan Konservasi Energi (EBTKE) 2015. Indonesia Ministry of Energy and Mineral Resources.

Jakarta. Pg. 19

Based on the graph above, the amount of electricity that can be generated by the

biomass power plant listed in the table in 2011 is calculated as 61 Mega Watt, if the

calculation of electricity needs of 1 house average of 2,854 watts per day, then the

total power of electricity generated Above can meet the electricity needs for 21,374

houses.119

Increased production and distribution of biodiesel from 2009 to 2011.

The increasing of biomass power generation until 2011, was also accompanied by

increased production of biodiesel in Indonesia as a whole. An increase in Indonesia's

biodiesel production and distribution from 2009 to 2011 can be seen in the graph

below.120

119

Kho, Dickson. “Cara Menghitung Daya Listrik yang diperlukan Rumah”. Data retrieved from http://teknikelektronika.com/cara-menghitung-daya-listrik-yang-diperlukan-rumah/. Retrieved on July 18, 2017 120


0

10

20

30

40

50

60

70

2006 2010 2011

Installed Capacity (MW)

http://teknikelektronika.com/cara-menghitung-daya-listrik-yang-diperlukan-rumah/

69

Source : Directorate General of New,Renewable Energy and Energy Conservation. 2015.

Statistik Energi Baru Terbarukan dan Konservasi Energi (EBTKE) 2015. Indonesia Ministry of

Energy and Mineral Resources. Jakarta. Pg. 20

Based on the graph above, it can be seen that significant improvement in the

development of biodiesel in Indonesia occurs in terms of production and export,

but the absorption of biodiesel at the domestic level has not shown a significant

increase. This is of course very regrettable especially when compared with the

amount of production and its exports that are considered very significant. In

2008, the government issued Regulation of the Minister of Human Resources

No. 32 of 2008 which regulates the provision, utilization and administration of

biofuel as other fuels. In the attachment the regulation has been regulated

phasing of minimum utilization of biodiesel which can be seen in table below.121

Sector Type Oct 2008 –

Dec 2008

January

2009

January

2010

January

2015

January

2020

January

2025

Informatio

n

Household - - - - - - Not yet

Specified

121

Peraturan Menteri SDM No 32 tahun 2008 tentang penyediaan, pemanfaatan dan tata niaga bahan bakar nabati (biofuel) sebagai bahan bakar lain. Lampiran 1

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2009 2010 2011

Indonesia Biodiesel Production and Distribution

Production

Export

Domestic

70

PSO

Transportation

1%

(existing) 1% 2,5% 5% 10% 20%

To total

needs

Non PSO

Transportation 1% 1% 3% 7% 10% 20%

To total

needs

Industry and

Commercial 2,5% 2,5% 5% 10% 15% 20%

To total

needs

Power Plant 0,1% 0,25% 1% 10% 15% 20% To total

needs

Source: Minister of Energy and Mineral Resources Regulation No. 32 of 2008 on the supply,

utilization and administration of biofuels as other fuels. Appendix 1

After seeing the sharply increasing production and export of biodiesel in

2011, the government took further steps in its effort to increase domestic

absorption of biodiesel by amending the Minister of Manpower no. 32 of 2008

through Ministerial Regulation No. 25 of 2013 on changes to regulations Minister

of energy and mineral resources number 32 of 2008 on the supply, utilization, and

marketing of biofuels as other fuels. In this regulation the government improves

the presentation of the minimum utilization of biodiesel utilization stages, which

can be seen in the table below.122

122

peraturan menteri esdm nomor 25 tahun 2013 tentang perubahan atas peraturan menteri energi dan sumber daya mineral nomor 32 tahun 2008 tentang penyediaan, pemanfaatan, dan tata niaga bahan bakar nabati (biofuel) sebagai bahan bakar lain. Lampiran 1

Sector Type September

2013

January

2014

January

2015

January

2016

January

2020

January

2025 Information

Household - - - - - - Not yet

Specified

PSO

Transportation 10% 10% 10% 20% 20% 25%

To total

needs

Non PSO

Transportation 3% 10% 10% 20% 20% 25%

To total

needs

71

Source : Source: Minister of Energy and Mineral Resources Regulation No. 32 of 2008 on the

supply, utilization and administration of biofuels as other fuels. Appendix 1

Based on the above table, the government's ambition is to increase domestic

biodiesel catch, by increasing the percentage of biodiesel use obligation for fuel

mixture in all sector type.

Increased installed capacity of biodiesel and bioethanol (in metric tons and kilo

liters) from 2006 to 2011.

Installed capacity is the total production capacity that can be produced by

production machines, which in this case are biodiesel and bioethanol producing

engines. Installed capacity does not determine the final amount of production,

because the installed capacity does not quantify production factors that can

reduce the number of final products. By knowing the amount of installed

capacity of biodiesel and bioethanol, can be seen the development of Indonesia

in infrastructure development that support this production. The development of

installed capacity of biodiesel and bioethanol from 2006 - 2011 can be seen in

the table below.123

123


Industry and

Commercial 5% 10% 10% 20% 20% 25%

To total

needs

Power Plant 7,5% 20% 25% 30% 30% 30% To total

needs

72

Source : Directorate General of New,Renewable Energy and Energy Conservation. 2015. Statistik Energi

Baru Terbarukan dan Konservasi Energi (EBTKE) 2015. Indonesia Ministry of Energy and Mineral

Resources. Jakarta. Pg. 21

From two tables above can be seen that from biodiesel development, the

total installed capacity experiencing stable increase from 2006 till 2011 which

shown the progress of its infrastructure building is continuing, meanwhile from

Years Total installed capacity

Metric Tons Kilo Liters

2006 7.000 8.046

2007 1.907.000 2.191.954

2008 2.701.010 3.104.609

2009 3.670.973 4.219.509

2010 4.432.973 5.095.371

2011 4.474.373 5.142.957

Years Total installed capacity

Metric Tons Kilo Liters

2006 0 0

2007 42.900 55.000

2008 233.300 299.103

2009 264.679 339.333

2010 264.679 339.333

2011 264.679 339.333

BIODIESEL

BIOETHANOL

73

bioethanol development, stagnancy occurs from 2009 to 2011 shows that there

are no new infrastructure build in that time.

3.2.2 Natural Resource Management Development and Environmental

Function Preservation

Indonesia's long-term development emphasizes on the principle of sustainable

development supported by the management of natural resources and a good

environment. Based on these principles, forestry, energy, mineral, and mining

resources are utilized as development capital coupled with its conservation

efforts.124

Indonesia's forest resources are one of the largest in the world. In 2004

Indonesia's forest area was 126.8 million hectares making it the third largest

tropical forest group in the world after Brazil and Zaire. In addition, in the same

year's assessment, Indonesia's biodiversity was also second only to Columbia.125

Based on these facts, Indonesia's forest area further strengthens itself not only as

a strategic development capital but also as one of the world's lungs that play a

direct role in maintaining global climate stability.

However, the forestry and peat lands sector in Indonesia itself is also a major

emission contributing sector. Based on data from Indonesian Ministry of

Republic Industry, in 2000 alone Forestry and peat lands accounted for 59.6% of

Indonesia's total gas emissions, followed by Energy 20.4%, Waste 11.42%,

Industrial Process 3.12%, Agriculture 5.47% with emissions generated from

forestry already added to emissions from deforestation and forest degradation

processes, and transported emissions generated together in energy. To overcome

the problems of the forestry sector itself, the Indonesian government has

implemented several programs such as Daily Hotspot monitoring in 20 provinces

124

Bappenas. 2009. “Pencapaian Sebuah Perubahan: Evaluasi 4 Tahun Pelaksanaan RPJMN 2004 – 2009”. Kementrian Negara PPN. Jakarta. Pg. 453. 125

Ibid.

74

to reduce the potential for forest fires, the implementation of the Green Indonesia

(MIH) Program through the Indonesian Simultaneous Plantation Action

Movement which reaches more than 79 million trees plantation, Women

Planting and Maintaining Trees that reach over 10 million trees, Solidarity of

Wives of United Indonesia Cabinet (SIKIB) through Indonesia Green and Clean

Program, Green Bali Movement and Green Bangka Belitung Movement. Based

on the implementation of the above program, the yield of vegetation cover levels

in 2006-2007 is 37 percent of Sumatera area, 8.2 percent in Java, 39 percent in

Kalimantan, 15-18 percent in Bali and Nusa Tenggara, 49 percent in Sulawesi,

83 percent in Maluku, and 73 percent in Papua.126

3.3 Indonesia overall emission and energy consumption 2011

As been stated in the previous chapter, the writer will use Indonesia MDGs

report especially goals indicator from the 7th

point of MDGs which are

greenhouse gas emission, and renewable energy mix as tools to assessing the

success of several program which stated before within period years 2000 – 2011

which considered as the time before CIRCLE Project established.

3.3.1 Indonesia Greenhouse Gas emission 2011

Green House Gas emission are a group of compounds that are able to trap

heat (long wave radiation) in the atmosphere, keeping the Earth's surface warmer

than it would be if they were not present.127

One of this gases which also the main

gases produces by the treatment of POME in open lagoon is what so called Methane

(CH4). In 2010, Indonesia ranked as the 6th highest methane emitter, behind China,

the U.S., Russia, India, and Brazil, with estimated total anthropogenic methane

emissions of 234.6 MTCO2e. From the total methane emission in Indonesia in that

years, waste water contribute for 10 % of the source. Meanwhile the methane

126

Bappenas. 2009. “Pencapaian Sebuah Perubahan: Evaluasi 4 Tahun Pelaksanaan RPJMN 2004 – 2009”. Kementrian Negara PPN. Jakarta. Pg. 462 - 463 127

Allison, Ian. The science of climate change: questions and answers. Canberra: Australian Academy of Science, 2010.

75

emission caused by POME treatment specifically in that year reach the number of

40.647.750 MTCO2e128

In Indonesia MDG report 2010, also show that Indonesia

current carbon emission based on data counted in 2008 are 1,711,626 Gg CO2e

which shows big increase from the baseline set in the MDG which are Indonesia‘s

emission in 2000 at 1.416.074 Gg CO2e.129

In 2010 the Government of Indonesia pledged to reduce emissions by 26%

(41% with international support) against the business as usual scenario by 2020.130

According to Indonesia‘s Second National Communication of 2010, national

greenhouse gas (GHG) emissions were estimated to be 1.8 GtCO2e in 2005.131

This

represents an increase of 0.4 GtCO2e compared to 2000. Most emissions (63%) are

the result of land use change and peat and forest fires, with combustion of fossil fuels

contributing approximately 19% of total emissions.132

Based on Indonesia‘s First

Biennial Update Report (BUR) submitted to UNFCCC in January 2016, national

greenhouse gas (GHG) emissions was 1.453 GtCO2e in 2012 which represent an

increase of 0,452 GtCO2e from year 2000. The main contributing sectors were

LUCF including peat fires (47.8%) and energy (34,9%).133

Since Indonesia voluntarily pledged to reduce emissions by 26% on its own

efforts, and up to 41% with international support, against the business as usual

scenario by 2020, Indonesia has promulgated relevant legal and policy instruments,

including the national action plan on GHG emissions reduction as stipulated in

128

Eastern Research Group, Winrock International. 2015. Resource Assessment for Livestock and Agro‐Industrial Wastes—Indonesia. Global Methane Initiatives. Pg. 32 129

BAPPENAS. 2010. REPORT ON THE ACHIEVEMENT OF MILLENNIUM DEVELOPMENT GOALS INDONESIA 2010. BAPPENAS. Jakarta. Pg. 97 130

Republic of Indonesia. 2016. First Nationally Determined Contribution Republic of Indonesia. Ministry of Environment and Forestry. Jakarta. Pg 1 131

Ibid. Pg 2 132

Ibid 133

Republic of Indonesia. 2016. First Nationally Determined Contribution Republic of Indonesia. Ministry of Environment and Forestry. Jakarta. Pg 2

76

Presidential Regulation (PERPRES) No. 61/2011 and GHG inventory through

Presidential Regulation (PERPRES) No. 71/2011.134

In Presidential Regulation No. 61/2011 about National Action Plan on Green

House Gas Emission Reduction, explained that national action plan on Green House

Gas Emission Reduction is working plan document for the implementation of various

activities that are directly or indirectly reducing Green House Gas Emission which in

line with national development target.135

The regulation also stated the activity of

greenhouse gas emission reduction including: agriculture, forestry and peat land,

energy and transportation, industry, waste management, and other supporting

activities.136

In the appendix of the regulation, there are several action plan regarding

the use of biogas and palm oil such as :

Development of plantation areas of palm oil tree, rubber, and cocoa in

non-forested land or degraded land with the specific goals of palm oil

tree plantation measuring at 860.000 ha within 2011 – 2014 time

period. Through this action, the Green House Gas emission reduction

will able to reach 74,53 million ton CO2e.137

Implementation of energy conservation partnership program, with

specific target to implement energy conservation partnership program

with private sector or with society towards 1003 objects included

building and industry in years 2010-2014. By this program, the

134

Republic of Indonesia. 2016. First Nationally Determined Contribution Republic of Indonesia. Ministry of Environment and Forestry. Jakarta. Pg 2 135

Republic of Indonesia. 2011. “Presidential Regulation No. 61/2011 about National Action Plan on Green House Gas Emission Reduction”. Article 1 Pg 4 136

Ibid. Article 2 Pg 6 137

Republic of Indonesia. 2011. “Presidential Regulation No. 61/2011 about National Action Plan on Green House Gas Emission Reduction”. Annex I Pg 14

77

estimated number of greenhouse gas emission reduction is 1,62

million ton CO2e.138

Provision and management of renewable energy and energy

conservation, with goals to build various power plants ranging from

micro hydro, mini hydro, solar energy, wind energy, to biomass. With

the specific goals of biomass based power plant building is 0,4 Mega

Watt within 2010 – 2014. The biomass power plant itself will reduce

about 0,00032 million ton of CO2e.139

Biogas utilization. The government of Indonesia within this regulation

wanted to utilize the use of biogas by targeting to build 10.000 unit of

biogas maker within 2010 – 2014. This utilization will reduce GHG

emission for 0,04 million ton of CO2e.140

3.3.2 Indonesia final energy consumption 2011

By seeing Indonesia final energy consumption in 2011 can be seen the

development of energy source in Indonesia. The growth of Indonesia total energy use

from its sources can be seen from the graph below.141

138

Republic of Indonesia. 2011. “Presidential Regulation No. 61/2011 about National Action Plan on Green House Gas Emission Reduction”. Annex 1. Pg 22 139

Ibid. Annex 1. Pg 23 140

Ibid. Annex 1. Pg 24 141

Center for Technology of Energy Resources and Chemical Industry. 2016. “INDONESIA ENERGY OUTLOOK 2016 : Energy Development in Supporting Green Industry”. Indonesia Agency for the Assessment and Application of Technology. Jakarta.Pg. 15

78

Source : Center for Technology of Energy Resources and Chemical Industry. 2016. “INDONESIA ENERGY

OUTLOOK 2016 : Energy Development in Supporting Green Industry”. Indonesia Agency for the Assessment and

Application of Technology. Jakarta.Pg. 15

From the table above can be seen the energy consumption of Indonesia over

the years experiencing growth especially from 2005 to 2011. The source of energy

use by Indonesia in 2011 can be stated still not showing significant improvement

from renewable energy sectors. However, the use of biofuel that started in 2006 have

shown potential growth over the years and shows increase over the years which

means it is expected to still increasing after 2011.

Moreover in Indonesia MDGs report 2010, stated that between 1990 – 2008,

the total energy used have increased 3 times the amount. Total energy usage in 1990

reached 247.975 million Barrels of Oil Equivalent (BOE), and by 2008, it reached

744.847 BOE which can be seen on the graphic below142

:

142

BAPPENAS. 2010. REPORT ON THE ACHIEVEMENT OF MILLENNIUM DEVELOPMENT GOALS INDONESIA 2010. BAPPENAS. Jakarta. Pg. 101-102

Biomass

Electricity

Liquefied Petroleum Gas (LPG) Gas

Coal

Biofuel

Oil fossil fuel

79

From the graphic above, can be seen that oil based fuel represent the most

used energy source. The increase in the use of non-renewable energy that reach

double the amount between years 1990 to 2008 need to be address by increasing the

developing of renewable energy resources.143

Indonesia‘s NDC reflects the targets of the National Energy Policy (NEP) to

increase renewable energy to 23% of total primary energy supply (TPES) by 2025,

from today‘s share of 4% (ADB, 2016). Indonesia also has one of the most

ambitious biofuel blending mandates in the world.144

However, the NEP faced by the

electricity shortage issues which then push Indonesia government to accelerate a

program designed to provide an additional 35 Giga Watt of power capacity by 2019.

As president of Indonesia, Joko Widodo stated in his remark at the groundbreaking

of Lontar Extention Steam-fuelled Power Plant (PLTU) in Lontar Village,

Tanggerang, Banten, on June 10, 2016 which says ―If we do not accelerate the

143

BAPPENAS. 2010. REPORT ON THE ACHIEVEMENT OF MILLENNIUM DEVELOPMENT GOALS INDONESIA 2010. BAPPENAS. Jakarta. Pg. 101-102 144

Kharina, Anastasia. Malins, Chris. Searle, Stephanie. 2016. “Biofuels Policy in Indonesia: Overview and Status Report”. The Inteernational Council on Clean Transportation (ICCT). Washington. Pg 7

Indonesia Total Energy Usage by Source

80

development, Java and Bali will experience electricity shortage in 2019 and the

provinces will be hit by electricity outages. Therefore, I persist the 35,000 MW

power plants development project all around Indonesia to be accelerated‖.145

This 35 GW program consist of PLN responsible for 17-GW, while another

18-GW will be given to the private parties where private parties will create a

consortium and operate as an independent power plant (IPP).146

However, for this

Program, the Government of Indonesia targets coal to be the main energy source at

more than 60% of the energy mix. It will make the National energy mix to be

dominated by coal in 2019.147

Source : Enrst & Young. 2015. ―Opportunities and challenges of the Indonesian Electrification Drive

March 2015‖. EY. London. Pg 5

By increasing the number of coal based power plant in the 3500 MW project

it also means that Indonesia will still rely on non-renewable energy. Coal is known as

one of the fossil fuel that cause greenhouse gas emission,148

which means that the

increase in coal use will affecting in the increase of greenhouse gas emission. Where 145

Asisten Deputy Bidang Naskah dan Terjemahan Sekretariat Kabinet Republik Indonesia. 2016. “Accelerate 35,000 MW Power Plant Development Project: President Jokowi”. Sekretariat Kabinet Republik Indonesia. Jakarta 146

Enrst & Young. 2015. “Opportunities and challenges of the Indonesian Electrification Drive March 2015”. EY. London. Pg 1 147

Ibid. Pg 6 148

United States Environmental Protection Agency. 2017. “Sources of Greenhouse Gas Emissions”. EPA. United States.

81

it is contradictive with Indonesia Millennium Development Goals in reducing

greenhouse gas emission, even though the amount of renewable energy also

increased in the 2019 energy mix projection.

The increase in the use of renewable energy especially biofuel doesn‘t mean

that it will certainly reduce the number of GHG emission even though the biodiesel

delivers higher emission reduction than petroleum.149

As been stated above,

Indonesia has an ambitious target in biofuel blending which was converted through

The National Energy Policy under Presidential Regulation No. 5/2006 initially

pronounced the aim of having a 5% share of biofuels (ethanol and biodiesel) in

national energy consumption by 2025.150

Also in 2008, Indonesia‘s Ministry of

Energy and Mineral Resources (MEMR) issued a regulation with a progressive target

for a biofuel blending mandate over the 2008–2025 time frame. The regulation

defines the minimum biofuel quantity used in transportation, in industrial and

commercial use, and for electricity generation by the target date set for the mandate.

Since then, the blending mandate regulation has been revised several times, most

recently through another MEMR Regulation released in March 2015. This regulation

increases mandatory biodiesel blending from 10% to 15% for transportation and

industrial uses, and it increases mandatory biodiesel blending to 25% for electricity

generation as of April 2015.151

In 2006, Timnas BBN envisioned enormous growth in biofuel production

over 10 years but the biofuel industry has actually developed at a moderate rate in the

intervening period. In 2016, it is expected that Indonesia will consume up to 3.8

149

Kharina, Anastasia. Malins, Chris. Searle, Stephanie. 2016. “Biofuels Policy in Indonesia: Overview and Status Report”. The Inteernational Council on Clean Transportation (ICCT). Washington. Pg 6 150

Ibid.Pg 8 151

Ibid.

82

billion liters of biodiesel from palm oil.152

This represents only about one-sixth of the

biodiesel consumption proposed for 2015 which can be seen at the table below

Indonesia biodiesel consumption proposed for 2015

and about one-tenth of total proposed biofuel consumption for that year.

Although it is likely that implementation will continue to lag behind the aspired

goals, Indonesia‘s ambitious targets for biofuels blending indicate a strong

government interest in expanding the domestic palm biodiesel industry.153

The demand for biofuels which lead to expand in biodiesel industry will have

impacts for the agricultural sector, as this demand may be met by expansion of the

domestic palm oil industries. While oil palm plantations in Indonesia are required to

be ISPO-certified (Indonesian Sustainable Palm Oil), plantations for biofuel

production are specifically exempt from this. As the total area of palm oil plantations

in Indonesia has risen more than tenfold in the period 1990–2015 (US Department of

152

Wright, Tom. Rahmanulloh, Arif. Indonesia Biofuel Annual Report 2015. USDA Foreign Agricultural Service. Pg 9 153


Source : Kharina, Anastasia. Malins, Chris. Searle, Stephanie. 2016. “Biofuels Policy in Indonesia: Overview and Status Report”. The

International Council on Clean Transportation (ICCT). Washington. Pg 12

83

Agriculture, 2016), while forest cover declined by about 20% (World Bank, 2015),

production of biofuels from palm oil is ―predicated on a vision of biofuel expansion

that would require extensive deforestation,― according to the ICCT.154

Options to prevent this could be requiring incentivizing the creation of new

palm oil plantations only on degraded lands, or support biofuel production from oil

palm residues.155

By looking at the result referencing in Indonesia MDG report 2010, despite

the amount of effort and achievement that have been done within years 2000 – 2011,

the national emission of Indonesia is still rising. Thus making Indonesia‘s effort

within the years in reducing emission still cannot able to give a big change, but it is

surely contribute towards the increase in development of renewable energy resources.

The disability of Indonesia as developing country to fund a big project in increasing

the use of renewable energy also takes part in the minimal contribution that can be

given from the empowerment of renewable energy towards Indonesia goals in

reducing emission.

154

Kharina, Anastasia. Malins, Chris. Searle, Stephanie. 2016. “Biofuels Policy in Indonesia: Overview and Status Report”. The Inteernational Council on Clean Transportation (ICCT). Washington. Pg 6 155


84

CHAPTER IV

Achievement of circle project in Sumatera Cities 2016

4.1 Background

This chapter will explain about the contribution as well as the result of

CIRCLE project towards Indonesia goals in reducing emission and increasing the use

of renewable energy. As been stated in the previous chapter, in this chapter the writer

will focusing in the second part of the research assessment which is the CIRCLE

project timeline from 2011 – 2016, in this chapter, the result of the project will be

explained, and to assess the contribution of this project, the writer will again

referencing to Indonesia MDG report in the relative years. .

4.2 CIRCLE Project

Capacity for Indonesian Reduction of Carbon in Land Use and Energy

(CIRCLE) Project is a USAID funded project which aims to help the owner of palm

oil mills in Indonesia to reduce their pollution as the result of production. Especially

in the form of Palm Oil Mill Effluent (POME), while also producing renewable

energy in form of biogas as well as to improve their overall facilities sustainability.156

CIRCLE project provided technical, financial and sustainability analyses for palm oil

mill owner in Indonesia related to POME to Biogas technology. The CIRCLE project

cooperated with Winrock International as the third-party developers to secure

financing and investment ($3-4 million per plant) for POME-to-energy projects with

its target by 2017, CIRCLE Project will offset 420,000 tons of CO2 annually.157

156

Winrock International. “Legacy Project : A CIRCLE of Opportunity: Improving Sustainability and Economic Opportunity in Indonesia’s Palm Oil Industry”. https://www.winrock.org/project/a-circle-of-opportunity-improving-sustainability-and-economic-opportunity-in-indonesias-palm-oil-i/. Data retrieved on August, 14 2017 157

Winrock International. 2016. “WINROCK’S WORK IN SUSTAINABLE PALM OIL”. Winrock International. Virginia

https://www.winrock.org/project/a-circle-of-opportunity-improving-sustainability-and-economic-opportunity-in-indonesias-palm-oil-i/

https://www.winrock.org/project/a-circle-of-opportunity-improving-sustainability-and-economic-opportunity-in-indonesias-palm-oil-i/

85

CIRCLE Project is one of USAID funded project in form of cooperative agreement,

USAID basically offers two kind of project funding which are contract and

cooperative agreement. The different between contract and cooperative agreement is

that in contract, USAID uses a tender system whereby NGOs and organizations

submit their proposals and then will be selected the winning tender for specific

project for example ICED project with Tetratech as the implementer.158

In the form

of contract, all activities must be approved by USAID and all funding fully come

from USAID. Meanwhile, the CIRCLE project is in the form of a cooperative

agreement in which USAID invites a company or organization to provide a proposal

related to the main theme provided by USAID, where it is about environment and

emission reduction, the form of its activity is unrestrained. The difference of the

cooperative agreement is that it funded by USAID and the organization ( Winrock),

even clients who receive benefits through this project also contribute financially.

Winrock International in 2011 submitted a proposal to USAID about the

emissions reduction and renewable energy project that focuses on one of Indonesia's

largest commodities which is palm oil under the name of CIRCLE Project. Winrock

International proposed this program because of the increase of Indonesia Crude Palm

Oil production over the years which can be seen in the table below.159

Indonesia CPO production 2009 – 2012 ( in Ton )

Year Small holder Government Private Total

2009 1.503.543 401.176 1.960.139 3.864.859

2010 1.691.742 378.101 2.321.781 4.391.624

2011 1.759.585 409.112 2.450.611 4.619.308

2012 1.839.546 426.601 2.936.957 5.203.104

158

Karsiwuln, Dhiah. Deputy Chief of Party – CIRCLE Project. Personal Communication. August 30, 2017 159 Directirate General of Estate Crop, Indonesia Ministry of Agriculture. “Tree crop estate statistic of

Indonesia (Palm Oil) 2015”. Indonesia Ministry of Agriculture. Jakarta. Pg. 24

86

Based on the results of the study, Winrock International found that the

increase of the CPO production accompanied by the increase of new plantation land

in a large amount, and this is certainly can be a driver of Indonesia to increase

emissions due to land use change.160

Another concern of Winrock International is

also the lack of waste management technology in Indonesia especially for POME

which at that time only use open lagoon treatment. This happens due to the lack of

government regulations in regulating good POME processing procedures, the

Ministry of Environment only determines the raw standard of its waste but does not

regulate the proper process that must be done to achieve the standard which can be

seen on the Decree Of The Minister Of Environmental Number: Kep-51 / Menlh /

10/1995 on quality of liquid waste for industrial activities. The decree only regulates

the amount of Chemical Oxygen Demand (COD) and Biochemical Oxygen Demand

(BOD) that save to be discarded by the palm oil industry. COD and BOD itself are

two most component of POME which if do not treated well can cause methane

emission.161

If methane capture project is done as the POME treatment system, it can

reduce up to 60% of total emissions from palm oil mills. The emissions from palm

oil POME due to open lagoon alone amounted to 40,326,000 MTCO2e from

Indonesia's total GHG emissions that reach 380 million tons of CO2 in the same

years of 2008.162

The CIRCLE Project initial period was only 3 years from 2011 to 2014 but

ended up having two extensions. This project originally started in November 2011

and should be completed in 2014 but due to the many requests from the mill to join

the project, CIRCLE finally experienced the first extension until September 2015,

which then experienced a second extension in October 2015 until the end of 2016.

160

Karsiwulan, Dhiah. Deputy Chief of Party – CIRCLE Project. Personal Communication. August 30, 2017 161

Winrock International. 2015. “Handbook POME to BIOGAS Project”. Pg 8 162

PUSAT DATA DAN TEKNOLOGI INFORMASI KEMENTERIAN ENERGI DAN SUMBER DAYA MINERAL. 2016. “Data Inventory Emisi GRK Sektor Energi”. Jakarta. Pg. 50

87

CIRCLE Project itself has a target that determined by USAID which are to complete

1 project in Bidding process stage, 2 Pre-construction stage project, and 2 projects in

under construction stage. Meanwhile Winrock International itself have their own

target that related to electricity production which is to make 30 methane capture

project, from those 30 projects, only 6-8 projects that will be develop to become a

productive PLTBG in term to generate 27 MW of electricity.

In implementing the CIRCLE project, Winrock International cooperates with

several government agencies such as PLN, provincial and national plantation offices

as well as Ministry of Energy and Mineral Resources, precisely with EBTKE (Energi

Baru Terbarukan dan Konservasi Energi) directorate, because EBTKE has a target to

actively promote and applies pome methane capture to generate electricity from

biogas. The chart of cooperation in the CIRCLE project can be seen in the picture

below.

88

CIRCLE Project Chart

Source : US Embassy and Consulate in Indonesia. Data retrieved from https://id.usembassy.gov/our-

relationship/policy-history/embassy-fact-sheets/fact-sheet-u-s-indonesia-energy-cooperation/

United States of

America

Indonesia

US-Indonesia

Working Group On Energy

USAID Government of

Indonesia

Winrock International Ministry of Home

Affairs

Ministry of Energy

and Mineral

Resources

Palm Oil Company

PT PLN

Regional Plantation

Agency

Comprehensive Partnership

CIRCLE

89

From the cooperation chart above, can be seen the bigger picture of CIRCLE

Project and all actors which involved in the project. At the highest level, Indonesia

and USA established Indonesia-US Comprehensive Partnership (CP) during

President Barack Obama‘s visit to Indonesia on 9-10 November 2010.163

Within the

Comprehensive Partnership, both of the states launched 6 working group to increase

the cooperation across wider range of issues.164

The six working group itself actually

have been implemented in the first Indonesia – US Joint Commission Meeting in

Washington, D.C. on 17 September 2010, where both of the states which moderated

by their respective foreign minister agreed to launch plan of action for Indonesia –

United States Comprehensive Partnership that then become the guideline of

cooperation between two country.165

However, the energy cooperation relationship

between US and Indonesia has started in May 2005 where Presidents George W.

Bush and Susilo Bambang Yudhoyono establish The U.S.-Indonesia Energy Policy

Dialogue, a dialogue of bilateral working groups on oil and gas, electricity, and coal.

These topics, along with energy efficiency and renewable energy, which then started

their first meeting in 2008.166

In the 3rd Indonesia - US Energy Policy Dialogue that

held on June 29, 2010, in Washington, then established Indonesia - US Energy

Investment Roundtable which is implemented as an effort to increase energy

investment in Indonesia in comprehensive partnership between Indonesia and the

United States.167

163

Embassy of The Republic of Indonesia. United States Page. https://www.kemlu.go.id/washington/lc/Pages/Amerika-Serikat.aspx. Data retrieved on December 2, 2017 164

U.S Department of State. “United States-Indonesia Comprehensive Partnership”. https://2009-2017.state.gov/r/pa/prs/ps/2013/10/215196.htm. Data retrieved on December 2, 2017 165

Embassy of The Republic of Indonesia. United States Page. https://www.kemlu.go.id/washington/lc/Pages/Amerika-Serikat.aspx. Data retrieved on December 2, 2017 166

U.S Department of State. 2007. Data retrieved from https://2001-2009.state.gov/g/oes/rls/fs/2007/96410.htm. Data retrieved on December 2, 2017 167

Indonesia Ministry of Energy and Mineral Resources. 2012. Data retrieved from http://mobile.migas.esdm.go.id/post/read/Pekan-Depan,-The-2nd-Indonesia---US-Energy-Investment-Roundtable-. Data retrieved on December 2, 2017

https://www.kemlu.go.id/washington/lc/Pages/Amerika-Serikat.aspx

https://2009-2017.state.gov/r/pa/prs/ps/2013/10/215196.htm


https://2001-2009.state.gov/g/oes/rls/fs/2007/96410.htm

https://2001-2009.state.gov/g/oes/rls/fs/2007/96410.htm

http://mobile.migas.esdm.go.id/post/read/Pekan-Depan,-The-2nd-Indonesia---US-Energy-Investment-Roundtable-

http://mobile.migas.esdm.go.id/post/read/Pekan-Depan,-The-2nd-Indonesia---US-Energy-Investment-Roundtable-

90

The energy working group of Indonesia-United States comprehensive

partnership work to promote clean energy technology and policies, improve energy

access, and reduce the growth in Indonesia‘s energy-sector greenhouse gas

emissions.168

In this working group, United States through its Agency for

International Development, USAID have provided nearly $18 million for Clean

Energy Development and to build Indonesian capacity to reduce carbon in land use

and energy through several project such as ICED, CIRCLE, and Indonesian

Geothermal Education Capacity Building.169

4.2.1 USAID

CIRCLE Project is one of USAID funded project which established through

cooperative agreement with Winrock International as the project runner. CIRCLE

Project was established on October 7th

2011 through USAID cooperative agreement

No. AID-497-A-12-00001 Capacity for Indonesia Reduction of Carbon in Land Use

and Energy (CIRCLE) which signed by Wanda M. Henry as Agreement Officer of

USAID.170

Under this agreement, listed several point regarding the project such as

the budgeting, purpose of the cooperative agreement, responsibilities of parties, to

program description.171

Under the reporting and evaluation point, Winrock International obligated to

submit financial reporting which included Quarterly Financial Reporting, and Final

Financial Report, as well as program performance reporting which included annual

work plan, monitoring and evaluation plan, quarterly progress report and final report

168

U.S Department of State. “United States-Indonesia Comprehensive Partnership”. https://2009-2017.state.gov/r/pa/prs/ps/2013/10/215196.htm. Data retrieved on December 2, 2017 169

U.S Embassy and Consulate in Indonesia. Fact Sheet : U.S Indonesia Energy Cooperation. https://id.usembassy.gov/our-relationship/policy-history/embassy-fact-sheets/fact-sheet-u-s-indonesia-energy-cooperation/ 170

Winrock International Institute for Agriculture Development. 2011. “Cooperative Agreement No. AID-497-A-12-00001 Capacity for Indonesia Reduction of Carbon in Land Use and Energy (CIRCLE)”. USAID. Indonesia 171

Winrock International Institute for Agriculture Development. 2011. “Cooperative Agreement No. AID-497-A-12-00001 Capacity for Indonesia Reduction of Carbon in Land Use and Energy (CIRCLE)”. USAID. Indonesia.

91

to Agreement Officer‘s Technical Representative (AOTR) and

USAID/Washington.172

In attachment B- Program description, under Organizational

Capability chapter, inside Partnership sub chapter, explained that in CIRCLE Project,

Winrock International partnering with Aksenta, Biotrix, and WWF Indonesia.

Aksenta is a consultancy firm based in Jakarta which provides environmental and

social management training they also expert in technical advisory services for

certification schemes, Including RSPO.173

In CIRCLE Project, Aksenta will perform

sustainability screening based on industry standard at three selected mills in term to

prepare them for accreditation process. Biotrix Asia Company, based in Thailand is

an environmental technology company focusing in biogas technology included bio

treatment solution, and biological treatments of industrial effluents.174

In CIRCLE

project, Biotrix Asia will provide guidance Winrock International technical field

team to evaluate and optimize anaerobic digester option. Meanwhile, WWF

Indonesia work with Winrock International in identifying and do the screening of

palm oil company‘s plantation to make sure they meet the standard such as not

having palm oil plantation in restricted area like protected forest.175

4.2.2 Ministry of Home Affairs of The Republic of Indonesia

As a non-governmental organization which has been doing their work in

Indonesia for over 10 years, any Winrock International activity was regulated under

their MoU with Indonesia Ministry of Home Affairs about sustainable development

program.176

In the Article 1 about the objective of the MoU, stated that the objective

of the Memorandum of Understanding is to establish a legal framework for

cooperation between Indonesia and Winrock International to support the Government

172

Winrock International Institute for Agriculture Development. 2011. “Cooperative Agreement No. AID-497-A-12-00001 Capacity for Indonesia Reduction of Carbon in Land Use and Energy (CIRCLE)”. USAID. Indonesia. Pg. 9 173

Ibid. Pg. 21-22 174

Ibid. 175

Ibid. Pg. 81 176

Naleid, Michael. Winrock International Indonesia Country Manager. Personal Communication. November 21, 2017.

92

of Indonesia in implement sustainable development program.177

In this MoU, at the

second articles contain the scope of cooperation which both parties agreed to

cooperate in which are: Socio-economic in under develop region and environmental

protection and management.178

The MoU also regulate the obligation of Winrock

International as the second party such as Winrock International shall: comply with all

applicable laws and regulations in Indonesia, Provide traiing and technical assistance

in implementing the program focused on community and building the capacity of

human resource as well as the welfare of beneficiaries, submit progress development

report every end of the year to the Ministry of Home Affairs annually, with copies

provided to the local government.179

4.2.3 Ministry of Energy and Mineral Resources

On the CIRCLE project diagram above, can also be seen that Winrock

International also working closely with other relevant Indonesian Stakeholders

including government institutions (Ministry of Environment, Ministry of Energy and

Mineral Resources, District Government, Provincial Plantation Agency, etc.), and

PT. PLN. In working together with those 3 agencies, Winrock International does not

have specific MoU or agreement as the legal basis of the cooperation.180

The

cooperation happened due to the same goals which wanted to be achieved by

CIRCLE Project and the governmental agencies, specifically Ministry of Energy and

Mineral Resources (MEMR) and PT PLN Bangka Belitung.181

MEMR especially the

Directorate of New Renewable Energy and Energy Conservation (Direktorat Energi

Baru Terbarukan dan Konservasi Energi/EBTKE) was implementing a bio-energy

program that provides grant funding for biogas power plant project development to

177

Indonesia Ministry of Home Affairs. 2017. Memorandum of Understanding between The Ministry of Home Affairs Of The Republic Of Indonesia and Winrock International on Sustainable Develeopment Program No. 193/43/FK/03. 178

Ibid. 179

Ibid. 180

Naleid, Michael. Winrock International Indonesia Country Manager. Personal Communication. November 21, 2017. 181

Ibid.

93

local governments. EBTKE requested CIRCLE to conduct a feasibility study and

provide technical inputs for tender document for their project in Jorong, Tanah Laut

District, South Kalimantan.182

EBTKE also has a budget from the APBN for

Regional Owned Enterprises that work with palm oil companies to provide electricity

for the community. Winrock is helping the EBTKE team as a team of experts and

winrock also provides training to EBTKE teams.183

In CIRCLE project proposal, one

of the capacity building activity which included within the project is to provide

training to local community, industry, and GOI stakeholders, one form of this activity

is through creating workshop with related parties included Ministry of Energy and

Mineral Resources especially EBTKE team.

In CIRCLE project final report can be seen several workshop and feasibility

study which have been done by Winrock International with EBTKE namely :

Workshop ―POME to Energy‖ for EBTKE in Bogor or May 24, 2013, and feasibility

field training for EBTKE and PTPN VI in Jambi, on September 24-25, 2013.184

4.2.4 PT PLN Bangka Belitung

Meanwhile, PT PLN Bangka Belitung has been facing a challenging situation

due to energy shortage which resulted in frequent blackouts happened in the area. In

addition, Government of Indonesia has targeted to reduce the use of fossil fuel in the

national energy mix. Therefore, PLN Bangka Belitung is considering POME - to -

energy to be a promising solution to the energy shortage.185

PLN Bangka Belitung

endorsed three mills whose the technical assistance was provided by CIRCLE.186

Another governmental agency which is the Regional Plantation Agency help

182

Winrock International. 2016. Capacity for Indonesian Reduction of Carbon in Land Use and Energy (CIRCLE) Final Report. Winrock International. Pg 14 183


Winrock International. 2016. Capacity for Indonesian Reduction of Carbon in Land Use and Energy (CIRCLE) Final Report. Winrock International. Annex D Pg.1 185


Ibid.

94

CIRCLE in screening process since they have accurate data regarding the area owned

by each palm oil company within their area, and as the regional government, they

also help CIRCLE to obtain letter of support from local government.187

According to

the CIRCLE final project, Winrock International through CIRCLE learned valuable

lesson which is that supports from regional PLN and District Government are

essential for the project development since the support provides assurance to the

project developers and shorter process for obtaining permit and license.188

4.2.5 Palm Oil Company

Meanwhile while cooperating with palm oil company, Winrock International

use Confidentiality and Non-Disclosure Agreement (NDA) as the legal basis.189

Which underlined several important term and condition such as: both of the parties

desire to enter into discussions regarding a potential business relationship regarding

the CIRCLE Project, Both of the parties desire to exchange confidential information,

and other terms and condition.190

This NDA then will be signed by the

representatives of both parties, where from Winrock International it is signed by

Bernard Castermans as the Country Representatives Winrock International. Further

about the content of the NDA between Winrock International and palm oil company

can be seen in the appendices section of the thesis.

4.2.6 Regional Plantation Agency

In collaborating with regional plantation agency especially in Sumatera cities,

Winrock International do not have a legal basis for the cooperation in form of

agreement of MoU, the cooperation that occurred by both parties was caused by the

willingness of regional plantation agency to help because they see that the project

187




Winrock International. Confidentiality and Non-Disclosure Agreement. Jakarta

95

may able to suppress the act of illegal burning done by palm oil company.191

In

helping Winrock International in CIRCLE project, regional plantation agency give

the data regarding the plantation area own by the palm oil company. Through this

data, Winrock International can check whether the palm oil company itself have

plantation farm in forbidden area such as in protected forest or land with high BOD

and COD number. Based on this assessment then Winrock International can choose

the proper palm oil company to be targeted to join the project.192

CIRCLE Project itself has 3 main activities in its POME Methane Capture

project :

Sustainability improvement

The goal of sustainability improvement is to apply the value of sustainable

development to palm oil mill, which in the future will provide long-term benefits for

the company. The first step in this process is to form a partnership with the mill in

the form of NDA. In this case Winrock International is not only looking for

companies that want to cooperate but they also looking for companies who want to

commit to run sustainable development practices in their business.193

In choosing

clients who will be invited to work together in this project, Winrock International has

several points of consideration such as: the company should not have land in forest

areas or other restricted areas, winrock also see whether the company has zero

burning policy or not and also assess the land clearing system from the company. It

does not mean that the company should be good to be able to join the project, they

may still be in development but they have a commitment because later there will be a

teams that help them to make improvements.194

This team will help the palm oil

company starting from the assessment then they will construct an action plan

191


Ibid. 193


Ibid.

96

workshops, until monitoring. The initial phase of this activity is the screening process

in which winrock International works with WWF to screen the land to ensure that the

companies participating in this project do not have land in the forest and in areas

where the HCV (High Conservation Value) and HCS (High Carbon Stock) is high,

because it is a no go area for palm plantation.195

POME to Biogas project

POME to biogas project which introduce by Winrock International is in the

form of For the POME to Biogas conversion project itself, Winrock International acts

as a provider of technical assistance and expertise to help palm oil mills conduct

feasibility studies.196

The next step after the result of feasibility study is approved

will be prefeasibility study. If the result of the prefeasibility study is good, it will be

continued to in-depth feasibility study. Not only providing depth feasibility study,

Winrock International also provides assistance for palm oil producer until the

preparation of tender document and assistance at tender. They also give assistance in

financing project either with co share or fund search for example from bank.

However, there are several project that will be assisted by Winrock International up

to monitoring because the mandate from USAID for this project is there are at least 3

projects running, running in the sense of being PLTBG.197

Capacity building

Capacity building is one part of the circle project where Winrock

International provides knowledge about POME conversion technology for staff or

mill personnel, for offices such as plantation agencies in the area including staff from

EBTKE (New and Renewable Energy and Energy Conservation department of

195


Ibid. 197

Karsiwulan, Dhiah. Deputy Chief of Party – CIRCLE Project. Personal Communication. August 30, 2017

97

Ministry of Energy and Mineral Resources), in technical and financial including

calculation emissions and also about methane capture technology itself, so the topic

given depended to the needs of each party.198

Source : Winrock International. Seminar Investasi Energi ‗Peluang Bisnis Energi dari

Biogas‘. October 16, 2014

In the course of the project, Winrock international often encounter several

obstacles, especially in the first 2 years of this project runs. One of them is the lack of

interest from palm oil mill managers to participate in this project mainly because of

their views on the funding sources of this project which come from USA.199

This

perception was built due to the intensity of black campaign done by western country

towards Indonesia palm oil Industry. According to Mrs. Dhiah Karsiwulan, the

Deputy Chief of Party – CIRCLE Project, many of the palm oil mill tell that they

198


Ibid.

CIRCLE Project Flow Chart

98

have ever received similar offer for feasibility study but the result of the study

conducted was used to against them to attack the Indonesian palm oil industry.200

To avoid this kind of view from palm oil mill producer, Winrock

International assured oil palm companies in Indonesia through a memorandum of

understanding which regulate that Winrock would not provide data given by palm oil

companies to other parties without the consent of the palm oil company, which then

reflected by the existence of some companies that are not even willing to provide

data to USAID to be a report.201

But on the one hand, the Project offers an attractive value for the oil palm

company itself. Because the palm oil industry is definitely pursuing profit, so the

most interesting thing for them is that if they follow this program, they can generate

electricity that they can use alone or to be sold to PLN in financial terms, of course

by producing electricity for its own needs will ease the company's production burden

so as to increase profits, so also if the electricity from waste treatment proceeds to be

sold to PLN, the palm oil company will benefited as well.202

4.2 CIRCLE Project Result

The result of the circle project that will be discussed in this chapter is the

number of mill assisted by Winrock international in applying methane capture

technology which then will be converted into biogas that will be used to generate

electricity.

During the period 2011 - 2014, CIRCLE Project has successfully assisted 12 mills in

Sumatera which can be seen in the table below:

200


Ibid. 202

Naleid, Michael. Winrock International Indonesia Country Manager. Personal Communication. November 21, 2017.

99

No Province Total Mills Capacity (Tons/Hour)

1 Medan 1 60

2 Jambi 5 210

3 Palembang 3 260

4 Bandar Lampung 1 45

5 Pangkal Pinang 2 90

Source : Winrock International. 2016. Capacity for Indonesian Reduction of Carbon in Land Use and

Energy (CIRCLE) Final Report. Winrock International. Annex C Pg 3

Based on the data above, it can be seen that the total POME generated per

hour is 1240 tons. If calculated the amount of electrical energy biased by the pome is

based on the Winrock study at the CIRCLE Handbook which found 1 ton / hour

pome can generate 52,380 watts of electricity, it will get the total electrical energy of

64.95 MW. From 2014 to 2016, there are 9 more mill added as the member of the

project, 4 in Bangka Belitung, one in Central Sulawesi and 4 in East Kalimantan.203

Upon the closing of CIRCLE project, Winrock has completed 2 projects

under commercial operation, one project is in commissioning stage, and 3 project

under construction. While from 6 - 8 projects that aimed to be really developed by

Winrock, there are 6 project achieved with estimated power capacity of 6 projects is

up to 11.5 MWe, generate about 100,740 MWh of gross electricity per year

(assumptions: 8,760 operating hours, 100% utilization), and reduce GHG emission

about 240,000 tCO2e annually from the methane capture and fossil-based power

displacement.204

Unfortunately, the project that has been completed within the CIRCLE

project period from 2011 to 2016 has not been biased in claiming to reduce emissions

203


Ibid.

100

because the completed project has not been able to generate electricity. According to

the data the writer obtained from the interview with CIRCLE Project's Deputy Chief

of Party, two projects that have entered the operational phase in 2016 are biased to

generate electricity by the end of 2016 so that the emission reduction and electricity

generated by the company cannot be input into the achievement of CIRCLE

Project.205

Moreover, as the CIRCLE Project is over, Winrock International no

longer has access to monitoring or calculation of the project already in operation, as

it is the full right of the palm oil company. However, there are several other

achievements achieved by CIRCLE Project including: 2 additional mills obtained

IPP (Independent Power Producer) appointment from Ministry of Energy and

Mineral Resources and able to sell the generated electricity to PLN grid, CIRCLE

also managed to conduct 26 events of workshops and seminars for multi

stakeholders, And CIRCLE Project will have another similar program but with

different donor agency which is Global Green Growth Initiatives.206

From the explanation above regarding the result of CIRCLE Project

especially in seeing its contribution towards emission reduction and biogas

production, can be seen that this project has not been able to contribute directly to

Indonesia's emission reductions and biogas production improvements since the

completed project within the CIRCLE project period cannot be claimed generating

electricity until the end of the CIRCLE project. According to the Winrock

International estimation, 3 projects developed to generate commercial power could

be claimed to generate electricity and reduce emissions by the end of 2016.207

Thus,

it can be said that CIRCLE Project did not give direct impact to help Indonesia

achieve its emission reduction target in MDG Indonesia. This can be seen from

Indonesia MDG‘s report 2014 which shows that the number of of Indonesia emission

is still increasing with the latest data from 2005 that shows our emission are at

205


Ibid. 207

Ibid.

101

1,791,372 Gg CO2e compare to the base year with 1.377.983 Gg CO2e in year

2000.208

Another accomplishment which have been achieved by CIRCLE Project are

several workshop which attended not only by governmental agencies but also open

for public such as : Workshop on sustainability for palm oil sector for practitioners,

POME potential for sustainable energy, Training ‗POME to Energy‘ for WWF

Indonesia, Workshop ‗POME to Energy‘ for EBTKE, Workshop ‗Sustainable Energy

for POME‘ with WWF, Feasibility Field Training for EBTKE and PTPN VI, POME

to Energy and Greenhouse Gas Calculation in Indonesia‘s Palm Oil Industry,

Training of POME (Palm Oil Mill Effluent) Utilization for Biogas Power Plant, and

several other workshop with palm oil company.209

Nevertheless, CIRCLE Project itself is one of the foundations for the

development of sustainable palm oil industry. This was further reinforced by Mrs

Dhiah Karsiwulan statement as the Deputy Chief of CIRCLE Project which saw this

project is more of a startup project that she hope would trigger another project in the

same field.

4.3 Indonesia POME potential

As one of the biggest commodity in Indonesia, Palm oil is not only become

the foreign exchange contributor to the State but also one of the biggest causes of

emissions. The largest emissions in the oil palm manufacturing process are in pome

waste treatment systems in open tubes. Palm oil mills mainly produce crude palm oil

and palm kernel oil. The process produces two types of waste: palm oil mill effluent

(POME), with waste effluent of 0.7 m3 per ton of FFB processed. and solid waste in

208

Direktorat Tata Ruang dan Pertanahan Bappenas. January 30, 2014. Pencapaian MDGs dan Tindak Lanjut Pasca 2015. Bappenas. Jakarta. Pg. 49 209

Winrock International. 2016. Capacity for Indonesian Reduction of Carbon in Land Use and Energy (CIRCLE) Final Report. Winrock International. Annex D Pg 1

102

the form of shell, fiber, decanter cake, and empty fruit bunches.210

10 Palm oil mills

generally cite an effluent rate of 65 percent, but the Capacity for Indonesian

Reduction of Carbon in Land Use and Energy (CIRCLE) project studies have found

that effluent rates in the Indonesian palm oil sector could exceed 80 percent.211

Most

of mills apply the final treated effluent from the last lagoon for fertilizer in their

plantation. Thus, with the amount of waste of palm oil and the lack of good waste

treatment system, the project methane capture will certainly provide a significant

effect.

The potential of methane capture projects and POME treatment in Indonesia

itself is considerably great. Based on data from Global Methane Initiatives, 3 sectors

with the largest potential of anaerobic digestion project (AD) in agricultural sector

are palm oil plantation, cassava plantation, and swine farm.212

Can be seen in the

table below, the reason why these three sectors have great potential for the

application of ad project is due to the amount of emission reduction that can be

occurred.213

210

Eastern Research Group Inc, Winrock International. 2015. Resource Assessment for Livestock and Agro‐Industrial Wastes—Indonesia. Global Methane Initiatives. Pg 2-3 211

Ibid. 212

Ibid. Pg. vii 213

Ibid. Pg. 3

103

Based on the data above can be seen that the potential emission reduction in

the oil palm sector alone can reach 92.8%. This will certainly help Indonesia in its

effort to reduce national total greenhouse gas emissions.214

Meanwhile, when viewed from the amount of electricity that can be generated

through this methane capture process, based on estimates from Winrock International

in 2013 with an estimated 608 palm oil mill registered in Indonesia using this

methane capture system and total CPO production of 35.6 million tons. The amount

of electricity that can be generated is 6.7 TWh / year.215

4.4 Economic interest on CIRCLE Project (2011 – 2016)

Self-interest, in liberalism view is considered as the nature of individual.

Whereas, liberalism, believe that humanity basically is good and individuals are

rational human beings which able to improve their moral and material condition.216

Based on this believe, liberalism view that humanity is capable of satisfying its

natural needs through rational ways thus by creating cooperation. Furthermore,

neoliberal scholar such as Robert Axelrod and Robert O Keohane strengthen the

view that liberal do cooperation but they also broaden the reason behind why

cooperation occur. Neoliberalism see that cooperation emerges because when actors

have continuous interactions with each other, it is in their self-interest to cooperate,

and as more cooperation they build, rational players understand that they can

maximize their expected benefit cooperating thus making cooperation become their

preferred strategy overtime .217

Based on the explanation above, USA and Indonesia comprehensive

partnership can be seen through the eyes of liberalism as cooperation that happens

214

Eastern Research Group Inc, Winrock International. 2015. Resource Assessment for Livestock and Agro‐Industrial Wastes—Indonesia. Global Methane Initiatives. Pg vii 215

Winrock International. Seminar Investasi Energi ‘Peluang Bisnis Energi dari Biogas’. October 16, 2014 216

International Relations Theories. Pg. 83 217

International Relations Theories. Pg. 87

104

through continuous interaction with each other. Indonesia and USA have done

numerous cooperations since its first diplomatic relation in 1949.218

With the

growing relationship between the two countries, the target to be achieved in forming

its cooperation is also spreading. In the establishment of Indonesia's US strategic

partnership, Indonesia president in that time, Susilo Bambang Yudhoyono said that

U.S. – Indonesia strategic partnership would have to be based on: equal partnership

and common interests. It has to bring about mutual and real benefit for our peoples. It

has to be for the long-term, and have strong people-to-people content because we are

entering an era where our relations will be more and more driven by the need to

address global issues, as much as by the imperative to develop bilateral relations219

In the USA – Indonesia comprehensive partnership, can be seen that both of

the country developing cooperation not only in one specific issues but cooperate in

many sectors such as : education, trade, food security, global climate change

mitigation, investment and business, and security.220

The increase of issues covered

in cooperation also explained by neoliberal institutionalist. They stated that

cooperation in one issue are may spill over into other areas, while Robert Keohane

also added that cooperation can deepen to the point where it may be said to have

inertia : whatever the original condition of its establishment, once established,

institutional cooperation can exist and even flourish even if those initial conditions

vanish. This argument reflected through the fact that in October 2015, Indonesia

under the new presidential era of Joko Widodo extended the USA – Indonesia

comprehensive partnership with other issues to be covered such as maritime

cooperation.221

218

U.S Department of State (January 17,2017). “U.S Relation with Indonesia “ https://www.state.gov/r/pa/ei/bgn/2748.htm. Data retrieved on May 19, 2017 219

The 2009 U.S.-Indonesia Comprehensive Partnership: Engaging the Non-Government Sector. Findings and Recommendations of USINDO Conference April 16-17, 2009 220

Ibid. 221

The White House. October 26, 2015. Joint Statement by the United States of America and the Republic of Indonesia. Office of the press and secretary.

https://www.state.gov/r/pa/ei/bgn/2748.htm

105

CIRCLE Project is one of the project under the energy working group under

Indonesia USA comprehensive partnership. The main objective of this CIRCLE

project is to introduce methane capture technology in Indonesian palm oil industry

with the aim that this technology can generate energy by using POME. For Indonesia

alone, CIRCLE Project is one of the best investment projects to increase renewable

energy production. According to the Director General of EBTKE Rida Mulyana in

his speech during the inauguration of Biogas Power Plant (PLTBg) based on Waste

of Oil Palm (POME) capacity of 2 MW Asian Agri in Ukui, Pelalawan Regency,

Riau Province, the effort to utilize palm oil waste into energy is the optimization of

waste to energy which is one of Indonesia's contribution in reducing global GHG

emission by 29% by 2030.222 Increased renewable energy alone is one of the targets

in the MDGs Indonesia listed on point 7.2D on energy mix for renewable energy

with a baseline reference of 3.5% in 2000. In the 2014 MDGs Indonesia report the

latest data on energy mix for renewable energy comes from from the year 2010

which shows the increase from the baseline year for 1,5% which made it 5%.223

Thus, through the CIRCLE Project, which is a USAID funded project, USA

wants promote clean energy technologies and policies to help meet Indonesia‘s

growing energy demands, improve energy access, and reduce the growth in

Indonesia‘s energy-sector greenhouse gas emissions.224

This project is also acted to

support Indonesia and the United States second debt-for-nature swap in 2011, in

which the United States forgave $28.5 million in debt in exchange for Indonesian

commitments to protect forest areas and reduce greenhouse gas emissions from

deforestation, environmental impact assessments to advance sustainable land use and

222

Kementerian Energi Dan Sumber Daya Mineral Republik Indonesia. January 23, 2016. Siaran Pers Nomor: 05/SJI/2016. Data retrieved from http://ebtke.esdm.go.id/post/2016/01/25/1088/dirjen.ebtke.resmikan.plt.biogas.berbasis.limbah.cair.kelapa.sawit. Data retrieved on September 10, 2017 223

Direktorat Tata Ruang dan Pertanahan Bappenas. January 30, 2014. Pencapaian MDGs dan Tindak Lanjut Pasca 2015. Bappenas. Jakarta. Pg. 49 224

US Department of State. 2013. United States-Indonesia Comprehensive Partnership Fact Sheet. US Department of State. Data retrieved from https://2009-2017.state.gov/r/pa/prs/ps/2013/10/215196.htm. Data retrieved on September 10, 2017

http://ebtke.esdm.go.id/post/2016/01/25/1088/dirjen.ebtke.resmikan.plt.biogas.berbasis.limbah.cair.kelapa.sawit

http://ebtke.esdm.go.id/post/2016/01/25/1088/dirjen.ebtke.resmikan.plt.biogas.berbasis.limbah.cair.kelapa.sawit



106

forest management practices.225

In the US climate action plan described that one of

the strategies of us president at that time that is Barack Obama to combating climate

change is by working with another country that then specified more to : working with

another emitter country in reducing emission from deforestation and forest

degradation and also leading global sector public financing towards cleaner energy in

which US government mobilized billions of dollars or clean energy investments in

developing countries.226

CIRCLE Project itself provides those two strategy above

because the circle project is a USAID funded project for renewable clean energy

investment which in its application also aims to reduce deforestation caused by

clearing of land from palm oil industry.

With the CIRCLE project targeting the Indonesian oil palm industry, it should

be seen also that this industry is very vulnerable. Indonesia Palm oil industry has

become the subject of black campaign from developed country for several years even

though it is still not clear whether their action is to protect the earth from climate

change attack or just to protect their own interest.227

The use of crude palm oil that

vary from food product, cosmetics, and bioenergy have made palm oil to become one

of the most valuable oil in the world that compete with other plant sourced oil such

as corn oil, soybean oil, sunflower seed oil, and canola oil. Besides its various use,

the low production cost along high productivity, and low of cost of its maintenance

have pushing crude palm oil more to become the valuable commodity. Thus, black

campaign that happened towards crude palm oil is an indication of market

competition due to a shift in the use of vegetable oil sources: from corn oil, soybean

oil, sunflower seed oil, and canola oil to palm oil. Increased production and

225

US Department of State. 2013. United States-Indonesia Comprehensive Partnership Fact Sheet. US Department of State. Data retrieved from https://2009-2017.state.gov/r/pa/prs/ps/2013/10/215196.htm. Data retrieved on September 10, 2017 226

Executive Office of the President. June 2013. The President’s Climate Action Plan. The White House. Washington. Pg 18-20 227

Kementrian Perdagangan Republik Indonesia. 2011. Kampanya Negatif Kelapa Sawit Indonesia. Kementrian Perdagangan Republik Indonesia. Jakarta. Pg 7



107

consumption of palm oil worldwide has reduced the demand for conventional

vegetable oils that have been largely produced by western countries.228

Indonesia Palm Oil Industry have been accused by many parties especially

from western side as the main contributor for emission in Indonesia, many external

forces have come to Indonesia in term to make Indonesia regulate the increase of

palm oil plantation growth, even though the sources of emission in Indonesia are not

mainly come from opening new plantation land which considered as land use change,

the existence of forest fires that are not deliberate because of geographical factor of

Indonesia that mostly happened in Sumatera and Kalimantan area, which is the area

of oil palm plantation make many parties accuse that oil palm plantation is cause of

the fire.229 As when Indonesia joined the RSPO, it was then seen how other actors

from outside the State of Indonesia could also have the power to influence domestic

decisions. The force that then make Indonesia government planned to give

moratorium for new plantation of palm oil. Examples of black campaigns ever

undertaken by the EU and USA include the EU enacting the EU Directive on

greenhouse emission provisions, which regulate that the EU should not import CPO

for biofuels because these commodities are deemed not to comply with the

restrictions on emissions limiting CPOs European Union. Greenpeace (2007) has also

used the term "How The Palm Oil Industry Is Cooking The Climate" to refer to the

understanding of how Indonesia's peat land carbon stocks are being spent through the

development of palm oil. The main problem of oil palm development is not just

environmental issues. In the beginning Western countries (especially Europe and

America) made a negative campaign (black campaign) by stating that palm oil is not

good for health. For example, the Center for Science in the Public Interest (CSPI) in

the United States in 2005 argued that palm oil can cause heart attacks because it

228

Putri, Marsha Dewi. 2013. Analisis dampak black campaign minyak kelapa sawit (cpo) terhadap volume ekspor cpo indonesia. Departemen ilmu ekonomi fakultas ekonomi dan manajemen Institut Pertanian Bogor. Bogor. Pg. 8-9. 229

Bangun, Derom. 2010. “Derom Bangun : Memoar Duta Besar Sawit Indonesia”. Kompas Media Nusantara. Jakarta. Pg. 39

108

contains high saturated fats (Brown and Jacobson 2005). Similarly, the World Health

Organization has suggested to reduce consumption of palm oil because of the

potential to cause cardiovascular diseases.230

National interest is a thing that every actor have not only states in accordance

with liberalism. In circle project itself, according to Mrs Dhiah Karsiwulan, can be

seen the effort of USAID in protecting US interest which is the USAID action in

limiting the actions taken by Winrock International, one of which is to assist

Indonesian oil producers to obtain RSPO certification. USAID does not allow

winrocks to help oil palm producers obtain RSPO certification because it is

considered to helping US trade competitors. Moreover, because USAID assistance to

this project comes from the American people, USAID must also protect US interests

Basically, USA has their own oil commodities that become one of the palm

oil competitor which is soybean oil, thus making Indonesian oil palm companies

become more careful to America. Referring to the soybean oil projection issued by

the United State Department of Agriculture (USDA) in February 2016, the world's

soybean plantation area will increase from 118 million hectares in 2015 to about 130

million hectares in 2025, of which around 10 million hectares of soybean plant

expansion takes place in Brazil and Argentina using transgenic soybean seeds. So

that world soybean oil equivalent production will increase from 58 million tons

(2015) to about 70 million tons (2025). 231

In the same period, if Indonesia is subject to oil palm memorization, then in

2025 the world oil palm plantation will be only about 19 million hectares of which

about 16 million hectares of crops produce, so the world CPO production in 2025

will be only about 64 million tons. Thus before the year 2025, soybean oil production

230

Putri, Marsha Dewi. 2013. Analisis dampak black campaign minyak kelapa sawit (cpo) terhadap volume ekspor cpo indonesia. Departemen ilmu ekonomi fakultas ekonomi dan manajemen Institut Pertanian Bogor. Bogor. Pg. 8. 231

GAPKI. 2016. Jika Sawit Dimoratorium: Minyak Kedelai Kalahkan Minyak Sawit Sebelum 2025. Data retrieved from https://gapki.id/jika-sawit-dimoratorium-minyak-kedelai-kalahkan-minyak-sawit-sebelum-2025/. Data retrieved on September 10, 2017

https://gapki.id/jika-sawit-dimoratorium-minyak-kedelai-kalahkan-minyak-sawit-sebelum-2025/

https://gapki.id/jika-sawit-dimoratorium-minyak-kedelai-kalahkan-minyak-sawit-sebelum-2025/

109

will beat world palm oil. This is the target of the world's soybean oil producer

countries, especially South America and the United States (70 percent of the world's

soybeans).

With the existence of black campaign ever conducted by USA, as well as the

existence of trade competition between USA and Indonesia emerged speculation that

this circle project aims to restore the image of USA.232

Even though this project

contains national interest to be achieved by USA, the prior target that wanted to be

achieved by this project is based on mutual goals in emission reduction. This goal in

reducing emission was reflected from US President Climate Action Plan Page 18

regarding reducing emission from forest degradation and expanding clean energy use

to Asia-Pacific region.233

Besides, for Indonesia as developing country which

commonly deals with the lack of capability of the national government in financing

such huge project, international aid is one of the best option to help our funding.

Furthermore, this project can be really valuable for the future of Indonesia Palm Oil

Industry if it can be maintained by our local human resources since the basic of the

methane capture program have been well distribute by CIRCLE Project.

More over in Facing Sustainable Development Goals, Indonesia still have

much work to do. In Indonesia SDG plan, it is explained that one of Indonesia

strategy in engaging its SDGs is through the use of philanthropy which then can be

done in two different ways. First, by creating philanthropy trust fund where all the

member of the philanthropy give the whole implementation to certain organization,

Second one is through not creating pooling fund which then the member can select

the goal they wanted to support. The members then do their own project to realize

their support with transparency and accountability report.234

If the base of CIRCLE

232


Executive Office of the President. June 2013. The President’s Climate Action Plan. The White House. Washington. Pg 18-20 234

Deputi Bidang Maritim dan SDA Bappenas. 2015. Sustainable Development Goal (SDGs). Bappenas. Jakarta. Pg 15.

110

Project which is Methane Capture program can be funded by this system, it can

accelerate the goal of Indonesia government in reducing emission as well as

increasing the use of renewable energy.

Through the explanation above, can be concluded that even though CIRCLE

project also unable give direct result towards the reduction of emission and

increasing the use of renewable energy within the time frame of the project in 2011

to 2016, can be stated that CIRCLE project can be seen as the project that may be

able to become the foundation towards the development of POME to biogas

technology in palm oil Industry in Indonesia. It cannot be denied that the help from

United States in funding the CIRCLE project has help Indonesia to increase the

number of POME to biogas technology installed by palm oil company.

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CHAPTER V

CONCLUSION

Indonesia is one of the biggest contributors of green-house gas emission after

China and U.S due to the high number of deforestation that happened over the years.

Referring how vulnerable Indonesia to the effects of global warming such as the

increase of sea level due to Indonesia geological condition as archipelago country,

Indonesia president Susilo Bambang Yudhoyono at the 2009 G-20 in Pittsburgh

committed to reduce Indonesia GHG emission up to 40% by 2020. In 2010, U.S

President Barack Obama stated to support Indonesia- U.S shared goal on climate

change mitigation. The commitment from both of the states then further realized

through the establishment of Indonesia – U.S comprehensive partnership in

November 2010. In this partnership, both of the country agreed to create 6 working

group to cover a wide range of cooperation sectors which are : Democracy and civil

society working group, education, security, environment and climate, energy, and

trade and investment working group.

CIRCLE project established under energy working group. CIRCLE project is

the result of cooperation between Indonesia and America through its government

agency namely USAID. USAID then selected Winrock International which is a US

based non-governmental organization to run this project. The CIRCLE project

focuses on the construction of pome waste processing technology from palm oil mills

to make biogas which can then be used as a source of energy to generate electricity.

The selection of this project was because palm oil industry in Indonesia is one

of the complex issues that are closely related to other issues, especially

environmental issues. The expansion of oil palm plantations on the one hand

increases palm oil production but on the other hand also causes environmental

degradation. The existence of plantation areas that take up forest land that should not

112

be planted and the process of land clearing by burning that often occurs because it is

considered as an easy and effective way by palm oil companies has accelerate the

rate of forest degradation in Indonesia. In addition, the lack of community

knowledge, especially the palm oil mill company, to the high emissions from palm

oil waste in the form of POME if not properly treated can make Indonesia's efforts to

reduce emissions become more difficult. In addition, the existence of black campaign

on palm oil as the biggest cause of forest destruction in Indonesia is increasingly

cornering Indonesian palm oil and causing a bad image to the industry even though it

is not entirely true.

The CIRCLE project is expected to be the solution to the above problems,

because in its work program, CIRCLE project has several stages, firstly selecting the

mill to be invited to cooperate; in this election, the international winrock will screen

the related companies to ensure they have no land in where it is not supposed to

ensure that the company does not open the land by burning or the use of chemicals

that can damage the environment; secondly, providing capacity building usually in

the workshop's bench towards the company members about POME to biogas

processing system, then preparing the company for the adoption of sewage treatment

system, as well as helping companies to gain international certification which will

affecting the competitiveness of their product in global market.

The CIRCLE Project, which runs from 2011 to 2016, is still included in

current year range of MDGs from 2000 to 2015. In Indonesia's MDG at the 7th goal

on environmental conservation, Indonesia targets to reduce carbon emissions and

increase energy elasticity and use of new renewable energy in national energy mix as

a whole. With the CIRCLE Project's goal to reduce emissions from the waste

treatment sector and the utilization of waste processing products for energy sources,

it is hoped that the circle project can give impetus to Indonesia's efforts to achieve its

MDG goals. However, until the end of its CIRCLE project, it can be stated that this

project has not been biased to give a significant effect on the reduction of emissions

113

and increase the use of biogas as a power plant, because from 3 mill that goes to the

stage of becoming PLTBG, it cannot be claimed to generate electricity through pome

to biogas technology conversion until the end of 2016.

CIRCLE project also cannot reach its full potential due to the existence US

interest that must be maintained. In essence, described in the cooperative agreement

between USAID and Winrock International, one of CIRCLE Project's activities is to

ensure that mill that has passed the screening is ready to be registered to RSPO

certification, but in the course of its project, USAID limits Winrock not to help the

mill to get certification. Because helping palm oil companies get international

certification will help improve the competitiveness of Indonesian palm oil in Europe,

this will threaten the strength of American oil products is soy bean oil. With the

limitation of CIRCLE's capability, CIRCLE's partner AKSENTA, which moves as an

RSPO consultant, also withdrew from the CIRCLE project. The CIRCLE project in

its implementation also has some constraints such as the length of time it takes to get

permission from the local government, this is because Winrock International does not

have a special agreement with the local government agency.

However, even though the CIRCLE project has not been able to show its

maximum results, this project should be the foundation for the development of

POME-based waste processing technology in Indonesia. With the capacity building

that has been done by CIRCLE project, it is expected that the government can

support for this waste processing system can be run by all oil palm companies. One

way is to pass a law that regulates the better treatment of waste, by determining the

procedures for the treatment of waste not only set the waste quality standards for the

waste. Due to pome waste, the biggest emissions and pollution that occur is due to

the wrong waste treatment process. By developing this project, this future project

will help Indonesia reduce emissions from the plantation sector, help regulate oil

palm companies, and also help generate electricity especially for remote areas that

are difficult to reach by PLN‘s grid

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APPENDICES

119

APPENDIX 1

Media Note

Office of the Spokesman

Washington, DC

September 17, 2010

Following is the text of the joint statement released at the conclusion of the first

meeting of the U.S.-Indonesia Joint Commission, held in Washington, D.C. on

September 17, 2010.

BEGIN TEXT:

U.S. Secretary of State Hillary Rodham Clinton and Indonesian Foreign Minister

Marty Natalegawa met in Washington on September 17, 2010, for the inaugural

meeting of the U.S.-Indonesia Joint Commission.

The Joint Commission is a key component of President Obama and President

Yudhoyono‘s long-term commitment to broadening, deepening, and elevating

bilateral relations between Indonesia and the United States to confront the challenges

of the 21st century. Chaired by Secretary Clinton and Foreign Minister Natalegawa,

this framework within the Comprehensive Partnership strengthens bilateral

collaboration on a broad range of issues in order to promote peace, stability, and

economic prosperity, not only for the United States and Indonesia, but also regionally

and globally. The Comprehensive Partnership allows our two countries to fully

explore and build upon our shared national interests, maximizes cooperation on our

mutual priorities, and strengthens the already rich relationship between the people of

Indonesia and the United States.

Secretary Clinton and Minister Natalegawa pledged to deepen relations between the

two countries by affirming a Plan of Action for the U.S.-Indonesia Comprehensive

Partnership covering political and security cooperation; economic and development

cooperation; and cooperation in socio-cultural, educational, science and technology

matters. The two ministers also reaffirmed that the U.S.-Indonesia relationship is an

enduring friendship based on our common values including democracy, tolerance,

respect for human rights and diversity, and our joint promotion of economic

development.

120

They pledged that the United States and Indonesia, as important partners, would

engage in close, frequent consultations on global and regional developments. Both

recognized the significance of enhanced cooperation between two of the largest

democracies in the world, the opportunities for economic and development

cooperation, and the value of fostering mutual understanding through people-to-

people exchanges.

The two ministers affirmed that the Joint Commission and its Working Groups are to

assist both countries in overcoming shared challenges using the Plan of Action for

the U.S.-Indonesia Comprehensive Partnership. They reconfirmed that the Working

Groups have been charged with coordinating strategies and highlighting policy

initiatives and priorities in the areas of Democracy and Civil Society; Education;

Climate and Environment; Trade and Investment; Security; and Energy. The two

ministers also agreed to explore the possibility of additional working groups, as

appropriate.

Working Group on Democracy and Civil Society

The co-chairs of the Working Group on Democracy and Civil Society shared with

Secretary Clinton and Foreign Minister Natalegawa their mutually agreed upon

mission statement of promoting good governance, enhancing democracy, and

strengthening human rights protection through dialogue and capacity building. The

two officials reported that under this mission statement, the thematic focus of

strategies and activities will be on elections and political participation, freedom of

information and expression, conflict resolution, promoting basic human rights, civil

society, freedom of association, transparency, anti-corruption efforts, and

strengthening the rule of law Through these efforts, they pledged to seize short- and

long-term opportunities to enhance U.S.-Indonesia cooperation on democracy at the

bilateral, regional and global level.

Working Group on Education

The co-chairs of the Working Group on Education reported to Secretary Clinton and

Minister Natalegawa on the shared vision underlying the announcement at the

Toronto G-20 of the U.S.-Indonesian Higher Education Partnership. They re-iterated

the goals of increasing the number of Indonesian students studying in the United

States and boosting the number of American students studying in Indonesia over the

next five years. They also recognized the value of increasing and strengthening

university-to-university partnerships, supporting increases in government-sponsored

educational exchange programs, and engaging the resources and expertise of the

private sector, foundations and the higher education community. They affirmed the

need to share best practices to enhance the provision of quality education and to

invite private-sector entities to leverage their knowledge and technology towards

shared goals.

Working Group on Climate and Environment

121

The co-chairs of the Working Group on Climate and Environment reaffirmed the

components of the U.S.-Indonesia Comprehensive Partnership on climate change

announced at the G-20 meeting in Toronto this year. They pledged to use the

Working Group as a forum to exchange best practices and information regarding

climate change and the environment. The officials agreed to focus attention on land

use change, peatlands, and forests; marine environments and oceans; and

environmental management and policy. They also identified the SOLUSI Partnership

and the Climate Change Center as vehicles to make progress on these fronts. They

acknowledged the need to incorporate education and public outreach in all their

endeavors.

Working Group on Trade and Investment

In advance of the Joint Commission meeting, Deputy USTR Ambassador Demetrios

Marantis and Vice Minister of Trade Mahendra Siregar met in Indonesia to assess

progress made by both governments in improving the bilateral trade and investment

relationship following the last Trade and Investment Council (TIC) meeting in

Washington, D.C., on May 13-15, 2009. They reaffirmed their commitment to

strengthen cooperation in the field of trade and investment and to resolve remaining

issues within the framework of the TIC/TIFA.

Working Group on Security

The co-chairs of the Working Group on Security reported to Secretary Clinton and

Minister Natalegawa on the result of the last meeting of Indonesia – United States

Security Dialogue (IUSSD) in Washington, D.C., on May 25-26, 2010. They

reaffirmed the strong security relationship the two countries share, and pledged to

continue close cooperation on programs related to maritime security, humanitarian

assistance and disaster relief, peacekeeping, and defense reform and

professionalization. The chairs also reported on the recent signing of the Framework

Arrangement on Cooperative Activities in the Field of Defense, and highlighted the

annual Indonesia-United States Security Dialogue as the pre-eminent forum for the

two countries to discuss security issues. The Indonesian delegation shared

information on TNI reform toward professionalization, modernization, and respect

for human rights.

Working Group on Energy

The co-chairs of the Working Group on Energy reported to Secretary Clinton and

Minister Natalegawa on the result and follow-up of the last meeting of Energy Policy

Dialogue (EPD) in Washington, D.C., on June 28-30, 2010. The EPD is the primary

mechanism for bilateral cooperation and policy discussions in the areas of mutual

energy security, energy trade and investment, and the deployment of clean and

efficient energy technologies. At the June EPD meeting, both sides agreed to identify

two to three new areas in which to expand cooperative bilateral activities. Indonesia

proposed focusing on an information exchange on policies to improve the investment

climate, build capacity and promote sustainable economic development; participation

122

in Methane to Markets; and encouraging public-private investment partnerships in

the energy sector. Both delegations pledged to increase communication at the

technical and working level and are developing a concrete work plan.

Secretary Clinton and Minister Natalegawa reaffirmed the importance of the Joint

Commission in strengthening the bilateral relationship and offering a strategic vision

for enhanced future cooperation. The two delegations look forward to future

discussions on issues raised at the Commission through official interactions, working

groups, and existing bilateral dialogues. Both countries pledged to intensify

discussions on how to further deepen and broaden cooperation.

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APPENDIX 2

JOINT STATEMENT

THE 2ND INDONESIA-US

JOINT COMMISSION MEETING

BALI, 24 JULY 2011 1. Indonesian Foreign Minister Dr. R. M. Marty M. Natalegawa and U.S.

Secretary of State Hillary Rodham Clinton met in Bali on July 24, 2011

to co-chair the second meeting of the U.S.-Indonesia Joint Commission

under the bilateral Comprehensive Partnership. Both were accompanied

by senior officials from their respective governments.

2. The Joint Commission is the principal vehicle to implement the

Comprehensive Partnership launched by Presidents Yudhoyono and

Obama in November 2010 in Indonesia. The first Joint Commission

Meeting was held in Washington, D.C. in September 2010.

3. Foreign Minister Natalegawa and Secretary of State Clinton were

delighted to see the steady progress of the Joint Commission, whose

members had collaborated with enthusiasm and a constructive spirit

reflecting the elevated status of bilateral relations under the

Comprehensive Partnership.

4. Foreign Minister Natalegawa and Secretary Clinton engaged in an

extensive dialogue on bilateral, regional, and global issues. They

highlighted President Obama‘s November 2010 visit to Jakarta and his

upcoming trip to Bali in November 2011 and pledged to continue to

strengthen the U.S.-Indonesian high-level strategic dialogue on global

and regional developments. Given Indonesia‘s chairmanship in 2011 of

the Association of Southeast Asian Nations (ASEAN), the entry of the

United States into the East Asian Summit (EAS), and both countries

membership in the G-20, Secretary Clinton and Foreign Minister

Natalegawa acknowledged the great importance of this enhanced

consultation. They also expressed strong support for the intensive efforts

to conclude a Millennium Challenge Corporation compact, likely to total

$600 million over five years, which is in the final stages of development. 2

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5. The two ministers noted that the Joint Commission and its Working

Groups are, in the spirit of equal partnership, promoting close dialogue

and cooperation in overcoming shared challenges. Participants in today‘s

Joint Commission session welcomed substantial progress over the past

year under the three pillars of the Comprehensive Partnership Plan of

Action covering political and security cooperation; economic and

development cooperation; and cooperation in socio-cultural, educational,

science and technology affairs.

6. The two Ministers reviewed strategies and highlighted policy

initiatives and priorities developed by the six Joint Commission Working

Groups in the areas of Democracy and Civil Society, Education, Climate

and Environment, Trade and Investment, Security, and Energy.

7. Working Group on Democracy and Civil Society

The co-chairs of the Working Group on Democracy and Civil Society

shared with Foreign Minister Natalegawa and Secretary Clinton the

results of bilateral initiatives on cooperation with civil society

engagement, civic education, and the upcoming bilateral media dialogue.

They agreed to cooperate on democracy and human rights initiatives in

international fora including the UN Human Rights Council, and on

building democracy through bilateral programs. The United States

participated in the third Bali Democracy Forum (BDF) as an observer

and will take part in the upcoming Fourth BDF, while the National

Democratic Institute (NDI) supported the BDF implementing agency, the

Institute for Peace and Democracy. The co-chairs expressed a desire to

focus in the coming year on cooperation related to open government

partnership, human rights, interfaith initiatives, local elections and

women participation in politics. They will strive to increase youth

participation in all these areas.

8. Working Group on Education

The co-chairs of the Working Group on Education reported significant

progress and new initiatives under the five-year Higher Education

Partnership. They described the two countries‘ support for increased

exchange of students and scholars, including through the expanded

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binational Fulbright Program and with the Department of State‘s

community college initiative, as well as the development of new

university partnerships through the U.S. Agency for International 3

126

Development to strengthen educational capacity, especially in the fields

of science and technology. They highlighted the growth of the Peace

Corps‘ English Teaching and Teacher Training program. They also

welcomed Indonesian support for 100 Darmasiswa scholarships for

Americans and Joint Fulbright-Dikti Scholarships for Master‘s and PhD

degree programs in the United States. They noted expanded support for

English and Indonesian language learning to further strengthen

collaboration and mutual understanding, and continued support for

improved basic education services to facilitate more Indonesian students‘

ability to continue onto higher education. The Working Group also

highlighted the Spring 2011 American-Indonesian Educational

Foundation EducationUSA and Access America Education Fairs, in

which over 100 U.S. colleges and universities participated, and

announced an Indonesia-U.S. Higher Education Summit to be held in

Washington, D.C. on October 31, 2011 to further engage the higher

education and private sector communities in both countries. In addition,

they acknowledged the existing academic recharging, ‖twinning‖ and

other post graduate program funded by the Government of Indonesia.

9. Working Group on Climate and Environment

The co-chairs of the Working Group on Climate and Environment

reported on accomplishments in priority areas, including intensified

consultations on global climate change action, tropical forests,

environmental management and governance, and biodiversity and

ecosystems conservation. Noting Indonesia‘s July 12, 2011 land tenure

speech as a major step forward for forest-dependent communities and

recognizing the importance of an accurate forest mapping system, the

Working Group identified key challenges and action plans to pilot

Reducing Emissions from Deforestation and Forest Degradation- Plus

(REDD+) programs; strengthen climate change measurement, reporting

and verification systems; advance the establishment of the climate

change center, protect biodiversity, including habitats that are critical to

the survival of orangutans and tigers; combat illegal logging; and

promote sustainable management of forest and marine ecosystems. The

Working Group also recognized an important new agreement between

the U.S. Environmental Protection Agency and the Ministry of

Environment to expand environmental cooperation and launch the

―Breathe Easy, Jakarta‖ partnership. The two sides also expressed strong

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support for collaborating in a new Tropical Forest Conservation Act

program expected to total approximately $20 million to manage tropical

forests. 4

128

10. Working Group on Trade and Investment

The co-chairs noted preparation for upcoming meetings of the Trade and

Investment Council (TIC) and efforts to intensify engagement in the

coming year. Bilateral trade figures reached $23.4 billion in 2010

compared to $18.0 billion in 2009. Indonesia reported that the United

States has become the third largest source of investment in Indonesia,

with investment reaching $930.9 million in 2010. During the first half of

2011, U.S. investment to Indonesia surpassed $936.1 million. Working

Group co-chairs outlined recent commercial engagement successes such

as the Overseas Private Investment Corporation (OPIC) investment

conference and U.S. agriculture and education trade missions earlier this

year. As well, the co-chairs announced that the U.S. Department of

Agriculture and Indonesia‘s Ministry of Agriculture are leading a

temporary task force, to include participation from government,

universities, and the private sector, to explore opportunities for

cooperative engagement regarding the development of agriculture

research, education, market access and food security and use of

innovative technologies in agriculture. In addition, they recognized

growing cooperation on entrepreneurship including a recent U.S.

entrepreneurship delegation to Indonesia and Indonesia‘s hosting of the

ASEAN Regional Entrepreneurship Summit. They welcomed the

preliminary meeting of the Commercial Dialogue between the two

countries held in Washington, D.C. on July 14, 2011 as an initiative to

strengthen the existing Working Group on Trade and Investment under

the Joint Commission. These initiatives will create a foundation for

further increases in our bilateral trade.

11. Working Group on Security

The co-chairs of the Working Group on Security reported on the

improving military-to-military relationship, including a number of

cooperative activities on maritime security, transnational crime,

counterterrorism, humanitarian assistance/disaster relief, peacekeeping,

and defense reform/professionalization. The Working Group noted U.S.

support for the continued modernization of the Indonesian military forces

and for Indonesia‘s construction of a Peacekeeping Training Center. The

Working Group noted the U.S. and Indonesian co-chairmanship of the

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ASEAN Defense Ministers Meeting Plus (ADMM+) Counter Terrorism

Experts Working Group.5

130

12. Working Group on Energy

The co-chairs of the Working Group on Energy reported on the

cooperative activities undertaken since the Energy Policy Dialogue

(EPD) in June 2010, including the U.S.-Indonesia Energy Investment

Roundtable in May 2011 in Jakarta. The highly successful event

identified the key policy issues for improving the investment climate in

Indonesia‘s energy sector and attracting the substantial investment

needed for Indonesia to meet its own ambitious production targets for

both fossil fuels and renewable energy. The Working Group has already

begun cooperating to implement key recommendations from the event,

including the July 10-20 Geothermal Power Reverse Trade Mission that

the U.S. Trade and Development Agency organized for thirteen

Indonesian delegates from the national and provincial government as

well as the corporate sector. Additionally, the Working Group is in the

preliminary stages of planning a second U.S.-Indonesia Energy

Investment Roundtable focused on conventional and unconventional gas

to be held this fall. Furthermore, Indonesia and the United States have

decided to cooperate on Indonesian efforts to slow the growth of

emissions from its energy sector through strategies outlined in

Indonesia‘s climate change sector roadmap, in particular through

cooperation on a $16.2 million Indonesia Clean Energy Development

Project that will install 120 MW of clean energy and increase access for

1.2 million Indonesians to clean energy.

13. Secretary Clinton and Foreign Minister Natalegawa reaffirmed the

importance of the Joint Commission in strengthening the bilateral

relationship and offering a strategic vision for enhanced future

cooperation. They noted that in addition to regular Joint Commission

plenary sessions, the United States and Indonesia are boosting overall

senior level dialogue, building relationships between our peoples, and

developing institutional relations, not only between governments, but

also among civil society, business, and academia. They also underscored

cooperation in health, which has made significant progress over the last

year, with steps taken to work closely on a variety of health and

infectious disease issues. They also highlighted important bilateral

science and technology cooperation initiatives.

131

14. The two sides plan to hold the next meeting of the Joint Commission

in the United States in 2012.

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APPENDIX 3

CIRCLE Project Award Cover Sheet

136

APPENDIX 4

Non-Disclosure Agreement

139

APPENDIX 5

Interviews

Michael Naleid as Manager of Winrock Indonesia

140

Dhiah Karsiwulan as Deputy Chief of CIRCLE Project

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