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Project
Summary
The
Leuser
Ecosystem
REDD
Project
Aceh,
Indonesia
G l o b a l
E c o
R e s c u e ,
1 1 th
F l o o r ,
S u i t e
1 1 0 1 .
D e u t s c h e
B a n k
B u i l d i n g
J a l a n
I m a m
B o n j o l
8 0 ,
J a k a r t a
1 0 3 1 0 ,
I n d o n e s i a
Avoided Deforestation, Biodiversity Conservation and Development
The Leuser Ecosystem REDD Project
Project Description
The Leuser Ecosystem is located in the province of
Aceh, Indonesia. It covers just over 2 million hectares of
forest that is exceptionally rich in biological diversity. It
is considered to be the last place in SE Asia that is of
sufficient size and quality to maintain viable populations
of many rare and charismatic species such as tigers,
orangutans, rhinos, elephants, and clouded leopard.
The Leuser Ecosystem also functions as a life-support
system for more than four million people in the
surrounding area. There is a direct link between
conservation of Leuser and the welfare of local
communities.
The status of the Leuser Ecosystem is bound by Act No
26, 2007 regarding National Spatial Plans. In the
implementation details of this Act PP No 26, 2008 the
Leuser Ecosystem was declared to be a Strategic Area -
an area that is of national importance, especially for
economic and environmental reasons. Consequently it is
illegal to undertake any activities inside the Leuser
Ecosystem that are not directly related to either the
protection or restoration of the ecosystem, the strongest Figure
1:
Map
of
Aceh
Province,
situated
at
the
northern
tip
of
Sumatra,
Indonesia.
The
outline
of
the
Leuser
Ecosystem
is
shown.
protection status possible under Indonesia law.
Moreover, both provincial and district level spatial plans sold into the appropriate global cap and trade systems.
comply with the regulations articulated in Jakarta and the The Project will align with compliance market criteria
under a national system as it emerges.
boundaries of the Leuser Ecosystem have been socialised
to communities that live along its periphery. Recognising Deforestation
the need to protect the Leuser Ecosystem specifically the In 2005, the FAO determined the Indonesian national
Governor of Aceh, with the agreement of the Aceh average rate of deforestation to be 2.59% while rates in
Parliament, established a special body to manage the Aceh have historically been lower, at an estimated
Leuser Ecosystem – Badan Pengelola Kawasan 0.89%. However, since 2004 the threat of forest loss in
Ekosistem Leuser (BPKEL). Aceh has been heightened due to a number of
fundamental changes. First, Aceh’s 30-year period of
Despite the strong legal protection, the main threats that civil conflict ended in August 2005, during which time
are driving deforestation in the Leuser Ecosystem are there was political and economic uncertainty and
similar to other forest areas in Indonesia and include: investment was constrained. Second, the 2004 Tsunami
wreaked human and infrastructural disaster, which lead
• Poorly controlled infrastructure development – to a massive reconstruction effort and a strong demand
including, roads, transmission lines, and large for timber. As a result, deforestation rates have increased
dams dramatically in Aceh, rising from an average of 20,000ha
• Mining per year to an estimated 130,000ha per year in 2005-
• Conversion of forest to tree crop plantations, 2006 or a 3.66% rate of deforestation.
namely palm oil The Leuser Ecosystem has a total current carbon stock of
• Settlement expansion ~1,400 Mt CO2e with a weighted average carbon stock
• Smallholder encroachment of ~760 t CO2e /ha. Preliminary assessments have
estimated that ~30% of the Leuser is under threat from
• Illegal logging deforestation, with a yearly deforestation rate of ~2%.
GER is establishing a project level and a sub-national Under this scenario the project will deliver
approximately ~6-8 million Verified CO e Emission
provincial level baseline to quantify the carbon stock that 2
is under threat. Resulting emission offsets will be Reductions (VERs) annually for a minimum of 30 years.
verified under Voluntary Carbon Standard (VCS) and
Climate Community and Biodiversity (CCB) criteria and
Avoided Deforestation, Biodiversity Conservation and Development
The Leuser Ecosystem REDD Project
Project Approach, Additionality, concern for potential investors in Aceh, who in most
Permanence and Leakage cases have to rely on their own power plants, or simply
choose not to invest in Aceh.
The financial flows created by carbon credits will be The importance of electrification for the economic
used to fund sustainable development and conservation development of Aceh cannot be overstated. At a basic
activities. An integral part of GER’s strategy is to level, electricity allows for the creation of downstream
address the root cause of deforestation: unsustainable industrial capacity, value added processing, irrigation,
approaches to economic development. GER’s holistic refrigeration of perishables, Internet access etc. GER has
land management strategy is aligned with the Governor’s identified a number of renewable energy investments on
Aceh Green vision, which calls for hard investments in the periphery of the Leuser Ecosystem.
electrification projects, agro-forestry and timber farms as
well as soft investments in education, healthcare and Forest Supply Chain. The forest value chain represents
community work. These investments would refocus a particularly important set of opportunities to rationalize
communities neighboring natural rainforests away from forest utilization.
inefficient forest utilization and agricultural practices and Timber producing provinces need a sustainable source of
employ them in higher value-added and ecologically timber for their construction needs. If supplies from
balanced economic activities. This holistic approach is natural forests are reduced or minimized, then
best positioned to address the issues of Additionality, commercial plantations need to be established to meet
Permanence and Leakage. local demand and reduce long-term pressures on natural
Specific development activities are targeted on the basis forests.
of their ability to support development goals while at the Given the lack of clear title to land, it is difficult to
same time providing incentives to local stakeholders to secure large tracts of land to establish plantations.
value conservation. Activities will be pursued through Developing community forestry is a crucial component
both sustainable commercial ventures and community of the optimization of the forestry supply chain. It
development initiatives. Two of the key sectors that GER increases total supply of wood, improves relationships
will focus on in Aceh are power and the forest supply with communities, and provides them with alternative
chain. income streams and employment opportunities. The
Power. On average, 70 percent of electricity related model being developed is to form partnerships with local
infrastructure in Aceh is in disrepair as a result of the communities to establish profit sharing plantations, agro-
2004 tsunami, the 30-year civil conflict or lack of forestry and tree crops.
maintenance. The province faces a power deficit of GER can provide much needed capital, facilitate local
approximately 220MW and is vulnerable to power partnerships and bring technical expertise to project
shortages. Additionally, it is estimated that to meet development and management. It is only through
increasing energy demand in Aceh, it is necessary to investment in R&D that the limited land resources will
generate new electric capacity at the rate of at least be optimized.
20MW per year. Power is currently the most significant
Additionality. Significant conservation activities and
sustainable development projects both under BPKEL and
under other NGOs active in the region have not been
pursued in the absence of adequate funding. Regional
government and State funding for such activities is
minimal. Carbon financing can fill this gap by
implementing the Leuser REDD Project which would
produce additional emission reductions from the
“baseline” business-as-usual scenario.
Permanence. GER’s holistic approach to manage non-
permanence risks associated with the Project establishes
environmentally, socially and financially sustainable
development initiatives orientated towards improving
local stakeholder respect for conservation values.
Community development activities are designed not only
to promote greater health, education, and welfare for
communities in and around the Project area but also to
provide alternative livelihoods and advanced agricultural
training to ensure more ecological suitable revenue
streams are provided for the long term.
Figure
2:
Conversion
of
lowland
forest
to
palm
oil
in
the
Leuser
Ecosystem
Leakage. Minimizing leakage (whereby forest
exploitation moves out of a newly protected area to an
adjacent one) is an essential component of any REDD
Avoided Deforestation, Biodiversity Conservation and Development
The Leuser Ecosystem REDD Project
project. The holistic land management approach adopted A strong proof of concept with successful
by GER calls for establishment of nurseries and tree implementation is absolutely imperative to create an
plantations that will continue feeding the downstream alternative source of carbon credits. The inclusion of
pulp and paper industry and averts expansion of logging such credits should ensure that the next iteration of the
into areas surrounding the Ecosystem. Under the world’s cap and trade system is economically viable.
November 2008 VCS AFOLU guidelines, a leakage risk GER has engage the most credible offset buyers and
assessment for avoiding planned and unplanned (illegal) strategic partners but is open to further collaboration.
frontier deforestation and degradation will be Our future partners would share our concern for global
undertaken. Depending on the results of the leakage risk climate change and the immediate need to pro-actively
assessment, 10-30% of carbon credits will be set-aside. put a price on the destruction of pristine rainforests.
Partners and Forms of Collaboration
GER is a private project developer. It is active on the
ground developing and implementing long-term forest
protection projects that produce carbon credits. GER
also has its in-house sales and marketing force to sell
such credits in the international cap and trade systems.
GER has operated in Indonesia since 2006 and has
offices in Switzerland.
GER is developing the Leuser REDD project in
partnership with the Government of Aceh. The two
parties will jointly implement the carbon rights
agreements and channel carbon revenues into sustainable
development investment activities. The approach is
designed to couple strong management oversight with
local expertise via the development of partnerships that
can effectively deploy capital adapted to the local
realities.
An essential partner of the Project is BPKEL – the
government authority responsible for the conservation of
the Leuser Ecosystem. Additional financing will be
provided to BPKEL through the Project to help them
effectively conserve the Leuser Ecosystem. Current
government budget allocations are insufficient.
Arrangements with strong local partners from within
local government, NGOs, community groups and the
private sector will be pursued to identify, improve and
develop sustainable development and conservation
activities.
Project approval will be sought from the central
government of Indonesia, through the Ministry of
Forestry.
The Big Picture
Accumulating science suggests that we may have less
time that we thought to reverse the climate changes due
to carbon emissions. The cost of solving the problem
can be contained if cap and trade systems explicitly
include the most cost effective measures. Forest
protection is one of the most cost effective measures to
reduce emissions available today.
GER anticipates a significant rise in the price of tCO e
2
once projects are compliant under a post-2012 REDD
compliance market scheme, or the anticipated US cap Figures
3
and
4:
The
Leuser
REDD
Project
will
deliver
significant
biodiversity
and
and trade system that will include international forestry community
development
related
benefits.
credits. The distribution of revenue will be even more
beneficial to local parties at this point.
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