U/S DISCUSSES INDONESIA'S ROLE IN COP 13, CLEAN ENERGY,

UNCLAS SECTION 01 OF 02 JAKARTA 002611

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR A/S HILL, EAP/MTS AND EB/IFD/ODF
DEPARTMENT FOR OES/IET and OES/ETC
USAID FOR CBARBER, MMELNICK
DOE FOR A/S HARBERT, CUTLER/PI-32, GILLESPIE/PI-42
NSC FOR CEQ CONNAUGHTON, VAN DYKE
DEPT PASS USTR FOR DBHATIA AND DKATZ

E.O. 12598: N/A
TAGS: SENV KGHG EAID ECON PGOV ID
SUBJECT: U/S DISCUSSES INDONESIA'S ROLE IN COP 13, CLEAN ENERGY,
BIOFUELS DEVELOPMENT



1. (SBU) Summary. During his visit to Indonesia September 10-12,
U/S Jeffery held a roundtable lunch on September 10 with GOI
officials, donor representatives ad private sector representatives.
The head of Indonesia's COP 13 steering committee said that the GOI
would await the outcomes of the U.N. and Major Economies meetings
later this month before finalizing a non-paper on COP 13 agenda
items, and expressed interest in advanced clean energy technologies.
U/S Jeffery, Ambassador Hume, and other roundtable participants
agreed on the importance of renewable energy and affordable clean
technologies in addressing climate change. Participants
acknowledged the challenge of balancing palm oil expansion and
biofuels development plans with forest conservation and other
environmental concerns. End Summary.

Indonesian Expectations for COP 13
--------------


2. (SBU) U/S for Economic, Energy, and Agricultural Affairs Reuben
Jeffery discussed energy security, climate change, and
deforestation, with a group of GOI officials, donor representatives
and members of the private sector on September 10. Agus Purnomo,
Executive Director, Indonesian National Steering Committee for the
Conference of Parties 13 (COP 13),described the four main agenda
items for the COP 13: a post-2012 mitigation strategy, an adaptation
funding mechanism, reducing emissions from deforestation and
degradation, and technology transfer. He noted that the Ministry of
Environment (MOE) would circulate a non-paper on these items for
discussion at the pre-COP 13 ministerial in Bogor, October 24-25.
The MOE will wait until early October to finalize the non-paper,
because the upcoming U.N. meetings and Major Economies Meeting (MEM)
will be influential in shaping the debate. Purnomo stated that, as
host to COP 13, Indonesia intends to adopt a publicly neutral
approach to all proposals, whether on mandatory versus
"aspirational" emissions reduction goals or new carbon trading
schemes. Indonesia wants to see a consensus forged at Bali on a
post-2012 agreement that includes ideas from both developed and
developing countries.


3. (SBU) Responding to a question from Purnomo about how to
negotiate practically on energy intensity levels, U/S Jeffery
emphasized that one of the foci of the MEM would be the issue of
measurement and standards. He agreed that Bali's outcome would be a
package of solutions that included both intermediate steps and
long-term goals. Purnomo stressed the need for new mechanisms
besides the Clean Development Mechanism for a post-2012 world,
noting that existing alternative market-based mechanisms are
incipient and far too small. U/S Jeffery affirmed the importance of
renewables in the climate debate, and emphasized that all these
issues would be discussed at the U.N. and MEM.

Indonesia Prefers Non-Nuclear Energy Alternatives
-------------- --------------


4. (SBU) Luncheon participants discussed Indonesia's policy on
renewable energy, including geothermal, hydropower, nuclear energy
and advanced coal power technology. Purnomo noted that the
government is pursuing a nuclear power facility in central Java. He
added, however, that the government also places a high priority on
developing its vast potential for renewable energy, such as
geothermal. He expressed the GOI's interest in advanced coal
technology - "clean coal" and carbon capture and sequestration --
but raised concerns about the high cost of the technology, asking
about affordable financing mechanisms.


5. (SBU) The head of the National Biofuel Development Team, Alhilal
Hamdi, noted that GOI energy pricing policy, which subsidizes fossil
fuels, has been an impediment to development of renewables. He
asserted that the GOI is in the process of improving the incentive
structure and refining mandatory biofuel use requirements to
encourage growth in this area. In response to the question whether
palm oil profitability depended upon the clearing of forested land,
Hamdi emphasized that profitability was high without any timber
sales. Thus, there is ample opportunity for the industry to expand
in already degraded land and be highly profitable, addressing

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concerns about the environmental impact of oil-palm plantation
expansion into forest land. He highlighted the importance of
biofuel's advantages in job creation and poverty reduction. A World
Bank representative and a biofuel private sector executive in
attendance also acknowledged the tension between oil-palm plantation
expansion and forest conservation, and pointed to ongoing efforts to
develop a biofuels certification that addresses these concerns.
Hamdi also highlighted the opportunities to develop jatropha-based
biofuel in arid soils, explaining that Indonesia needs assistance in
research and development to scale up and maximize yields, similar to
past efforts devoted to oil palm.


6. (U) U/S Jeffery cleared this cable.

HUME