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. The establishment of a Baseline . Reductions in carbon emissions achieved against the Business as Usual scenario
. Monitoring and verification of the reductions . The accounting of carbon trading units; and
. The distribution of the payments from the market to the agencies responsible for achieving the tradable carbon credits.
Pilot projects should test how these steps can be undertaken in a way which results in tradable carbon credits under the range of circumstances which this
large and complex country presents. The outcome of the demonstration projects will determine:
. Where gaps may lie in information or capacity to obtain information; . The practicality of implementing management options which reduce emissions
in each of the forest use sectors from a technical and economic perspective; . The practicality of implementing management options at different spatial and
administrative scales; . The quality and permanence of the carbon credits that can be achieved;
. Mechanisms which are just and transparent for the distribution of payments from the market transactions to the agencies government, business,
community or NGO responsible for the resource management changes. Because all steps in the supply chain need to be realised in order to achieve
an effective REDD trading scheme, pilot activities should be designed which incorporate all stages. For example there is no point in testing precision of
monitoring unless it is linked to the evaluation of carbon credits. The Supply Chain represents an integrated system which needs to be applied to demonstration
projects, and to the subsequent full implementation of a REDD scheme. t would be wise if guidelines for selecting proposals for demonstration activities
included a clause which emphasized the need for proposals to be holistic and mindful of testing the application of all stages in the supply chain.COP- decision
also provide indicative guidance for Demonstrationa Activities, which also need to be taken into account.
6.2.2 The Scale of Demonstration Projects
ndonesia has adopted a decentralized approach to government within its unitary state. Responsibilities for forest and land use have been variously devolved
according to law. n the case of forest resources, responsibilities are shared by all levels of government, although some aspects of local management responsibilities
remain vague. The Minister retains a high level of administrative power. The approach known as the Padu Serasi has been followed between the national
government and the province governments to achieve harmonization in relation to land uses on and off the forest estate, to bring into line spatial planning under
the Spatial Planning Act, decentralized to local government, and spatial planning in relation to the allocation of forest use zones under the Forestry Act.
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Based on an analysis of responsibilities of the three strata of government, Demonstration Projects should be undertaken at four levels of potential future
activity: . National for example with land management units managed from national
government, e.g., National Parks; . Province Forestry activities in areas that cross districts; e.g., , TAURA
. District Forestry activities that occur within a District P, T, Community Forest Area, oil palm estate
. Project for example with forest management units such as individual P, T, Estate crop plantation, or community based TR.
The view of the FCA analysis is that the minimum spatial scale should coincide with the administrative level of the District in order to reduce the inherent
difficulties posed by leakage and additionality. At all levels, the new concept of the KP as described in the PP
and amended in PP
, offers the most integrated administrative unit for forest management on the Forest Estate.
A key consideration in relation to the selection and design of the demonstration activities will be the need for areas to be mapped and monitored at large scale,
preferably : to maximum :
, thus putting them at a scale comparable to the spatial planning of the District level of local government.
There is a also a significant issue in relation to the organisation of Payment Distribution Mechanisms
because there is debate as to whether these should be managed at national, sub-national or project level. This analysis follows PCC
Guidelines and assumes that the monitoring of reduced emissions and subsequent payment distributions to contributing projects will be coordinated nationally.
When the REDD carbon market is fully active it will be the responsibility of the national facility monitoring emission reductions, to recommend compensation
through payment distribution to project implementing agents across the country. As projects will not sell their specific carbon emission reduction credits directly
into the market under the compliance framework, the task to be faced by the management agency is to determine, on the basis of national emissions savings,
what proportion of the income received from the market should go to each project, based on its size, effectiveness and form e.g., savings in an oil palm project in Riau
may be compensated according to different formula than a natural production forest in Maluku .
The pilot phase leading to provides the opportunity for these formulae to
be determined through demonstration activities which have direct relationships with buyers under national coordination guidelines, . These objectives should be
stipulated in the implementing regulations for REDD Demonstrationa Activities . This period is an opportunity for project proponents from all industry sectors
and at all geographical scales to volunteer forest industry management practices to save measurable emission reduction credits for which they will be guaranteed
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reimbursement, possibly through fund sources, in return for lessons which can be used to establish national management principles for each forest industry.
There would be opportunity in negotiation between the Ministry of Forestry and the proponents to agree a set of project management guidelines which applied
the strategic reforms recommended for each forest sector in Chapter . After the implementation of a systematically chosen set of demonstration projects it should
be possible for national management guidelines to be defined, which could then be appended to permits issued nationally to individual projects. Providing the
projects were then implemented according to permit guidelines each could then expect reimbursement on the basis of a statistically established rate of emissions
saving. This national compliance based system would run independently and parallel to
the voluntary market which will always be market-based and where remuneration
of projects will result from direct trading between project sellers and buyers, a situation which will not occur in the compliance market.
6.2.3 Selection of Demonstration Activities
