The Joint Crediting Mechanism or JCM is a new initiative that initiate by Indonesia and Japan for bilateral carbon trading. This new initiative is already implemented well in Indonesia and some other countries.

1. Joint Crediting Mechanism Development
in Indonesia
Indonesia JCM Secretariat

2. 1. Indonesia strategy on climate change
mitigation
2. The JCM concept
3. The current development of the Joint
Crediting Mechanism in Indonesia
4. The JCM and Indonesia business sector
5. The way forward for JCM
Presentation Structure

3. It’s all started from climate change issues
Emission Reduction Targets
Source: DNPI, 2011• Economic growth increases with GHG emission
• 7 years to achieve national commitment of GHG emissions reduction by 26%
under BAU level in 2020 (up to 41% with international support).
• Emission reduction is not compromising growth (26/7 vision).
Sector Unilateral Supported
Forestry and Peat 0.672 1.039
Waste 0.048 0.078
Energy and Transport 0.038 0.056
Agriculture 0.008 0.011
Industry 0.001 0.005
Total 0.767 1.189
(in GtCO2e) Source: DNPI/2011
Lesson learned:
• Carbon market instruments such as CDM proved to be effective to spur emissions
reduction by industries: 215 projects approved by DNA, 141 projects registered, 34
projects issued CERs (9.4 million tCO2)
• Increasing interest and opportunity from voluntary carbon markets, currently 9
projects are already delivered more than 8 million tons.

4. How to finance climate change mitigation in Indonesia?
• Indonesia has commited to reduce national emission up to 26% by business as usual scenario by
2020.
• Indonesia climate change mitigation activities need market- and non market-based financial system.
Mitigation
market based mechanism
carbon market another market
government
budget
central and local
government
private
investment
public private
partnership and
purely private
FDI
foreign private
and government
investment

5. Why using carbon market instruments?
• Offer greater certainty and visibility in achieving the objectives of
emissions reduction.
• Internalize external costs.
• Greater flexibility for business to meet their objectives  lower
compliance costs.
• Incentivize business to invest in innovation to reduce their impact
on the environment.
• Support employment when used in the context of green fiscal
reform.
• Promotes competitiveness without imposing an undue burden on
consumers.
Source: Commission of the European Communities, 2007
• Japan and Indonesia have their own national target on emission
reduction to be achieved.
• Both countries also need to increase their economic development
as well as develop more opportunities for their private sectors to
grow.

6. Indonesia highly considers further utilization of market instruments.
Multilateral carbon
market
Bilateral and regional
carbon market
Domestic carbon market
• 215 CDM projects have been developed, 33 of
it have delivered 9.4 million tons of CERs
• 11 VCS are developed that delivered more than
2 million tons of VERs (not including the REDD+
projects)
• Indonesia also join the WB initiatives on PMR
• Actively involved in the UNFCCC negotiation
• Between Indonesia and developing countries, e.g.
JCM with Japan
• Could be an international carbon offset scheme
• Indonesia open its position to work together with
other countries to develop bilateral and regional
carbon market
• Start from facilitating voluntary offset (the NCS)
• Developed and traded in Indonesia
• Simple yet robust
• Could be linked to other mechanisms
• The NCS now is being developed under the
management of the National Council on Climate
Change of Indonesia
Indonesia strategy on carbon market development

7. What is joint crediting mechanism (JCM)?

8. Basic concept of the JCM
• Facilitating diffusion of leading low carbon technologies products systems technologies, products, systems, services,
and infrastructure as well as implementation of mitigation actions, and contributing to sustainable development of
developing countries.
• Appropriately evaluating contributions to GHG emission reductions or removals from Japan in a quantitative manner,
by applying measurement, reporting and verification (MRV) methodologies, and use them to achieve Japan’s emission
reduction target.
• Contributing to the ultimate objective of the UNFCCC by facilitating global actions for GHG emission reductions or
removals, complementing the CDM.

9. The complete mechanism of the JCM

10. Indonesia JCM current development
JCM Demonstration Projects (by the Ministry of Energy, Trade and Industry)
1. Energy Saving by Optimum Operation at Oil Refinery (Yokogawa and Pertamina)
2. Utility Facility Operation Optimization Technology (Azbil and Pertamina)
3. Demonstration Project on Remote Auto-Monitoring System for Thin-Film Solar Power Plant in Indonesia (Sharp Corporation and PLN) .
JCM Model Projects (by the Ministry of Environment)
1. Energy saving by double bundle-type heat pump at beverage plant (Toyota Tsusho Corporation and PT. Hokkan Indonesia)
2. Energy saving for air-conditioning at textile factory (Ebara Refrigeration Equipment & Systems and PT. Argo Pantes Tbk.)
3. Energy Savings at Convenience Store (Lawson and PT. Midi Utama Indonesia Tbk)
4. Energy Efficient Refrigerants to Cold Chain Industry (Mayekawa Manufacturing Company and PT. Adib Global Food Supplies)
5. Energy Saving for Air-Conditioning and Process Cooling at Textile Factory (Ebara Refrigeration Equipment&Systems Co., Ltd., Nippon
Koei Co., Ltd., and PT. Primatexco).
JCM Current Condition
1. 75 feasibility studies have been done from 2010-2013 fiscal years
2. The bilateral agreement has been signed and the Joint Commitee has been formed in 2013
3. As a decision from the first Joint Commitee meeting, the Indonesia JCM Secretariat was established to support the Joint Commitee
activities as well as to do the the JCM daily works
4. Some technical instruments are being developed by both countries to speed up implementation.

11. New Development FY2014, 5 Model Projects
Project Title Entities
Estimated Emission
Reduction (tCO2/year)
Location
Power generation by waste heat recovery in
cement industry
JFE Engineering
Corporation
PT Semen Indonesia
(Persero) Tbk.
122,000
PT. Semen Indonesia Tuban
Plant, Tuban, East Java
Palm waste biomass power generation
project
Shimizu Corporation PTPNⅢ(Persero) 28,128
Sei Mangkei Special
Economic Zone in North
Sumatra province
Solar power hybrid System installation to
existing base transceiver stations in off-grid
area
ITOCHU Corporation PT. Telekomunikasi Selular 2,786 (50 BTS)Kalimantan
Energy saving through introduction of
regenerative burners to the aluminum
holding furnace of the automotive
components manufacturer
Toyotsu Machinery Corp.,
Hokuriku Techno Co. Ltd
PT. Toyota Tsusho
Indonesia
PT. Yamaha Motor Parts
Manufacturing Indonesia
PT. Hokuriku Techno
Indonesia
PT. Matahari Wasiso Tama
855.6
KIIC Industrial Area,
Karawang, West Java
Energy saving for textile factory facility
cooling by high efficiency centrifugal chiller
Ebara Refrigeration
Equipment & Systems
Co., Ltd
PT. Nikawa Textile Industry
PT. Ebara Indonesia
Mitsubishi UFJ Lease
Finance Indonesia
104Karawang, West Java

12. JCM sectoral scope, 75 feasibility studies that have been done
Sectoral Scope 2010-2011 2011-2012 2012-2013 2013-2014 Total
1 Energy industries (renewable- / non-renewable sources); 3 9 11 4 27
2 Energy distribution; 1 1
3 Energy demand; 1 1 2 3 7
4 Manufacturing industries; 2 2 2 6
5 Chemical industry;
6 Construction;
7 Transport; 2 2 0 4
8 Mining/Mineral production;
9 Metal production;
10 Fugitive emissions from fuels (solid, oil and gas);
11
Fugitive emissions from production and consumption of
halocarbons and sulphur hexafluoride;
12 Solvents use;
13 Waste handling and disposal; 1 2 3
14 REDD and REDD+ 1 6 7 5 19
15 Agriculture. 1 1 1 0 3
Program 1 1
Carbon Capture and Storage 1 1 1 1 4
8 23 26 18 75

13. Financial scheme of JCM
Project Scheme by MOE
Japan
International
consortiums
(which include Japanese
entities)
Finance part of
an investment
cost:
up to the half
Demonstration Scheme by METI
Japan
Finance part of an
investment cost:
Based on
negotiation
Sharp – PLN = 85%; 15%
Yokogawa – Pertamina = 100%; 0%
Azbil – Pertamina = 100%; 0%
International
consortiums
(which include Japanese
entities)
New Support Program Enabling “Leapfrog” Development (Fund/ADB) by MOE
MOEJ
JICA, other
Fund for expansion of low-carbon
technologies
(Budget for FY 2014: approx
USD42million)
ADB Trust Fund
(Budget for FY 2014: approx USD
18 million)
Supported by JICA, etc.
JCM Project
Advanced Low Carbon
Technologies
ADB Project
• Waste to Energy plant
• Renewable Energies
• Water Supply and
Sewage Systems
• Transportation
Financial assistance/financial investments
for overseas and lending
Subsidy
Contribution
Finance
Finance
GHG
Emission
Reduction

14. JCM project cycle is simplification of the CDM
• More simple than any
other carbon market
mechanism
• Still using international
standards in its
implementation
• Both government have
very significant roles
• The private sectors will
be the main actors of
the mechanism.

15. How “green” is your project?
Aspect Normal Projects JCM Projects
Foundation Economic issues as the biggest
consideration
Climate change issues as basis
Legal basis Business to business partnership or
foreign direct investment
Indonesia-Japan Cooperation on
Low Carbon Partnership
Emission Reduction Business as usual, do not
necessarily consider emission
reduction
Must deliver real emission
reduction
Methodology Does not have to follow any
agreed, rigid methodology
Must follow agreed
methodology(ies)
Procedure Internal and partnership regulation Project cycle procedure to be
followed
Reporting Internal and as required by
governmental regulation
Regular report to the Indonesia-
Japan JCM Joint Committee
Technology transfer and capacity
building
No obligation A must

16. Sustainable development criteria in the JCM projects
• Every JCM project must deliver real and measurable
sustainability that will be evaluated by the
government of Indonesia.
• If a project fails to fulfil the criteria, the project will
be suspended until the criteria achieved.
• We are now developing those criteria based on
national and international commitment and local
condition and situation.
Sustainable Development Criteria (draft)
• Conservation or diversification of natural resource use
• Safety and health of local community
• Local community’s welfare
• Community participation
• Social integrity
• Transfer of technology.

17. What are Indonesian private sectors opportunities in JCM?
Become Third Party Entities
1. There are no third party entities (TPE) registered yet.
2. TPE should be accredited by the Japan or Indonesia
National Standard Bureau, certified ISO 14065 or
former CDM DOE
3. JCM Indonesia-Japan aims to involve Indonesian
individual TPEs.
Conduct Feasibility Studies
1. FS are planned together by the two governments in
yearly basis .
2. Project Idea Note should be sent to the two
governments.
Become project participant
1. Must establish cooperation with at least 1
Japan private companies/institution.
2. Should apply and submit Project Idea
Note to the Government of Indonesia and
Japan.
3. Must develop Project Design Document
(PDD) to be submitted and approved by
the Joint Committee of the both
countries.
Grab opportunities for
financial institution
Indonesian financial institutions
will be needed to work together
with Japanese and other
financial institutions to support
full projects implementation.
Learn from JCM Best Practice
1. Most of the projects will use the most
sophisticated technologies in low carbon
development.
2. Indonesian private sectors can copy or learn
from the JCM project results.
3. Every JCM project must build the capacity
of related stakeholders.

18. Indonesia JCM secretariat main tasks
JCM secretariat(s) may jointly:
 Prepare draft methodologies;
 Receive new initiatives from JCM projects participant candidates;
 Monitor development of JCM programs, project implementation,
sustainable development criteria and environmental integrity
fulfillment.
Each side may separately or otherwise decided:
 Develop environmental and sustainable development criteria and
capacity building needed;
 Monitor the development of JCM Feasibility Studies;
 Facilitate project participants in project-based capacity building;
 Establishes and maintains a registry, as developed by the Joint
Committee;
 Issue the notified amount of credits to the registry.
Indonesia JCM
Secretariat
• Located in Jakarta
• Support Indonesia Joint
Committee and JCM related
stakeholders
• Clearing house and
information center for JCM
implementation
• Work closely with other
stakeholders to ensure
fulfilment of cooperation
objectives
• Our website:
www.jcmindonesia.com

19. The coordination between parties in JCM
JCM Joint
Committee
Communication
Government of Indonesia
Japanese Project
Participant
Indonesian Partner
JCM Projects in
Indonesia
New project
proposal
Indonesian Project
Participant Candidate

20. JC Meeting 1 JC Meeting 2
Adoption of 1st JCM Rules & Guidelines
Amendments of 1st JCM Rules & Guidelines (TPE and Rules of
Implementation)
Agreement on emissions guideline:
- emission reduction
- reference emission
- net emission reduction
Adoption of methodology: PM_001 Power Generation by Waste Heat
Recovery in Cement Industry
Adoption of methodology postponed: PM_002 Energy Saving by
Introduction of High Efficiency Centrifugal Chiller.
Sectoral scope "Afforestation/Reforestation” changed into REDD-plus
Designation of 7 TPE: JCI, JQA, LRQA, JACO CDM, JMA, TUV SUD,
Deloitte-TECO
Establishment of Japan and Indonesia Secretariats
Indonesian proposal for TPE Partnership involving Indonesian expert
added into Rules&Guidelines:
8. Other : “The TPE to conduct validation/verification of JCM projects
in Indonesia should include Indonesian personnel as their team
members.”
Capacity Building Requirements on program, FS, and project level Amendment of Rules and Guidelines for PIN postponed
Indonesian proposal for TPE Partnership involving Indonesian expert
into Project Cycle or Guidelines
Sustainable Development Criteria introduced to Japanese side and to
be tested on projects in FY2014
Indonesian proposal for Project Idea Note (PIN) from Indonesian side
into Project Cycle or Guidelines
PerMenLH 15/2013 introduced to Japanese side
Indonesian side requests 1 umbrella Project MoU for JCM for each
ministry.
Result of the Joint Committee Meeting

21. Indonesia JCM main programs in 2014
1. Feasibility Study Projects
a. Normal feasibility study
b. Leapfrog feasibility study
2. Implementation Projects
a. Model project
b. Demonstration project
c. Leapfrog project
3. Supporting Programs
a. JCM instruments development
b. Consultation between 2 countries
c. Dissemination
JCM full
implementation in
2015

22. The Indonesia JCM Secretariat 2014 main activities
1. To support all of the Joint Committee decision making processes as
well as other related stakeholders
2. To develop the technical instruments of the JCM implementations
3. To disseminate the JCM among related stakeholders
4. To monitor and evaluate the implementation of the JCM, from the
feasibility study to the real implementation
5. To support the Government of Indonesia negotiation processes,
particularly that related to the Framework on Various Approaches
and New Market Mechanism.

23. Visit our website at www.jcmindonesia.com

24. Indonesia JCMSecretariat
BUMN Building 18th floor, Jl. Medan Merdeka Selatan 13,
Jakarta
Website: www.jcmindonesia.com
Email: info@jcmindonesia.com
Terima kasih!
Thank you!