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Development impacts (health and livelihoods)
While Indonesia is likely to experience modest temperature increases, climate change will result in more intense rainfall and sea-level rise. Potential development impacts include:

Root causes
Indonesia’s high level of greenhouse gas emissions is being driven by deforestation, forest fires and degradation of land, especially peat swamps. Underlying these emissions are good forestry policies and legislation, but weak implementation and enforcement. Also, initiatives such as expansion of biofuel production and revitalization of forest industries may exacerbate emissions if they are not carefully planned. Emissions from the energy sector are relatively small but rapidly growing. Root causes of problems in this area include the GOI’s pursuit of a coal-fired power expansion program and barriers to the development of renewable energy sources. Finally, there has been relatively little planning or investment in mitigation, e.g. CDM projects, and adaptation to climate change.

Government strategy
Various government strategies are relevant to this theme including:

Bank and other key donor assistance
The international community is seeking ways to respond to this growing commitment to address the causes and consequences of climate change. Financing for CDM projects has been actively promoted since Indonesia ratified the Kyoto Protocol by Austria, Canada, Denmark, Japan, The Netherlands, and the World Bank, but with limited results. More recently, the possibility of reducing greenhouse gas emissions through avoided deforestation has captured the imagination of the Ministries of Environment and Forestry. In response, Australia has announced an A$200 million Global Initiative on Forests and Climate with a geographic focus on Indonesia followed by a $100 million Kalimantan Forests and Climate Partnership aimed at reducing 700 million tons of green house gases over 30 years.

The World Bank and donor partners are developing a Forest Carbon Partnership Facilitythat would have an initial capitalization of several hundred million dollars and include Indonesia as a pilot partner.

Strategic gaps in government strategy and/or donor response
Until the second quarter of 2007, climate change was primarily the responsibility of the Ministry of Environment and the main focus was on Clean Development Mechanisms (CDM) projects. Since then, the issue has garnered the attention of the President and key ministries such as Finance and Forestry, and ensuing donor support. Perhaps the greatest remaining gap is that Government policy in the energy sector has yet to incorporate or align itself with the climate change agenda.

Proposed Initiatives
The World Bank is one of several actors that have been active in climate change issues over the past five years. This has included:

1) Implementing activities with the Global Environment Fund climate change mitigation program
2) Raising awareness about CDM opportunities
3) Actively developing CDM projects for carbon financing

We are now actively supporting the Government’s efforts to seize the unique opportunity to increase its ability to understand and respond to the key challenges presented by climate change. These efforts include Technical Support and Research. The Bank is working closely with donors and government to help stakeholders in Indonesia understand the issues and options faced by the country in mitigating and adapting to global warming. The two flagship reports are :

1.	Comprehensive synthesis of the most recent and reliable information on Indonesia and climate change (emissions, impacts and policies) Read the Report Summary
2.	Study of options for low-carbon growth that is being planned with the Ministry of Finance for 2008-09. In addition, we will be assessing carbon, energy and climate linkages as part of our work to prepare the Country Environmental Analysis

Focusing on avoided deforestation and degradation
As forest and peat land degradation are the overwhelming sources of Indonesia’s greenhouse gas emissions, we are helping Indonesia develop and implement its strategy for reducing emissions both through technical assistance and financing of pilot projects. The Indonesian government will launch an important new national initiative on Reduced Emissions through avoided Deforestation and Degradation (REDD) at the COP13 in Bali.