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Cablegate: Scenesetter for Ceq Chairman Connaughton Visit To

VZCZCXRO7866
OO RUEHCHI RUEHDT RUEHHM
DE RUEHJA #2194/01 2231214
ZNR UUUUU ZZH
O 111214Z AUG 07
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5752
RUEHBJ/AMEMBASSY BEIJING IMMEDIATE 4203
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUCNDT/USMISSION USUN NEW YORK 0651

UNCLAS SECTION 01 OF 02 JAKARTA 002194

SIPDIS

SIPDIS
SENSITIVE

FOR CHAIRMAN CONNAUGHTON AT EMBASSY BEIJING FROM AMBASSADOR HUME

E.O. 12598: N/A
TAGS: EFIN EINV ECON ENRG KCOR PGOV ID
SUBJECT: SCENESETTER FOR CEQ CHAIRMAN CONNAUGHTON VISIT TO
INDONESIA

1. (SBU) Summary. Embassy Jakarta welcomes you to Indonesia. You
are coming to Indonesia at a time when the country is under
increasing criticism for its rapid rates of deforestation, something
to which the Government of Indonesia (GOI) is increasingly sensitive
with the approach of the 13th United Nations Framework Convention on
Climate Change (UNFCCC) Conference of the Parties (COP) meeting in
Bali. Your trip follows a visit by OES Assistant Secretary Claudia
McMurray and will be a good opportunity to reinforce U.S. policy on
climate change and the upcoming COP-13. Your Indonesian
interlocutors will want to hear more about the President's September
conference for major economies. They will also want to hear
specifics regarding: 1) how the President's proposal addresses
deforestation; 2) how developing countries will have affordable
access to clean technologies; and 3) how the President's proposed
framework will fit with COP-13. End Summary.

INDONESIAN PARTICIPATION IN THE NEW FRAMEWORK
---------------------------------------------

2. (SBU) GOI officials, NGOs and other climate change stakeholders
have welcomed President Bush's climate change framework proposal as
a positive development. Each group has emphasized the need to
address forestry as a component of any climate change framework (see
paragraph 3). The GOI will focus on three issues relative to the
President's plan: stakeholder involvement, attention to forestry
and linkages to technology transfer. Dr. Emil Salim, the Senior
Environmental Advisor to President SBY, has cautioned that Indonesia
would not participate in the new framework without understanding its
incentives and obligations.

CLIMATE CHANGE AND FORESTRY IN INDONESIA
----------------------------------------

2. (U) Indonesia is the world's number three emitter of greenhouse
gases, with emissions resulting from deforestation and forest fires
accounting for five times the emissions from non-forestry sources.
Indonesia records the world's fastest rate of deforestation, an
average of 2.1 million hectares - an area the size of Maryland - per
year (Indonesia lost an estimated 21 million hectares between
1990-2000). The World Bank estimates most forests in Sumatra and
Kalimantan (Borneo) will be gone in a decade. This is due to
illegal or unsustainable logging practices, a weak judicial system,
and large scale land clearing for agri-business ventures, mainly oil
palm, much of which ironically goes into biodiesel. Illegal logging
constitutes as much as 82 percent of total consumption. Companies
engaged in illegal logging process most timber domestically before
exporting it.

THE BIOFUELS DEBATE
-------------------

6. (SBU) Indonesia's greatest potential source of biofuel
development, the oil palm, is ironically also one of the major
contributors to deforestation (and hence greenhouse gas emissions).
Logging and oil palm plantations are a $7 billion industry in
Indonesia. The GOI is continuing its ambitious five-year,
multi-billion dollar investment plan to boost biofuel production.
The GOI has announced several biofuel policies, including a $108
million fund to create incentives for biofuels investments and $1.08
billion to improve agricultural and rural infrastructure. The GOI
has also signed 58 tentative agreements reportedly worth $12 billion
with foreign and domestic investors (mostly Chinese, Japanese, and
Malaysian firms). Even though the Presidential Decree on biofuels
requires that investors only plant on degraded land, there are
sufficient loopholes to allow good quality forest to be lightly
exploited until it becomes classified as degraded. There is a need
in Indonesia to promote economic alternatives to unsustainable oil
palm development.

ACCESS TO CLEAN ENERGY
----------------------

10. (U) Indonesian climate change stakeholders have also expressed
concerns about access to affordable clean technology. One of the
bottlenecks in reducing greenhouse gas emissions in Indonesia is the
lack of capital investment. The GOI is attempting to save money by
investing in cheaper (and dirtier) coal technologies from China to
address its rapidly growing energy needs. We have communicated that
the President's proposal includes a component to have the
multilateral development banks prioritize clean energy investments,
but the stakeholders with whom you meet will want to hear more
details, particularly on affordability. Stakeholders have also
stressed the strategic priority to leverage the country's vast
potential for renewable, zero-emissions geothermal power and biomass
power.

COP-13

JAKARTA 00002194 002 OF 002


------

11. (SBU) As the host of December's COP-13 meeting, the GOI is
hesitant to participate in any negotiations they perceive will
distract from the COP. Although you will be in Jakarta to discuss
the President's proposal, you may find that your audiences will try
to change the subject to COP-13 or will want specific details on how
the President's proposal will complement COP-13 and contribute to
its success.

HUME

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