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