VZCZCXRO6926
RR RUEHCHI RUEHDT RUEHHM
DE RUEHJA #2407/01 2430717
ZNR UUUUU ZZH
R 310717Z AUG 07
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 6028
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHKO/AMEMBASSY TOKYO 0719
RUEHBJ/AMEMBASSY BEIJING 4257
RUEHBY/AMEMBASSY CANBERRA 1085
RUEHUL/AMEMBASSY SEOUL 4153
RUCNDT/USMISSION USUN NEW YORK 0661

UNCLAS SECTION 01 OF 03 JAKARTA 002407 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
DEPT FOR IO, OES/EGC, OES/IET AND EAP/MTS 
TREASURY FOR TFCA - BERG 
WHITE HOUSE FOR CEQ - James Connaughton 
 
E.O. 12598: N/A 
TAGS: SENV KGHG ECON TBIO ENRG ID
SUBJECT: US-INDONESIA ENERGY SECURITY AND CLIMATE CHANGE 
CONSULTATIONS 
 
JAKARTA 00002407  001.2 OF 003 
 
 
¶1. (SBU) Summary. White House Council on Environmental Quality (CEQ) 
Chairman James Connaughton and U.S. Senior Climate Negotiator Harlan 
Watson discussed energy security and climate change strategy with 
senior Government of Indonesia (GOI) officials, NGOs and donors 
during a series of meetings on August 15-16 in Jakarta. All 
interlocutors appreciated the high-level visit and hoped that the 
U.S. would play an active role to make the December Conference of 
Parties 13 (COP 13) in Bali a success. The GOI and the U.S. agreed 
on the importance of using the September 27-28 Major Economies 
Conference in Washington to focus on a sectoral approach to 
improving energy security and reducing greenhouse gases. The GOI 
stressed the need to dovetail the Major Economies Conference process 
into COP 13. NGOs and donors urged strong USG attention to 
incentives such as carbon trading to help preserve Indonesia's 
rainforests. GOI officials also briefed Connaughton on their biofuel 
development plans. During a meeting on August 15, United Nations 
Framework Convention for Climate Change (UNFCCC) Executive Secretary 
Yvo De Boer and Connaughton and Watson compared their planning 
assumptions and concerns for COP 13. End Summary. 
 
--------------------------------------------- -------- 
US Message: Energy Security and Climate Change Agenda 
--------------------------------------------- -------- 
 
¶2. (U) Throughout the visit, Chairman Connaughton outlined the U.S. 
approach to the Major Economies Process. He noted that the September 
27-28 conference is the first in a series of (likely five) meetings 
pursuant to the President's May 31 initiative for a new 
international framework for climate change. The objective for the 
September meeting is to seek agreement on the process by which the 
major economies would agree on a post 2012 framework. The U.S. is 
asking that countries send delegations who can address the 
environmental, energy security and economic aspects of climate 
change. The U.S. delegation, which will be led by Chairman 
Connaughton, will include Under Secretary Dobriansky and senior 
representatives from the Department of Energy and Treasury. 
 
¶3. (U) Chairman Connaughton said that countries invited to the 
meeting would prepare reports on their domestic policy and energy 
situations that would likely include binding commitments at the 
national level - a potentially more effective approach than binding 
but unenforceable multilateral outcomes. Based on a review of the 
respective country portfolios, the delegations would identify the 
highest priority sectors for action plans. For example, coal, 
transportation, and land use/forestry are the three most important 
sectors affecting climate change. COP 13 in Bali should also focus 
on discussions within these priority sectors. 
 
¶4. (U) Connaughton explained that Indonesia is at the center of the 
climate change debate and a key international player that also 
happens to be host to COP 13. Indonesia is both a petroleum producer 
and consumer, has extensive forests and coral reef assets, possesses 
expanding biofuel and agricultural sectors, and is a major 
developing economy. Connaughton echoed this theme during press 
events with Tempo (Indonesia's leading weekly magazine), Metro TV, 
Associated Press and Suara Pembaruan (an Indonesian newspaper). 
 
--------------------------------------------- ---------- 
Presidential Advisor: Coral Reefs and Forestry Concerns 
--------------------------------------------- ---------- 
 
¶5. (SBU) GOI Presidential Advisor Dino Djalal told Connaughton that 
the President Susilo Bambang Yudhoyono (SBY) had received President 
Bush's invitation for the Major Economies Meeting. The GOI supports 
the process and is preparing its official response to the 
invitation. Indonesia must balance its economic development with 
environmental concerns and has particular interest in expanding 
biofuels, protecting coral reefs and seeking financial mechanisms 
(such as carbon trading) to protect rainforests. Djalal also 
presented Connaughton with a letter from President SBY to President 
Bush concerning the impact of climate change on coral reefs. The 
letter seeks U.S. support for a new multilateral partnership called 
the Coral Triangle Initiative (CTI). President SBY hopes to discuss 
the CTI at APEC in September and raise it formally at COP 13. Djalal 
also noted that he plans to accompany President SBY to the September 
24 climate change meeting, a side event of the 62nd UN General 
Assembly. 
 
¶6. (SBU) Connaughton reported that President Bush supports inclusion 
of coral reefs within the climate change agenda and that the U.S. 
 
JAKARTA 00002407  002.2 OF 003 
 
 
will be including such protection under the Tropical Forest 
Conservation Act. The U.S. also recognizes that forestry and land 
use are an important part of the sustainable development and climate 
change agenda and require careful attention. However, the global 
impact of current carbon trading mechanisms such as the Clean 
Development Mechanism (CDM) contains perverse incentives for 
entrepreneurs to increase emissions in exchange for CDM 
compensation. 
 
-------------------------------------------- 
Environment and Forestry Ministries Concerns 
-------------------------------------------- 
 
¶7. (SBU) During a meeting with senior Ministry of Environment (MOE) 
officials, Minister Rachmat Witoelar thanked Connaughton for U.S. 
leadership on convening the major economies on climate change. 
Witoelar will chair COP 13 and Emil Salim, Presidential Advisor on 
Environment, will lead the GOI delegation. Witoelar reported that 
the GOI is now formulating a national plan of action on climate 
change but will adjust the Indonesian plan in the context of other 
national action plans. Witoelar stressed the importance of staying 
in close communication on all climate change issues and dovetailing 
the Major Economies Process into COP 13 in order to make both 
successful. Witoelar also stressed coral reef and marine 
conservation issues. Connaughton offered to send to MOE information 
about U.S. marine habitat and fish stock restoration programs. 
 
¶8. (SBU) Connaughton also solicited the views of Ministry of 
Forestry officials on how the U.S. could assist Indonesia on illegal 
logging and sustainable forest management. The officials appreciated 
U.S. assistance to date, and expressed optimism that these issues 
would be an important part of the COP 13 discussions. 
 
¶9. (SBU) During a dinner discussion with key GOI officials, Emil 
Salim emphasized the importance of identifying indicators of success 
for the COP 13 so that the meetings can be planned accordingly. 
Salim also stressed the need for addressing deforestation and 
sustainable forestry and stressed the urgency of addressing climate 
change immediately; he claimed that 2,000 Indonesians islands will 
likely be submerged within 20 years as a result of global warming. 
 
--------------------------------------------- --------- 
NGOs and Donor Perspectives: Climate Change Challenges 
--------------------------------------------- --------- 
 
¶10. (SBU) During meetings with NGO and donor representatives, 
participants highlighted the challenge in Indonesia of addressing 
climate change adaptation (including disaster preparedness) and 
deforestation. One NGO representative explained that the GOI has 
begun to focus more on adaptation, adding that, for example, the 
Ministry of Agriculture has assigned a team to assess the 
agriculture industry's technical capabilities to deal with the 
effects of climate change. Donors referred to other challenges, 
including a lack of statistics on climate change. Donors added that 
climate change adaptation and disaster preparedness are key focus 
areas and proposed that the international community develop a 
private-public partnership to finance disaster insurance for 
developing countries, with premiums set based on each country's 
disaster preparedness level. 
 
¶11. (SBU) Participants uniformly saw value in carbon funds for 
preventing deforestation, pointing to a lack of incentives for 
forest conservation. They noted, however, that questions about 
forest land ownership and to whom these funds would be paid 
currently limit their feasibility. Meeting participants agreed that 
most timber is harvested for products other than fuel but noted that 
increasing demand for biofuel development has led to an increase in 
deforestation to clear space for oil-palm plantations. 
 
¶12. (SBU) Both NGOs and donors emphasized the importance of 
balancing energy needs and biofuel development with environmental 
concerns. Donor representatives noted that the GOI is trying to 
address growing energy demand by investing in both new coal plants 
and biofuel development, and requires more international assistance 
to combat deforestation and address energy demand. They noted the 
potential for Indonesia to develop nuclear energy and adopt clean 
coal technology. Both the World Bank and Asian Development Bank 
(ADB) representatives noted that the two institutions do not 
consider nuclear energy projects, but are starting to consider clean 
coal projects based on increasing member country requests to 
 
JAKARTA 00002407  003 OF 003 
 
 
research the economic and environmental impacts of clean coal. 
 
-------------------------------- 
Biofuel Development in Indonesia 
-------------------------------- 
 
¶13. (U) Indonesia is pursuing policies to increase production of 
biodiesel to 20 percent of total consumption by 2025. According to 
members of the Indonesian National Biofuel Development Team (NBDT), 
this is part of an overall plan to increase biofuel use to 22.26 
million KL -- or 5 percent of Indonesia's total energy mix -- by 
¶2025. NBDT Chief Executive Alhilal Hamdi dismissed concerns about 
the environmental impact of oil-palm plantation development, arguing 
that total acreage under cultivation is relatively small and growth 
will be in already non-forested areas. He said that Indonesia and 
Malaysia are working to create a certification standard for 
sustainable oil-palm production, and that they are considering a 
public relations campaign later this year to address the negative 
publicity about oil-palm. Hamdi highlighted interest in developing 
genetically modified jatropha seed as a biofuel source, and welcomed 
U.S. cooperation in this effort. Connaughton affirmed the importance 
of establishing standards and setting the right blends of 
transportation fuel to ensure the long-term success of biofuel 
policy. 
 
--------------------------------------------- ---- 
UNFCCC: Connecting September Conference to COP 13 
--------------------------------------------- ---- 
 
¶14. (SBU) At a side meeting on August 15, UNFCCC Executive Secretary 
Yvo De Boer briefed Connaughton on his consultations with various 
parties concerning COP 13. De Boer noted that GOI preparations are 
proceeding well, and that the GOI is also enthusiastic about hosting 
a trade ministers meeting at COP 13, in addition to the planned 
finance ministers meeting. They both concurred that a new climate 
change agreement should consider options besides the CDM, and that 
all parties need to move away from the notion that cap and trade 
mechanisms are the only available tools. Connaughton also cautioned 
against further complicating COP 13 discussions by bringing in trade 
issues. 
 
¶15. (SBU) Connaughton described to De Boer how the September Major 
Economies conference would tie into COP 13. De Boer responded that 
President Bush's climate change initiative was "significant" and 
showed U.S. leadership. He conveyed that the Secretary General has 
not yet decided whether the UNFCCC, U.N. Environmental Programme, or 
Department of Economic and Social Affairs will represent the U.N. at 
the conference. Connaughton and De Boer agreed on the importance of 
clearly linking the September conference to the UNFCCC, in order to 
overcome the suspicion that the September conference and follow-on 
events are separate from the UNFCCC process. Connaughton solicited 
advice on how best to portray the conference, and De Boer suggested 
using the Secretary General's phrase of "advance negotiations" 
(rather than "launch") to allay suspicions that this will be a deal 
between the U.S. and its industrialized-country peers. 
 
¶16. (SBU) Appreciating the U.S. focus on national commitments under 
the Major Economies Process, De Boer asked that the U.S. clearly 
highlight the links to adaptation, mitigation, technology and 
finance in order to assuage the concerns of developing countries. He 
noted that the Secretary General's high-level meeting on climate 
change on September 24 will focus on these four areas. De Boer and 
Connaughton emphasized the importance of being flexible and keeping 
all options open, and promised to consult closely in the run up to 
the September conference and Bali. 
 
 
HUME