Requirements for Forestry Carbon Credit Certification

Additionality vs Baseline

"Additionality" is the added value or contribution that we will provide to the forest through the implementation of a carbon credit project. This additionality must demonstrate that the emission reductions achieved as a result of the project are reductions that would not occur naturally or as a result of existing regulations. It must also show that without the project, greenhouse gas emissions would remain high. This additionality is the primary consideration for the certification body that will issue carbon credit certificates for the forests we intend to register. Baseline is the initial condition of a forest before a carbon credit project is carried out, for example the forest is facing threats from illegal logging, forest fires, deforestation due to mining, etc.

Creditable Forest Recommendations

Integrated Land-Use Permits

Area of land has a single land-use permit, whether it's for forested or non-forested land, where the land management type allows for ecosystem improvement activities, such as carbon storage. For instance, permits issued to multi-forestry businesses (covering both protected and productive areas) that include environmental services (carbon storage) as one of the business models within the forest permit area.

Land Area and Methodology Impact

The land area and the type of methodology used will affect the cost-benefit ratio, thereby determining the feasibility of a project (with a domestic selling price of approximately $5/tonCO2e). Generally, the Improve Forest Management (IFM) methodology requires a minimum land area of 100,000 hectares, while avoided deforestation-degradation necessitates a minimum land area of 50,000 hectares. The ARR method may be more suitable for smaller land parcels. Therefore, if the managed forest is less than 50,000-100,000 hectares when using these methodologies, the expenses incurred for the certification process may not justify the carbon sales revenue in the future.

Forest Potential for Additionality

Forests have the potential for additionality as we explained above.

Forest Type Eligible for Carbon Credit

Ineligible Forest Types

The forest area that is mandated for reforestation. Such as forest areas from post-mining sites that have not been fully reclaimed.

Eligible Forest Types

Production Forest Implemented by the holder of PBPH, Social Forestry Management Agreement, or management rights. Conducted through the improvement of the RKU/RKT which explains the combination of multi-business carbon storage activities, such as the pengelolaan hutan lestari, pembangunan hutan tanaman; implementation of RIL-C and SILIN, improvement of rotation periods, replacement of high carbon-absorbing plants, and planting of MPTS.

Protected Forest

Implemented by the holder of PBPH, Social Forestry Management Agreement, or management rights. Conducted through the improvement of the RKU/RKT which outlines carbon storage activities, such as community forest, ecosystem restoration in degraded areas to adjustments in activities that support deforestation and degradation reduction in Community Forests, community plantations, etc.

Conservation Forest

It is carried out with the approval of the minister and involves various mitigation actions such as biodiversity conservation, reducing deforestation/degradation rates, etc.

Mangrove dan Peatland Forest

Mangrove and peatland forests can be certified through additional mangrove rehabilitation, avoiding degradation and deforestation in peatland and mangrove areas, and improving peatland water management.

Forest Tenure

Implemented by forest rights-holding communities with various mitigation actions, such as reducing deforestation/degradation rates, establishing permanent nurseries, and reforestation.

Customary Forest

implemented by indigenous communities through various mitigation actions, such as reducing deforestation/degradation rates, establishing permanent nurseries, and reforestation.

Non-Forest Area and Others

Areas with clear additionality, such as state forests that are not classified as forested areas, or any other relevant areas, can be eligible for carbon credits. For further consultation, we can discuss this matter in more detail with our team.

Data Requirements for Preliminary Stage

Licensing and Legal Data

Complete licensing documents to ensure that forest management permits have no problems and can be registered for carbon credit certification. It is in the form of a land legality permit that includes the permit number, licensing period, and land area as stated in the permit letter.

Forest Geographic Data

Attach a digital map of the concession/project area location as per the legal permit. If the concession area is in the form of forest utilization license (PBPH), it is also necessary to include a digital map attachment for the division of the Business Plan (RKU/RKT) in the concession area. Map of forest locations to ascertain the point of forest that will be carbon credited and observed using satellite imagery so that it can be interpreted how many carbon credits are produced and all other possibilities.

Work Plan Area

The work plan includes data on forest processing activities that have been conducted within the forest area up to this point, as well as data on community work and empowerment programs that have been implemented in the vicinity of the forest. The work plan also contains descriptions/calculations related to forest vegetation, plant age, plant density, and soil conditions (whether organic or not). This information is used to calculate the amount of carbon produced (in tCO2/ha).

Potential Mitigation Risks

Data on the condition of hotspots, flood-prone areas, landslide-prone areas, illegal logging sites, and the presence of structures in the vicinity (such as residential settlements or other buildings in forested areas) are collected to assess the potential risks of threats that may arise.

Requirements for Renewable Energy Carbon Credit Certification

Renewable energy projects can be certified as REC or carbon credit depend on the condition of the project. Carbon credits are tradable certificates or permits that give enterprises or countries the right to emit 1 tonne (1,000kg) of CO2eq In Indonesia the certification is under SRN-PPI in the form of SPE-GRK, where 1 SPE-GRK equals to 1 metric tonCO2eq. Renewable Energy Certificate (RECs) are certified proof that energy was created from renewable energy sources rather than from fossil fuels, which allow enterprises to claim the carbon emission scope 2 reduction, where 1 REC equals to 1 MWh

Initial Term to perform carbon credit or REC by private company

Meet the feasibility requirements of the initial project study, financially, technically and legally. For Carbon Credit: 1. Carbon claim is separated from the Power Purchase Agreement or PPA (Perjanjian Jual Beli Listrik - PJBL) and not owned by the PLN or government It has additionality, meaning that without a carbon credit project, emission reductions or carbon additions will not work. The project activity will be a new unconstructed power plant 2. The project increase energy efficiency, energy supply, or replace fossil fuels For REC: 1. The green energy attribute or REC are not owned by the PLN 2. The infrastructure is already constructed and producing nett electricity

Data Requirements for Preliminary Stage

Financial

requirement includes all financial information from the project, such as the feasibility study of the power plant which includes information on 1) project financing; 2) reports; and 3) projected profit and loss of the project.

Legality

requirement relates to general proprietary information, which relates to laws, regulations, and legislation such as 1) the PPA; 2) ownership of energy attributes renewable energy certificates (I-RECs, TIGR, etc.); and/or 3) ownership of the carbon claim.

Technical requirement

which contains all information related to machinery, electricity and all equipments in the project.

Financial Feasibility Study

Project Financing Overview

Information about the project financing to ensure that the power plant is feasible to be established.

Investment Details: Power Plant Implementation

Information on the total investment for the power plant implementation per installed capacity (MW)

Financial Viability Metrics: IRR and BEP

Information on the IRR (Internal Rate of Return) and the Break Even Point (BEP) of the project

Profit and Loss Projection for Electricity Sales

Information on the main business (electricity sales) profit and loss projection

Social and Community Empowerment Initiatives

Information on the additional activity that is established that have the social or community empowerment benefit

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