Carbon market feasibility assessment: Potential for ESP to enter the carbon markets


Development Alternatives, Inc.

Type of Document:
Research Report


Environmental Services Program

Date of Publication:

Place of Publication:
Jakarta, Indonesia


The purpose of the Carbon Market Assessment was to determine the feasibility of developing a strategy for one or more Pilot Payment for Environmental Service schemes using carbon credits as the commodity of trade. The consultancy focused on the opportunities to design projects that link to ongoing Environmental Services Program (ESP) activities and leverage the strengths of ESPs community mobilization activities throughout Indonesia.

Specifically, the Assessment explored the potential to develop carbon credit (a carbon credit or credit is one metric ton of CO2 equivalent) projects from the Land Use, Land Use Change and Forestry (LULUCF) Sector. LULUCF projects for ESP would focus on the amount of biomass stored, or sequestered, in forests. The biomass is easily converted to carbon credits that can be either brokered or sold. The forestry credits would come from the conservation and reforestation activities undertaken by communities and community watershed forums, who are the key constituents of ESP. Broadly, the assessment looked most carefully at the possibility of entering the voluntary market with these forestry credits but also tried to understand the regulatory carbon market opportunities via the Kyoto Protocol’s Clean Development Mechanism (CDM) or the Reducing Emissions from Deforestation and Forest Degradation in developing countries (REDD) frameworks. There are numerous precedents for carbon market projects in Indonesia, and there are operational projects in the country that can serve as potential models. (Excerpt from Executive Summary)


1. Introduction 2. Climate change and the carbon market 3. The carbon markets 4. ESP regulatory market carbon credit options 5. ESP voluntary market carbon credit options 6. Policy, legislative & regulatory framework 7. Institutional capacity 8. ESPS preferred carbon market options 9. Pilot REDD carbon credit project with OCSP 10. Project cycle and timelines and illustrative costs

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