Climate Change Program Loan
(Cool Earth Program Loan)

July 2008

Climate Change Program Loan (Cool Earth Program Loan), on which the Government of Japan and the Government of Indonesia agreed, is the first case of Climate Change-related ODA loan up to the total amount of 300 million U.S. dollars with special preferential interest rate based on the "Cool Earth Partnership," which was presented by Prime Minister Yasuo Fukuda, this past January.


The Indonesian Government has made its full efforts to address climate change issues with formulating the National Action Plan Addressing Climate Change which includes targets and action plans in each sector.

And the Indonesian Government highly appreciates the Japanese "Cool Earth Promotion Programme," and has actively participated in formulating a future framework on climate change in which all major economies participate in more responsible manner.

It is extremely significant for the Japanese Government to assist the Indonesian Government for taking the initiative in dealing with these issues under sound economic and financial management, since such assistance can promote the Indonesian Government's measures addressing climate change and also boost the international efforts to cope with climate change.

(Specific Outcomes)

Scope of the partnership is as follows:

Forestry Sector

  • (1) Launch of new market mechanism-oriented pilot projects (REDD) which are purposed to prevent forest decrease
  • (2) Increase of CO2 absorption capacity in the forestry sector with reliable and secure plantation management including forest fire prevention and peat land rehabilitation

Energy Sector

  • (1) Increase of geothermal capacity to 9,500MW in 2025(reduction of CO2 emission is estimated about 60 million ton per year)
  • (2) Development of relevant laws and regulations, and improvement of investment climate to facilitate private sector's investment in order to increase the share of renewable energy (including bio fuel but except for geothermal) to at least 10% of total energy supply in 2025
  • (3) Reduction of CO2 emission in power plant as much as 17% per year from Business as usual in 2025 by renewable energy development and energy conservation.

Industry, Domestic (household) and Commercial Sector

  • (1) Reduction of energy intensity to the range of between 12% and 18% by 2025
  • (2) Development of relevant laws and regulations to improve energy efficiency
  • (3) Preparation of Road Map of CO2 emission reduction for the major industrial sectors (e.g. Cement, Steel) while improving database of energy consumption, and provision of the regulation of CO2 emission reduction including target amount in each sector

Water Resource Management Sector

In order to optimally develop watershed management that is well adapted for climate change effects, measures will be taken as follows:

  • (1) Formulation of the Integrated Water Resource Management Plan
  • (2) Establishment of National Water Council which coordinates various interests among stakeholders and functions as the center point in formulating the facility-building plan


In Climate Change Program Loan, actions to formulate/improve policies and institutions in various areas such as the Agriculture sector, Spatial Planning Improvement, Co-benefits approach and Early Warning System, are also included.

(Advisory and Monitoring Activities)

Necessary policy recommendation will be provided to the Indonesian Government while executing, on a regular basis, monitoring activities on achievements for the targets above-mentioned.

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