(EnergyAsia, November 11 2011, Friday) — The governments of Japan, France and the Asian Development Bank (ADB) are extending a combined US$400 million loan to support Indonesia’s drive to reduce greenhouse gas emissions and strengthen its resilience against climate change. Japan will be providing US$200 million while France and the ADB will each contribute US$100 million, said the bank.

Indonesia has been carrying out many reforms to reduce emissions, to develop renewable energy resources, and to incorporate climate proofing measures into its development work.

It has pledged to cut greenhouse gas emissions by 26% over business as usual by 2020, and will aim to increase that to over 40% with international assistance. Achieving the 26% reduction will require an investment of billions of dollars between now and 2020.

An ADB study shows that under a ‘business as usual’ scenario, climate change could cost Indonesia between 0.7% and 2.5% of its gross domestic product by the end of this century.

The study also notes that Indonesia has been producing more than half of all Southeast Asia’s total greenhouse gases as it clears forests and converts peat lands for agricultural use.

Indonesia’s growing need for electricity is also increasing greenhouse gas emissions, with the energy sector likely to be its largest source of such emissions by 2030.

“This funding will help government efforts to move the economy onto a low carbon growth path and to make climate change adaptation measures an integral part of its national development strategy,” said Jon Lindborg, ADB Country Director in Indonesia.

ADB’s loan for the Low Carbon and Resilient Development Program follows a series of policy measures taken by the Indonesian government over the past year and a half.

These include a national action plan to reduce greenhouse gas emissions, the establishment of forest management units, and a legal timber verification system. ADB is also encouraging Indonesia to develop geothermal energy.

Indonesia has moved to improve its climate change forecasting methodology to develop more effective adaptation measures, and it has approved eight strategic plans for river basins to help them manage their precious resources more effectively.

A Japan Fund for Poverty Reduction technical assistance grant of US$700,000, administered by ADB, will complement the program and develop the capacity of national and local government agencies working on  climate change adaptation policies.