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Request for Proposals: Regulatory Impact Assessment of Indonesian Carbon Pricing

SUMMARY OF PROCUREMENT

WRI intends to award a cost-reimbursable type contract to assess the potential impacts on the implementation of the carbon pricing policy, particularly for selected sectors. The project has an expected end date of April 2021 with 3 phases of work and major deliverables due in November 2020, March 2021, and April 2021.

The objective of the project is to assess potential impacts, especially economic impact from the implementation of carbon pricing regulation. Potential impacts on economic, environment, regulatory and social from the proposed carbon pricing regulation will be assessed. The assessments would be a quantitative assessment and scenario modeling for the proposed carbon pricing regulation. The analysis (e.g. valuation, risks, cost-benefit analysis) will complement and/or confirm the previous assessments, and a final assessment will be made stating the main conclusions and also presents discussion of the uncertainties and limitations of the analysis. The result of the study in the form of policy recommendation will be submitted to the Government task force that is mandated to formulate the carbon pricing regulation.

About the World Resources Institute

Founded in 1982, The World Resources Institute (WRI) is a global environmental think tank that goes beyond research to put ideas into action. We work with governments, companies, and civil society to build solutions to urgent environmental challenges. WRI’s transformative ideas protect the earth and promote development because sustainability is essential to meeting human needs and fulfilling human aspirations in the future.

About the Project

Climate change is an important issue in Indonesia. With more than 17 thousand islands, majority of Indonesia’s people lives in the low-lying coastal area, which is exposed to the physical risks and socio-economic impacts of climate change. Indonesia is one of top GHG emitter and the emissions is increasing rapidly not only because of growing of population but also triggered by economic growth. As such, Indonesia is predicted to be the fourth largest’s economies in 2050.

Indonesia has committed to reduce GHG emissions up to 29% unconditional and 41% conditional by 2030. To achieve this along with the achievement of global development agenda 2030 (SDGs), Indonesia is committed to putting in place sustainable development principles that balance the economic, social, and environmental aspects. The development of green economy, involving business models that incorporate inclusive development, greenhouse gasses emission (GHG) reductions, also ensure maintenance and restoration of natural capital in the form of healthy functioning ecosystems as a basis for sustained economic growth. To underline this commitment of implementing LCDI, the Ministry of National Development Planning/Bappenas has launched the LCDI report in 2019. Further, the result of the LCDI report has been integrated into the National Medium-Term Development Plan (RPJMN) 2020 – 2024. This has made RPJMN 2020 -2024 as the first low carbon development plan in the history of Indonesia. Different from the previous development plan, Indonesia has added GHG emissions reduction as one of the developments of macro indicators.

The current RPJMN put the GHG emissions target at 27.3% in 2024 compared to the baseline, despite this is not the most ambitious scenario for Indonesia. The most ambitious LCDI scenario for Indonesia reflects more ambitious policy measures, that Incorporate an extra level of effort and requires a set of measures that are not yet considered in the current RPJMN, including the carbon pricing mechanism. One of the biggest challenges to achieve the emission reduction target outlined in the RPJMN 2020-2024 and to shift toward a more ambitious low carbon development path is financial constraint. The government efforts with its budget alone will not be sufficient to ensure the delivery of the NDC target. The crucial condition for Indonesia’s ability to achieve the targets is its capacity to effectively and efficiently mobilize national mitigation activities from both central and local government, communities, and private sector’s initiatives. Therefore, innovative regulation and financial schemes are needed to leverage non-party stakeholders (NPS) participation in scaling-up mitigation actions.

Putting a price on carbon is widely seen as the most cost-effective and flexible way to achieve emission reduction. Carbon Pricing can spur investment and innovation in clean technology by increasing the relative cost of using carbon-intensive technology. Businesses and individuals seeking cost-effective ways to lower their emissions will encourage the development of clean technology and channel financing towards green investments. Carbon pricing also promotes the achievement of the Sustainable Development Goals by channeling financing to sustainable development projects. It also generates revenue that can be recycled into the green economy through government spending for research and development into green technology, helping vulnerable communities adapt to the effects of climate change, or managing the economic impacts of the transition to a low-carbon economy.

Currently, there are 57 carbon pricing initiatives implemented or scheduled in 46 countries and 28 subnational covering around 20 GtCO2 equivalent or around 11% of the world’s GHG emissions. Those numbers show great interest in carbon pricing, including in developing countries, and Indonesia is among the countries elaborating the possibilities to implement carbon pricing to scale up climate change mitigation in their countries. In terms of international carbon pricing mechanisms, Indonesia has experience in the Clean Development Mechanism under the Kyoto Protocol, the Joint Crediting Mechanism with Japan, and projects under various voluntary carbon market mechanisms.

Indonesia is in the policymaking process of its carbon pricing regulation which will establish the general arrangement of carbon pricing utilization, both domestic and international. In this context, updated and additional regulatory impact assessment is needed to assess the possible impacts and gather the views of stakeholders that are likely to be affected by this upcoming regulation.

SCOPE OF WORK AND DELIVERABLES

The scope of works of the project may include the following phases and deliverables:

a. Scoping.

The Scoping phase is intended to confirm the regulatory impact assessment methodology(ies) and its requirement. Approved results of the scoping phase will guide the implementation of subsequent phases, namely the Data Collection and Regulatory Impact Assessment phases. The deliverables of this phase are approved scoping reports and necessary Term of References for subsequent phases.

b. Data Collection.

Based on the methodologies approved from the Scoping phases, necessary data will be collected. The deliverable of this phase is the data set(s) to be used in the Regulatory Impact Assessment phase.

c. Regulatory Impact Assessment

The Regulatory Impact Assessments to be conducted will be categorized into quantitative assessments. Quantitative assessment will be done for the carbon pricing regulation that is currently developed by the Government. The assessment will use most appropriate modeling methodology taking into consideration the availability of most recent data as the outcomes of the previous studies related with carbon pricing regulation. Potential impacts of economic, social and environmental of the carbon pricing regulation will be assessed quantitatively to the possible implementation mechanism of carbon economic value, including carbon trading system (ETS) implementation scenario in the power generation and industry of cement, pulp and paper, and fertilizer, performance-based payment, tax on carbon, International carbon cooperation as per the Article 6 of Paris Agreement, suggested emphasis is on the impact of recycling the revenue from international carbon pricing for national climate change objectives and other mechanism identified. The deliverables of this phase are:

  1. Assessment on economic, social and environmental of carbon pricing in Indonesia (for each instruments), relevant Regulatory Impact Assessment reports and assessment tools used in the assessments, i.e. modelling tools

  2. Draft of carbon pricing regulation (governance, institution and mechanism)

TIMING

Indicative Project Timeline: October 2020 – April 2021

Indicative Phases Timeline:

Phase Task Start and End Dates
Phase One: Scoping Desktop analysis; Focus Group Discussions; Scoping analysis October 2020 - November 2020
Phase Two: Data Collection Desktop analysis; Focus Group Discussions; Workshops; Surveys/Questionnaires November 2020 - January 2021
Phase Three: Regulatory Impact Desktop analysis; Focus Group Discussions; Modelling exercises; RIA January 2021 - April 2021

Indicative Milestones:

⁻ Kick-off meeting : October 2020

⁻ Inception report : November 2020

⁻ Draft final report : March 2021

⁻ Dissemination report : April 2021

BUDGET

Budgets up to 100,000 GBP will be considered and must break down expected team members, respective day rates, and anticipated days on the project. Please note this information will also be required on invoices, as this award will be paid on a cost-reimbursement basis.

Please note that WRI is an IRS-registered 501(c)3, tax-exempt organization. WRI is not VAT exempt. All prices or quotes should include VAT and tax, as applicable.

GUIDELINES FOR PROPOSAL SUBMISSION

Proposal content

The selected organization or consultant will be able to demonstrate capacity in similar work. Prospective organizations or consultants should consult the Innovation and Challenge Fund submission document, which will ask the organization or consultant to submit:

  • A statement of interest describing the proposed team and how it meets the above requirements;

  • CVs of team members;

  • Examples of and/or references for similar previous work;

  • An outline of the proposed methodology and workplan;

  • An account of how the work and/or organization is sustainable

  • A proposed budget with a breakdown of costs sufficient to assess reasonableness and compliance with our funder requirements. If proposing for a Fixed Price contract, please also include a competitive payment schedule associating amounts with work milestones.

  • If a reimbursable type of contract is envisioned, a summary of accounting system which will support claims.

Expression of Interest, Deadline for Questions, and Proposal

All proposals to this RFP must be received via email to the contacts below by October 9, 2020 (Washington, DC). Expressions of interest and Questions must be submitted prior. Answers to the questions will be shared will all parties who have asked questions or otherwise expressed interest.

  • Egi.Suarga@wri.org, Ari.Adipratomo@wri.org, eva.costa@wri.org

EVALUATION AND SELECTION

Evaluation Criteria

The following elements will be the primary considerations in evaluating all proposals submitted in response to this RFP:

  • Completion of all required elements;

  • The extent to which the organization’s or consultant’s proposal fulfills WRI’s stated requirements as set out in the RFP;

  • Experience with similar projects

  • Sustainability – WRI values sustainability and all other factors being equal, will favor a proposal to more sustainably perform the work.

  • Overall cost of the proposal.

The bidder offering the best overall value will be selected. For this procurement, price and non-price aspects are considered to be of approximately equal importance.

Selection Process

No proposal development costs shall be charged to WRI / all expenses are to be borne by the bidders. WRI may award to the bidder offering best value without discussions. However, WRI reserves the right to seek bidder clarifications and to negotiate with those bidders deemed to be within a competitive range.

WRI may, at its discretion and without explanation to the prospective organizations or consultants choose to discontinue this RFP without obligation to such prospective organizations or consultants or make multiple awards under this RFP.

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