Facilitating Green Prosperity in Indonesia

Millennium Challenge Account Indonesia

Through a robust program management plan, information system and delivery, and long-term sustainability initiatives, CDM Smith helped the governments of Indonesia and the United States to ensure a prosperous future for Indonesia.

Based on funding from the U.S. Millennium Challenge Corporation (MCC) for the “Green Prosperity Program,” the governments of Indonesia and the United States partnered to help alleviate poverty and reduce impacts to the environment by creating long-lasting economic growth opportunities and decreasing carbon emissions through various initiatives.

This 5-year, $330 million grant program was implemented by the government of Indonesia via the Millennium Challenge Account – Indonesia (MCA-Indonesia). The program comprised more than 100 projects focused on land-use, eco-tourism, forestry and renewable energy. Key program outcomes included:

^ha

of cocoa and palm oil farmland managed through sustainable practices

25K ^ha

of cocoa and palm oil farmland managed through sustainable practices

^ha

of improved, rehabilitated or protected peatlands

18K ^ha

of improved, rehabilitated or protected peatlands

renewable energy projects fully designed and constructed

Fulfilling the Need for Structure

To facilitate a program of this magnitude, MCA-Indonesia hired CDM Smith as the program management consultant (PMC), with the primary role of ensuring that all project activities were carried out in a coordinated, effective manner, and that the strategic goals and outcomes of the Green Prosperity Project were achieved. The CDM Smith team was composed of a joint venture between CDM Smith and Hatfield Consultants, in partnership with Planet Partnerships. To consistently oversee and track a program of this magnitude, a comprehensive program management plan (PMP) and information system (PMIS) was required. CDM Smith developed the PMP, which included a full suite of programmatic business processes, roles and responsibilities, and templates for program execution, and a custom-designed PMIS to operationalize these program delivery processes and templates.

A solar panel installed in a vocational school on Lombok Island, as part of the Green Knowledge project--a project aiming to share knowledge of ways to create green energy.

Stakeholder workshop in Bali for a Green Prosperity-funded project.

View of a mill that provides Palm Oil Mill Effluent as input for a power generation project funded by Green Prosperity.

Excavation process for capturing methane from Palm Oil Mill Effluent for a power generation project funded by Green Prosperity.

A Green Prosperity solar power generation project on a 6 square-kilometers island that provides electricity for more than 700 households.

As the PMC, CDM Smith ensured adherence to MCA-Indonesia’s requirements; helped to manage program-wide costs, schedules and milestones; developed and implemented monitoring and evaluation approaches; actively planned program activities and supported MCA-Indonesia in all program aspects, including technical, operational, financial and reporting. To support such a large program, the CDM Smith-led team hired more than 150 employees and consultants, resulting in more than 1,000 months of personnel support. Team Leader David Spector said of the effort, “We overcame program challenges and achieved successful outcomes thanks to the teamwork and dedication of our large and diverse PMC team. Trusted partnerships with managers from MCA-Indonesia and MCC, the adaptability and grit among MCA-Indonesia staff, and the collaborative working relationships with delivery partners and grantees, made Green Prosperity a reality.”

Through the Green Prosperity project and other MCC compacts, Indonesia is taking steps toward a brighter future. Andry Thamrin, former MCA-Indonesia Green Prosperity Director, believes the Green Prosperity team “managed the grant program transactional needs well–considering a dynamic and complex operational environment—and provided thoughtful leadership and support for broader strategic program initiatives.” MCA-Indonesia was able to facilitate the implementation and investment needed for several impactful projects that will contribute to the financial and environmental prosperity of the next generation of Indonesians.

The team managed the grant program transactional needs well...and provided thoughtful leadership and support for broader strategic program initiatives.

Andry Thamrin, former MCA-Indonesia Green Prosperity Director

Project Details

Other key program outcomes:

Training for more than 20,000 cocoa and palm oil farmers;
Construction of 200 canal-blocking structures to re-wet peatlands;
6 off-grid and 4 on-grid renewable energy projects that included solar and biomass power generation in rural communities throughout Indonesia;
40 districts in Indonesia with land use mapping, village boundary setting and geographic information system training, resulting in more than 350 village boundaries surveyed and mapped;
Creation of a Green Knowledge Management Information System, which is an open platform that shares knowledge and data products from the program.

Sustaining Future Success Beyond Green Prosperity

Financing Palm Oil Replanting

Over the next 25 years, approximately 175,000 hectares of palm oil will require replanting each year, equating to a long-term financing need of nearly $900 million annually. To address this issue, CDM Smith helped design a palm oil financing solution that would provide access to credit for Indonesian smallholder farmers and incentivize Indonesian investment in the palm oil sector. The solution includes a finance model that accounts for all replanting costs and inputs on total yields and revenues generated through higher-quality production—demonstrating positive cash flows with an internal rate of return of 18%.

Securing Investment for Renewable Energy

To fund construction of renewable energy projects that were supported with Green Prosperity project preparation grants, the CDM Smith team promoted public-private partnership investment models for local-scale power supply. Through matchmaking services to leverage program funding for private investment, a combination of 65 megawatts of hydropower projects were under due diligence and/or funded by outside investors, at program close.

Kickstarting Other Environmental Projects

Kickstarting Other Environmental Projects

CDM Smith assisted in the conceptualization of a project preparation fund referred to as the Clean Green Fund (CGF), to be established by the government of Indonesia and interested bi-lateral and multilateral financial institutions. By improving the viability of projects and focusing on standards of investor concern, such as technical soundness, social and environmental compliance, land acquisition resolution, tariff modeling and power purchase agreements, the fund has potential to lead to financing of more than $1 billion in renewable energy and sustainable forestry investments, with initial capitalization of $50 million.