Deforestation Regulation_Presentation_Updated_March 2023 _Indonesia.pptx

Deforestation regulation EUDR

1. 1 European Commission DG Environment Regulation on deforestation- and forest degradation free supply chains

2. Context 2 2 420 million hectares of forest worldwide – an area larger than the EU – have been lost between 1990 and 2020 (FAO). A significant share of that forest loss is legal (Forest Trends) . Deforestation and forest degradation are important drivers of climate change (IPCC: 11% of GHG emissions) and biodiversity loss . 90% of deforestation is provoked by the expansion of agricultural land (FAO), which is linked in particular to a series of commodities. The EU is a major consumer of commodities associated with deforestation and forest degradation: Imports of the commodities and products covered - EUR 85 billion / year .

3. Objectives of the Regulation Specific Minimise the EU’s contribution to deforestation and forest degradation worldwide (thus reducing global deforestation and forest degradation as well as greenhouse gas emissions and biodiversity loss ) 3 3 GENERAL Minimise risk that products from supply chains responsible for deforestation / forest degradation are placed on the EU market or exported from it Increase EU demand for and trade in legal and ‘deforestation free’ commodities and products

4. Scope 4 4 Palm oil, soy, wood, cattle, cocoa, coffee, rubber , and some derived products (e.g. chocolate, furniture, tyres, printed products ) Scope may be expanded over time Indonesia : EU imports of all commodities covered 6345 million kg/ 5032 Million €. Percentage of commodities covered imported by the EU from Indonesia by value (average of 2017-2021)

5. Principles No ban against any country or commodity: All countries will be able to continue to sell their commodities on the EU market if the operators can demonstrate that the commodities are deforestation-free and legal No discrimination : Applies equally to products produced in the EU and imported from outside Cut-off date of 31 December 2020: products produced on land deforested after this date are not allowed on the EU market Cut-off date is in line with SDG commitments: Aims to minimise disruption for smallholders and facilitate satellite monitoring No punishment for historical deforestation, but forward looking to prevent further deforestation and forest degradation 5

6. Definitions Forest degradation Deforestation (FAO) Conversion of naturally regenerating forests into plantation forests and primary forests into planted forests. Land spanning more than 0.5 hectares with trees higher than 5 meters and a canopy cover of more than 10 percent, or trees able to reach these thresholds. It does not include land that is predominantly under agricultural or urban land use. 6

7. Mandatory Due Diligence 7 7 Carried out by operators who place the products on the EU market/export from the EU Only products that are both deforestation-free and legal would be allowed on or exported from the EU market . The EU operator need to issue a due diligence statement confirming Legality : Products need to be legal according to the laws of country of production, including applicable human and labour rights and free, prior and informed consent . Deforestation-free: products not produced on land deforested after the cut-off date. Strict traceability linking the commodity to the plot of land where it was produced (Mandatory use of polygons above four hectares ) Information supplied by certification or other third-party verification systems can support, but not replace , due diligence obligations of operators

8. Country Benchmarking 8 8 Benchmarking system that will assign risk to countries or regions according to risk of deforestation – standard, low and high Criteria: primarily rate of deforestation and expansion of agricultural land for commodities All countries start at standard risk level . Changes in consultation with countries Specific obligations for operators : Simplified due diligence for low-risk (still required to collect information, but not assess and mitigate risks) . Minimum level of inspections for Member States authorities to perform (9%, 3% and 1%, depending on the level of risk) .

9. Cooperation with partner countries 9 9 Indonesia has a significant advantage for timber and wood products because of FLEGT VPA. The Commission will step up cooperation with the Government and private sector to ensure that EU partners are able to reap the benefits of new EU rules on deforestation . The EU will hold workshops in countries to explain the regulation to stakeholders. The EU will engage in open dialogue with all countries, and specific dialogue with those that could be classified as ‘high risk’ , with the aim of collaboratively reducing levels of risk. The EU will issue clear and easy to understand guidelines for EU operators and traders with the requirements of this Regulation ( under development) . Support tools will be put in place to help partner countries improve forest governance and sustainable agriculture, create socio-economic opportunities and tackle the root causes of deforestation. E.g. KAMI Project, Forest Partnerships, etc. The Commission will also intensify engagement with consumer countries such as China and USA as well as in international fora .

10. Implementation tasks 10 10 Information System : IT developments, Implementing Acts up and running by the entry into application (December 2024) Benchmarking : Implementing act, running by the entry into application (December 2024 ) . Guidelines : For operators and traders, for competent authorities, on certain definitions . Review : Impact assessment and legislative proposal (when needed) . First review: Other wooded land (one year after entry into force, before entry into application) . Second review: Commodities, products, other ecosystems, and financial institutions (two years after entry into force ) (June 2025) . Third review: Smallholders, trade facilitation tools, degradation, circumvention, etc. (five years after entry into force ) (20 28)

11. Timeline 11 11 November 2021: European Commission issued the legislative proposal December 2022: Preliminary agreement between European Parliament and European Council; May/June 2023 (tentative): Entry into force December 2024 (tentative) Obligations will begin for operators June 2025 for EU SMEs )

12. Expected results 12 12 Answers demands by consumer countries citizens to buy without destroying forests Reduces EU contribution to global deforestation – saving min. 32 mio . tons carbon/year . Leads the way at global level & encourages partner countries to step up forest protection Supports the GoI’s ambition to promote trade in sustainable products & reduce deforestation and forest degradation Creating new businesses opportunities for sustainable farmers around the globe and i mproves companies’ competitiveness in a global market with growing demand for green products. Boosts opportunities for all actors, large and small, in deforestation-free supply chains by reducing competition with illegally produced or deforestation related commodities P otential to benefit smallholders and indigenous communities by promoting efforts to resolve land tenure claims - help ensure the long-term sustainability of their livelihood . Reduces the environmental damage - benefit local populations who suffer from deforestation, climate change, biodiversity loss and disrupted weather patterns.

13. © European Union 202 1 Unless otherwise noted the reuse of this presentation is authorised under the CC BY 4.0 license. For any use or reproduction of elements that are not owned by the EU, permission may need to be sought directly from the respective right holders. Thank you! Learn more here: https://ec.europa.eu/environment/publications/proposal-regulation-deforestation-free-products_en https://data.consilium.europa.eu/doc/document/ST-16298-2022-INIT/en/pdf 13