World Resources Institute Indonesia
When more than 80 countries, Indonesia included, joined the Paris Agreement at surprising speed, it showed that climate change is not to be underestimated.
Despite lacking enforcement means, the Paris Agreement represents a united effort to curb global carbon emissions and signifies a historical momentum, when China and the US, the two biggest carbon emitters globally, agreed to set aside their disputes and join the climate cooperation.
This month, the parties to the agreement will convene in Morocco for the 22nd Conference of the Parties (COP 22) to the United Nations Framework Convention on Climate Change (UNFCCC).
To achieve the nation-by-nation target of cutting carbon emissions, countries have issued their national climate strategies or Nationally Determined Contributions (NDCs), but the bigger question is what will it take to achieve the NDCs?
To support developing countries in achieving their NDCs, developed countries have pledged to give up to US$100 billion annually, but developing countries such as Indonesia must step up climate finance readiness to be able to manage the funds.
Elevating Indonesia’s climate finance readiness requires the country to have an effective funding mechanism to distribute funds at the national and subnational levels.
Some efforts have been established, including the Indonesia Climate Change Trust Fund, the Reducing Emissions from Deforestation and Forest Degradation (REDD+) funding instrument design for performance-based payment and the plan to construct a specific fund for environmental activities.
These funds, however, have yet to gain international recognition to receive and manage global climate finance. The lack of mitigation and adaptation pipeline information, monitoring mechanisms and long delays in disbursement have often led to limited international support for Indonesia.
One way to address this limitation is to set up pioneering national institutions ready to be accredited for global climate finance such as the Green Climate Fund (GCF). As the largest international climate fund, the GCF is designated as a finance mechanism to support the Paris Agreement and to manage resources from developed countries for NDC implementation.
Another problem with Indonesia’s climate finance is that presently, a bulk of the international climate flow still goes to central government ministries and agencies (97 percent per a CPI report), with a small remaining proportion going to local administrations, even though numerous climate actions are implemented at the local level.
There should be a stronger synergy between the central government and local administrations — with policy decided at the national level and outcomes achieved and monitored locally. Climate mitigation needs to make sense for subnational administrations to accelerate implementation.
Looking at Indonesia’s funding transfer mechanism, we can explore several alternatives. Overall, local administrations’ awareness of climate financing is still limited to the utilization of the main regional budgets (APBD) and Special Allocation Grants (DAK) for environmental issues and measures.
Another possible option to accelerate global finance at the subnational level is an on-granting or on-lending framework, which is channeled through the Finance Ministry based on references of relevant line ministries and approved by the National Development Planning Board (Bappenas).
In combination, the Finance Ministry can also utilize its budgettagging exercise as a monitoring effort for fund transfer. The Low Emission Budget Tagging and Scoring System (LESS), established for tracking climate mitigation expenditure in Indonesia, could identify the total amount of budget allocations and actual expenditure on climate mitigation and assess the contribution of per-unit budgets to achieve emission reduction targets.
In addition to climate finance, Indonesia needs a robust pipeline to implement its NDC. The country has yet to identify the specific actions and to quantitatively clarify how it intends to achieve the 29 percent unconditional or 41 percent conditional reduction target specified in the NDC.
Indonesia will need to align the existing National Action Plan on Reducing Greenhouse Gas Emissions (RAN-GRK) with the NDC and specify reduction targets for each province to translate into the Local Action Plan for Reducing Greenhouse Gas Emissions (RADGRK).
The scheme to implement the NDC also needs to ensure that climate change action, as a cross-sectoral issue, is mainstreamed into the development planning document.
Finally, Indonesia needs to have a reliable verification mechanism to assess actual emissions reduction. This verification mechanism should be part of the national measuring, reporting and verification (MRV) system that monitors and reports greenhouse gas emissions abatement resulting from climate actions.
The verified emissions reduction would trigger financial compensation flowing to the country as an incentive for reducing the emissions. The MRV system should link to the funding instrument to make sure the disbursement of the financial incentive is accountable and transparent.
With the recently launched National Registry on Climate Change Oversight, Indonesia is aiming toward a single national database for systematically collating comparable mitigation activities from the all-inclusive actors, across sectors and across provinces.
This coordinated registry system is crucial to avoid the risk of double counting for carbon finance flows. For example, donors should not disburse double payments for the same REDD+ project activity reported by subnational and national governments or, similarly, carbon reduction from an industry process reported by the Energy and Mineral Resources Ministry and the Industry Ministry should not receive double payments.
This shows how the connection between a mitigation actions registry platform, national MRV system and funding instruments is important to ensure the effective recording of climate actions and the resulting carbon emissions reductions, and to shore up procedures in carbon payment disbursement.
With COP 22 just around the corner, this is the time to showcase Indonesia’s commitment to implementing its NDC. With the Paris Agreement ratified and international support on the table, reforming our readiness is a crucial priority for Indonesia, before and after Marrakesh.
Hanny Chrysolite, Gita Syahrani and Arief Wijaya The authors are the forest and climate program officer, sustainable commodity and business manager, and the climate and forests senior manager, respectively, at the World Resources Institute Indonesia.
We are looking for information, opinions, and in-depth analysis from experts or scholars in a variety of fields. We choose articles based on facts or opinions about general news, as well as quality analysis and commentary about Indonesia or international events. Send your piece to [email protected]
Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official stance of The Jakarta Post.