Indonesia ended the decade-long pact on Friday, citing Norway's failure to pay US$56 million in grant money, but Norwegian officials indicated that the country had been willing to pay. The funds were part of a $1 billion grant promised by Norway under the REDD+ scheme if Indonesia was able to limit its emissions from deforestation and forest degradation.

The Foreign Ministry announced the termination of the agreement on Friday night after notifying the Norwegian Embassy in Jakarta. The ministry said the decision had been made after a series of inter-ministerial consultations.

Last year, the two countries announced that Indonesia was eligible for the $56 million grant in the first payment under the scheme. The figure was based on a Norwegian assessment that found that Indonesia had prevented the release of 11.2 million tons of carbon dioxide equivalent (CO2e) into the atmosphere from 2016 to 2017, more than the 4.8 million tons initially reported by Indonesia. The money was to be paid in installments.

“But there seems to be no goodwill from the Norwegian government as we have not received a single cent from this agreement,” Deputy Environment and Forestry Minister Alue Dohong told The Jakarta Post on Saturday.

He said Norway had set additional requirements that had not been established in the agreement before they would wire the money and even after they had verified the emissions that Indonesia had prevented. These included requests for Indonesia to show documentation on how the money would be spent and other operational details.

Read also: Indonesia to receive $56 million from Norway for reducing emissions

The Norwegian government, Alue said, had also sent a due diligence team to assess the Indonesian Environmental Estate Fund (BPDLH), an agency established two years ago to manage REDD+ grant money and other environmental protection-related funds from domestic and international sources.

“We were wasting our time. Indonesia did its part of the deal in 2016 and 2017 [by reducing emissions]. The failing party here is the one that could not keep its promise of payment,” he said.

Gunhild Oland Santos-Nedrelid, a Norwegian Climate and Environment Ministry spokeswoman, did not immediately comment on any additional requirements but said on Saturday that “since the Indonesian government has now terminated the partnership, we no longer have a mechanism for making any results-based contribution to Indonesia.”

She told the Post that Norway was still willing to explore other options to support Indonesia’s efforts to reduce deforestation and peatland degradation.

Read also: How Indonesia finally earned nod from Norway for climate fund

In a press release on Friday, the Norwegian government said the discussions on the grant transfer to Indonesia had been ongoing until Indonesia terminated the REDD+ deal. It also said the discussions were “constructive and progressing well, within the frameworks set by our two countries' regulatory limits".

The fate of climate projects

BPDLH director Djoko Hendratto said the failure of the deal would “not disturb BPDLH programs because we are not managing money from only a single source”.

He said the agency was waiting for promised funds from other sources, including an estimated $214 million from the Green Climate Fund-World Bank Forest Carbon Partnership Facility (FCPF) to be used for environmental programs and $60 million from a public-private initiative called the BioCarbon Fund for programs in Jambi. The agency also expected receive an approximately $2 million grant from the World Bank and $1 million from the Ford Foundation for operational purposes.

The Foreign Ministry and the Environment and Forestry Ministry said the termination of the agreement would not affect the country’s overall climate mitigation commitments, including its pledges under the Paris Agreement.

Read also: Indonesia sets net-zero emissions goal ahead of COP26

In its updated Nationally Determined Contribution (NDC) to the Paris Agreement, Indonesia has promised to cut emissions by 29 percent independently or by 41 percent with international assistance by 2030 and to reach net-zero emissions by 2060.

'Understandable' move

The termination of the deal surprised many environmental groups, which had had high hopes for cooperation between the two countries. Even so, they said the move was acceptable and that the government should use the situation to prove to the world it was capable of reducing emissions with less foreign aid.

“It’s a shame that the cooperation had to end abruptly, but it is understandable, as the Indonesian government had been waiting since last year and the payment had not been made at all,” Madani Foundation director Nadia Hadad said.

"Indonesia now has to show that it is serious in keeping its [climate change mitigation] promises, even if it must be done independently," she said.