Indonesia Receives First Installment of $1Billion Climate Change Financing

Spotlight Activity: Indonesia Receives First Installment of $1Billion Climate Change Financing

In 2010, the Norwegian government committed to financing projects in Indonesia that would reduce greenhouse gas emission from deforestation and forest degradation or improve forest management and forest carbon stocks (REDD+, reducing emissions from deforestation and degradation. The plus was added to encapsulate all other projects related to forestry which capture carbon). REDD+ is a well-established clean development mechanism created under the UNFCCC COP agreements. The Norwegian International Climate and Forest Initiative (NICFI) has provided REDD+ funding under this REDD+ framework.

The Norwegian government committed $1 billion to Indonesia to be paid in installments as projects prove verifiable results. After the agreement, Indonesia enacted the 2010 moratorium on primary forest and peatland clearing covering 44 million hectares of land. With falling deforestation rates in 2017, the Climate and Environment Minister of Norway agreed to begin paying Indonesia for its progress. The first payment is estimated to be $20 million for preventing the emission of 4.8 million tons of carbon; this number may increase depending on negotiations. With Norway’s agreement with Brazil, each ton of carbon emissions avoided was valued at $5. Indonesia is hoping for a larger reward per ton.

Further funding will be provided when Indonesia can prove further avoided GHG emissions. Norway’s payments to Indonesia will not be used to offset their carbon emissions.

Status: Moving Forward

13% of the $1 billion pledge has been spent. This first payment, years after the announcement of the agreement in 2010, reflects the time lag to implement government mitigation programs and policies as well as develop an MRV (measurement, verification, reporting) system to prove that emissions were avoided. The Ministry of Environment and Forestry (KLHK) absorbed the previous administration’s REDD+ agency, putting the responsibility of leading REDD+ programming on the KLHK.

This first payment, although nearly a decade after the start of the deal, represents a major step forward for Indonesia’s realization of its nationally determined contribution. Its commitment to reduce GHG emissions by 26% by 2020 has been increased to 29% by 2030 following its baseline. However, Indonesia also committed to cutting GHG emissions by 41% if international support was given.

Falling deforestation rates and increasing climate financing are exciting steps towards a climate-oriented government. Now, Indonesia must explain by how much the 26% reduction commitment will rise given this increase in climate financing from Norway. Indonesia committed to reducing 41% of emissions if the international community provided financing to mitigation efforts. Indonesia must explain by what increase it will pursue this goal.

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Tweet out the #41%UntukIklim and mention the name of your parliament representative with a message in support of strengthening Indonesia’s pledge.

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