Thursday, October 11, 2018

THE COORDINATION OF CLIMATE FINANCE IN INDONESIA



Indonesia has been through an intensive process of policy and institution buinding in the context of its efforts to respond to climate change. The adoption of a Mitigation Strategy and Adaptation Strategy present a framework for action. Key institutions in efforts to implement these measures include the National Council on Climate Change established by the former president, the Ministry of Finance, the planning Ministry Bappenas and its Indonesia Climate Change Trust Fund and Agency. Financial regulators are also beginning to encourage green investment and there are nascent efforts to engage the private sector to make environmentally and socially beneficial investments.
While, the Indonesia Climate Change Trust Fund was intended to foster a coordinated approach on climate change, in practice it is one of the smallest actors in the domestic climate finance architecture in part because of its modest levels of capitalisation but also because the arrangements for the fund did not give key actors other than Bappenas a clear role. The fund has also struggled to meet international fiduciary standards. Existing international climate funds have been docked in one of the key ministries involved and have rarely made proactive efforts to engage the range of relevant national stakeholders, notably from the private sector and local government. There is a recognised opportunity for new climate funds such as the Green Climate Fund to work in callaborations with the National Designated Authority to make a more proactive approach to engaging diverse stakeholders and put in place new operational processes that can foster progress in achieving mitigation and adaptation.
As part of the developing climate finance architecture, National Climate Fund have gained some prominence. These funds are a type of mechanism that support countries in accessing and blending climate finance from multiple sources to fund climate change actions at national amd sub-national levels. The Indonesia Climate Change Trust Fund (ICCTF) was launched to mobilize and pool multilateral and bilateral grants for financing national climate change policies and programmers. The Indonesia Climate Change Trust Fund was initiated by the government to coordinate climate change activities in the country, increase accountability and avoid lengthy disbursement procedures. The Indonesia Climate Change Trust Fund has also the role of aligning donor assistance to national development priorities, improving access to financing and facilitating private sector involvement in climate change. The Indonesia Climate Change Trust Fund is governed by a Streeing Committee comprising members from various government ministries and advised by a Technical Committee of staff from different ministries as well. Day to day coordination and secretariat functions fall under the remit of Bappenas. The Indonesia Climate Change Trust Fund includes expenditure funds as well as revolving investment funds. The fund curently prioritizes three financing windows land based mitigation, energy, adaptation and resilience.
Mitigation over the past 20 years, Indonesia’s Grandhouse Gas emissions have increased at a staggering rate. This increasing trend in domestic emissions has negative consequences for the country’s development as well as the global environment. Short, medium and longterm solutions to mitigate Indonesia’s emission growth are critical if the country wants to avoid the adverse effects to this uncontrollable emission growth and the resulting climate change. Economic growth is also one of the driving forces behind the increase of Indonesia’s emissions and demand for land and energy are growing. Indonesia’s absolute Grandhouse Gas emissions increased at a faster rate than its per capita emissions.
Indonesia has signed an agreement with Climate Investment Funds to implement climate friendly energy and forestry projects. Through the Clean Technology Fund make US$ 400 million available for Energy Efficiency and Renewable Energy projects mainly focusing on geothermal energy. More than 30% of this funding is channeled through International Bank for Reconstruction and Development (IBRD) and the rest is channeled through Asian Development Bank (ADB) 50% and International Finance Corporation (IFC) 20%. Through the Forest Investment Program Indonesia is accessing US$ 70 million for forestry and land use related development in Indonesia. Follow ups were taken through various means from safeguard workshop, field visits, individual meeting and dialogues with the National Forestry Council. The National Forestry Council is a multi stakeholder body with five chambers, i.e government, private, academia, NGO and communities. This has helped to improve coordination, communication and ownership across stakeholders.

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