The Feasibility of National Climate Fund A Case of Indonesia Climate Change Trust Fund

Amin BudiarjoNational Project Manager PREP-ICCTF

Regional Clinic on the Design and Management of National Climate FundsBangkok, 6 September 2012

ICCTF SecretariatWisma Bakrie 2 Building, 6th floorJl. H.R. Rasuna Said Kav. B-2, Jakarta 12920, IndonesiaPhone: +62 21 57945760, Fax: +62 21 57945759Email: secretariat@icctf.or.id, Web: www.icctf.or.id

Structure of Presentation

1. Fund at a Glance

2. Rationale behind the Establishment

3. Process of Establishment

4. Lessons Learned

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Fund at a Glance

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• Objective: 1. To achieve Indonesia’s goals of a low carbon economy

and greater resilience to climate change; 2. To enable the Government of Indonesia (GoI) to increase

the effectiveness and impact of its leadership and management in addressing climate change issues.

• Governing body: Steering Committee, Technical Committee, Secretariat, Fund Manager

• Legal status: government trust fund (ministerial decree)• Capital: USD 11.2 million (2010-current)• Beneficiaries: central government (Executing Agency);

central and local government, universities, CSO, NGO, private sector (Implementing Agency)

Indonesia Climate Change Trust Fund (ICCTF), Indonesia

Fund at a Glance

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Steering Committee

Plenary Members

Observer/Resources Person

GOI Members(Chairman and Vice Chairman

from Bappenas)

Technical Committee

GOI Members(Chair& Co-Chairs from Bappenas &

Ministry of Finance)Representatives of Plenary Members

ICCTF Secretariat

Executing Agency (Central Govt. Agency) /Implementing Agency (Govt. Agency,

University, CSO/NGO, Private Sector)

Fund Management

National Fund Manager

UNDP as Interim Fund Manager

Legend :

Project Proposal

Approval and Assignment

Fund Channeling

Monitoring and Supervision

Current Structure and Work Flow

Rationale behind the Establishment

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National Background• Vulnerability to the negative impacts of climate change• Though Indonesia is not mandatory for GHG emission reduction, climate

change is a reality and urgent actions on adaptation and mitigation is required as an integral part of the development challenge facing the nation

• Mitigation and adaptation actions have to be taken jointly by all countries. Indonesia is ready to cooperate both bilaterally and multilaterally with international efforts.

International Background• UNFCC 1992, Article 3.4 incorporate climate change into national

development planning; Article 4.1 underlines the needs of all countries to develop specific national development priorities and objectives accordance to principles of common but differentiated responsibilities

• Kyoto Protocol to UNFCCC 1998 states emission reduction is binding for developed countries.

• Bali Action Plan 2007 includes the request for developed countries to contribute to mitigation of global warming in the sustainable development context and envisages enhanced actions on adaptation, technology development and on the provision financial resources and measures against deforestation

National Action Plan on GHG Emission Reduction (RAN-GRK)

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Presidential Regulation No.61/2011 Regarding National Action Plan on GHG Emissions Reduction (RAN-GRK)

Sectors: Agriculture, Forestry & Peatland, Industry, Energy & Transportation, Waste

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President’s Commitment at G-20 Pittsburgh and COP15Reducing green house gas emission by 2020

26% 26+15=41%

GoI efforts(Unilateral NAMAs)

GoI efforts andInternational supports(Supported NAMAs)

Rationale behind the Establishment

Mainstreaming Climate Change into National Development Agenda

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Bi-/Multilateral cooperation

BALI ACTION PLAN

PRESIDENT’S STATEMENT at

G-20, 2009

Mitiga-tion

Adapta-tion

ICCTF

ROADMAP(ICCSR)

Bridges National Action Plan on CC into 5 yr mid-term development plan (RPJM) 2010-2014 & inputs till 2030.

ICCTF- International financing mechanism channeling investment funds into national CC initiatives.

GoI’s own budgetMainstreaming into

RPJM

RAN - GRK

YellowBook

Rationale behind the Establishment

Policy Documents on Climate Change (1)

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Policy ContentLong-Term Development Plan (RPJPN) 2005-2025

In order to achieve the vision of sustainable development, the GoI concluded that "the long term sustainability of development will face the challenges of climate change and global warming which affect activities and livelihood".

National Action Plan on Climate Change (RAN-MAPI), 2007

Initial guidance for a multi-sectoral coordination effort designed to address jointly the challenges of mitigation and adaptation to climate change

National Development Planning: Indonesian Responses to Climate Change (Yellow Book), 2007-2010

It was intended to strengthen and reinforce the RPJMN (National Medium-Term Development Plan) 2004-2009 as well as to include inputs that can guide the integration of considerations of climate change into the preparation of RPJMN 2010-2014

Medium-Term Development Plan (RPJMN) 2010-2014

It emphasizes 11 national priorities, which 3 of them (food security, energy, and environment and disaster management) are strongly related to climate change.

Indonesia Climate Change Sectoral Roadmap (ICCSR), 2010

A roadmap to serve as a detailed policy guidance and in order to mainstream climate change issues into national development planning.

Presidential Regulation No.61/2011 regarding National Action Plan on GHG Emission Reduction (RAN-GRK), 2011

National action plan for mitigation to achieve the national targets of emission reduction (-26% and -41% of the BAU scenario until 2020). It contains policy directions and actions for mitigation in 5 sectors and constitutes important guidance for channeling financial flows into national and local mitigation programs. Local Action Plan on GHG Emission Reduction at provincial level

Policy Documents on Climate Change (2)

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Policy ContentPresidential Regulation No.71/2011 regarding National GHG Inventory System, 2011

Regular information on the level, status and trend of GHG emission change and absorption, including national, and subnational carbon stock as well as GHG emission reduction.

Presidential Instruction No. 10/2011 on Forest Moratorium, 2011

Development of REDD+ schemes including Indicative Moratorium maps

Presidential Decree No. 25/2011 on National Task Force for REDD+, 2011

REDD+ agency and related institutional development (finance and MRV)

In addition to that, also Government regulation on trust fund

Presidential Regulation No.80/2011 regarding Trust Fund, 2011

Establishment, structure and operation of a trust fund

Funding Scheme for Climate Change

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Bilateral:

Japan (JBIC & JICA)England (DFID)Australia (AusAID)Denmark (DANIDA)NetherlandsGerman (Kfw & Gtz)NorwayCanada (CIDA)Sweden (SIDA)

Multilateral:World BankADBUNDPEC

GEF (Convention):Special Climate Change Fund (SCCF)

Sources:

Bilateral

Adaptation Fund (Protocol)

CDM:Bilateral, Multilateral & Unilateral

2. UNFCCC Financing Mechanism:

Multilateral

1. ODA*) Rules and Regulations:

Global Financing Mechanism

Grant

GOI Mechanisms**)

Loan:

CC (Local) Trust Fund

1. Sector/ Project Loan

2. Program Loan

Notes:*): expected come from additional existing ODA comittment from Monterey Concensus (ODA+)**): comply with Government Regulation No.2/2006 : Climate Change Program Loan

Debt for Nature SwapOTHERS: GEF (Non-Convention):Strategic Priority on Adaptation (SPA)Resource Allocation Framework (RAF)

Process of Establishment

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Milestone• Vision of GoI to play bigger role in coordinating & implementing all climate change activities in Indonesia (2008)

• Bottom up initiatives agreed among GoI institutions to setup a national trust fund for climate change (2008)

• Develop Blue print of ICCTF (2009)• Establish decree of ministerial decree on ICCTF establishment

(2009)• Grant Agreement with donor, LoA & Prodoc on PREP-ICCTF (2009)• Establish ICCTF Secretariat, develop and operationalize SOP (2010)Resources and Support• Political support: President’s commitment on GHG emission

reduction and consensus from all line ministries • Champion: Ministry of National Development Planning and

Ministry of Finance, involving around 10 officials from both ministries

• Resources allocated: USD 250,000 for Blue print development (by EU Grant - GIZ); and counterpart budget and in-kind contribution from GoI

Required Institutional Capacity

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Institutional Arrangement• Management: organizational development, resource mobilization,

system development & operation, project management

Operation• Finance: financial management & accounting• Administration: administration & HR• Monitoring & Evaluation: M&E in project planning,

implementation, and impact assessment• Communication: external & internal communication, IT, database• Audit: External & Internal Audit

Technical Substance• Thematic expertise in priority areas: policy dialogue, project

appraisal, project implementation, impact assessment

Lessons Learned (2010-2012)

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•Establishment of Secretariat and fully functioning financing institution.•Climate change policy dialogue and coordination forum.•Selection, funding, monitoring and evaluation of 3 pilot projects.•Development of Business Plan and investment strategy including priority

programs, proposed activities and budget plan.•Assessment and application to be the NIE of Adaptation Fund•Model in development of Presidential Regulation on Trust Fund.

Achievements•Administered under the Ministry of National Development Planning•Capacity of project implementer (Executing Agency, Implementing Agency

& Project Management Unit) to adapt to a new project management system and to comply with robust M&E system in project implementation.

•Comprehensive assessment during project selection process•Limited involvement of CSOs in policy dialogue.•Accelerated growth of responsibilities and staffing•Support to GoI activities (RAN/RAD-GRK, UNFCCC COP/CMP)

Challenges

•GoI commitments and policies related to climate change and trust fund•Support (fund contribution & TA) from development partners•Established by the Ministry of National Development Planning and

Ministry of Finance•Support from line ministries at central government during operation

Success Factor

Way Forward

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2011 - 2013Improvement of institutional capacity

2011 - 2013Transition to fully National Trust Fund arrangement

2013 - 2015Involvement of wider stakeholders in project implementation

2011 - 2020Assessment to be NIE of International Climate Fund (AF, GCF)