20 21
Section 3: Current strategies
for inancing REDD+ in Indonesia
3.1 Indonesia’s REDD+ inancing needs
Indonesia will need signiicant funding to implement activities that directly and indirectly suppor t the achievement of the
country’s emission reduction targets, set out in the National Action Plan for Reducing Greenhouse Gas Emissions RAN-
GRK. Public policy and inance will play a crucial role in meeting the targets set for Indonesia’s major sectors see Table 2, Section
2.1 CPI, 2014. As highlighted in Section 2, approximately 87 of Indonesia’s
emission reductions are expected to come from forests and peatland. As such, REDD+ and sustainable land use have
a critical role to play in enabling Indonesia to meet its targets. There is a range of estimates of how much inance Indonesia
will require to meet its emission reduction targets from forests and peatland.
Meeting 87 of Indonesia’s emission reduction target from forest and peatland equates to 1.037 GtCO2e in real emission
reductions. Estimates from the REDD+ Management Agency on the inance required to meet that target range between
US5-10 billion by 2020 REDD+ Taskforce, 2012 Wulandari
F, 2014. At least one of these estimates is based on a scenario where the necessary REDD+ readiness structures have been
inanced, as has the wider enabling environment REDD+ Taskforce, 2012. These can be considered conservative
estimates, as other estimates from the National Council on Climate Change DNPI and the Ministry of Forestry, for
example, assume a higher carbon price MoE, 2010. Most of the stakeholders consulted refer to the Ministry of
National Development Planning BAPPENAS estimate that Indonesia will need US28.07 billion to inance the implementation
of RAN-GRK, of which US5.83 billion would be required to inance emission reducing activities from forests and peatland
between 2010 and 2020 BAPPENAS, 2011 1. BAPPENAS is responsible for formulating procedures and planning for climate
inance, coordinating climate change loans and grants, and is the agency responsible for mainstreaming climate change into
national policies Tanzler and Maulida, 2013.
3.2 Existing sources of funding for REDD+ in Indonesia
3.2.1 Domestic public sources of inance for forests and peatland
Data from Indonesia’s Ministry of National Development Planning BAPPENAS shows that following the issuance of the
RAN-GRK, the Government of Indonesia allocated US16.58 billion in the state budget for the Annual Development Plan
2011 – 2014, speciically for climate change activities Murniningtyas, 2013. This is distributed into 16 ministries
government agencies for the climate change adaptation program US6.37 billion, for the mitigation program US9.67 billion
and for other supporting activities US0.54 billion Murniningtyas, 2013.
However, this budget has been broadly allocated across the climate change spectrum and as a result it is dificult to
explicitly say how much state budget is allocated to REDD+. REDD+ is not recognised as a dedicated budget item, but as
‘cross-cutting issue’, therefore emission reducing activities from forests and peatland are classiied generically under mitigation
and adaptation activities. Currently, state budget for REDD+ is allocated under the Cross-Sectoral Climate Change Mitigation
Category. This makes it challenging to earmark inance that has been speciically allocated for REDD+.
Distribution of the funds in each year is presented in Table 3. A noteworthy upward trend is Indonesian government spending
on mitigation from 2011-2014. The majority of this funding, particularly in the REDD+ sector, has focused on establishing
the necessary enabling environment for REDD+ during the readiness phase.
Potential implication of Indonesia not receiving suficient international inance to reach its 41 emission reduction target
If Indonesia does not receive suficient international inance to enable it to reach its 41 emission reductions target, this could translate into a substantial loss of forest cover and, as a result, a signiicant release of GHG emissions.
The difference between Indonesia meeting its 26 target versus its 41 target in actual emissions is 0.367 GtCO2. If these emissions cannot be avoided, due to insuficient international inance, a rough estimate based on average
emissions per hectare of forest cover loss in Indonesia for the period 1990-2005 indicates that 0.367 GtCO2 emissions would be the equivalent of losing 1.158 million hectares of forest before 2020 Finlayson, 2011, an area 2.6 times the
size of Jakarta Mongabay, 2008. Details of this estimate can be found in Annex 1 on page 50.
NO. ACTIVITY
2011 2012
2013 2014
TOTAL
US billion 1
Adaptation 1.37
1.63 1.73
1.64 6.38
2 Mitigation
0.74 0.47
2.89 5.57
9.67 3
Supporting activities 0.11
0.13 0.15
0.15 0.54
Total 2.22
2.23 4.77
