Indonesia Climate Change Trust Fund ICCTF
24 25
3.2.3 Need for systematic monitoring of REDD+ inance
Table 4 provides data from 2011. At present we do not have access to more up-to-date information. However, the data
highlights the variety of international sources that are providing REDD+ inance to Indonesia. It also indicates the types of
inance made available. The majority is in grant or loan form aimed at readiness activities. Only the Norway commitment
includes performance-based inance, or more speciically, performance-based payments for REDD+. Another limitation of
the commitments shown is the time frame. Although disbursal rates of inance may go beyond project timeframes, there are
currently no commitments beyond 2017 and very few after 2015. One of the dificulties in tracking climate change inance, and
more speciically REDD+ inance, in Indonesia is that there is no existing dedicated system that records either. Furthermore, the
majority of climate change inance that Indonesia receives, from both multilateral and bilateral sources, typically does not deine
speciic amounts to be allocated to REDD+. Most of these funds fall under broader umbrellas of environment, conservation
or development programs in which climate change, and particularly REDD+, is one individual component. According to
Indonesia’s Fiscal Agency, tracking grant funding is more complex than tracking loans. Grants received and spent by a number
of parties in Indonesia have not been registered and reported systematically, particularly those managed by
non-government actors. The Government of Indonesia recognises this as a challenge.
The Ministry of Forestry is in the process of recording the levels of climate inance, including for REDD+, received by the
Ministry of Forestry
10
. Meanwhile the Ministry of Finance is also in the process of recording the level of climate inance received and
disbursed by the Government of Indonesia.
11
Ultimately what is needed is a systematic and comprehensive mechanism for monitoring and evaluation of all sources and
types of climate inance in Indonesia. In line with the National REDD+ Strategy, Indonesia is in the process of establishing the
Fund for REDD+ in Indonesia FREDDI, which is expected to create a transparent system that records all inancial aspects
of REDD+ in Indonesia. It will be important to ensure that this effort integrates with those efforts of individual ministries. Further
explanation about FREDDI is provided in Section 3.4.3 below. Note that due to current limitations to the monitoring of
climate inance, and more speciically REDD+ inance, funds available for REDD+ in Indonesia may be larger than presented
in this report.
3.3 The REDD+ inancing gap
While it is dificult to calculate an exact igure for Indonesia’s REDD+ inance needs, the data gathered indicates a signiicant
gap between estimates of what is required to inance emission reducing activities from forests and peatland, and the inance
that is currently available from domestic and international sources. Only about 30 – 40 of the committed funds are
for REDD+, and most are for readiness activities rather than payment for REDD+ emission reductions Tanzler and Maulida,
2013, and therefore do not directly contribute to boosting demand for REDD+.
Lack of inance and demand to pay for Indonesia’s REDD+
emission reductions
It is dificult to give an exact igure of the inance gap to pay for REDD+ emission reductions.
However, the only known source of performance- based inance in Indonesia committed for emission
reductions from REDD+ is the US800 million allocated by Norway under phase 3 of the Norway-
Indonesia Letter of Intent. Contrast this igure with the conservative estimates that between US5-10
billion
is required to inance REDD+ up to 2020 REDD+ Taskforce, 2012, and it is clear that the
inance gap is substantial According to Agus Sari, Deputy Head of the REDD+ Agency
on Planning and Funding, while the US1billion from the LoI between Indonesia and Norway is both generous and much
welcomed, it is not enough for Indonesia to reach its targets. He also stated that “without additional inance there is no legal
reform, no paradigm shift, no solution to tenure problems, and there is no conlict resolution” Sari, 2014.
Although public and other domestic inance sources will certainly be channelled into meeting REDD+ emission reductions targets,
and the wider transition to a green economy, it is fair to say that Indonesia still requires substantial additional inance to meet its
emission reduction targets from REDD+. However, it is also important to acknowledge that Indonesia still
faces constraints to its absorptive capacity for REDD+ inance, which is an underlying cause of the slow rate of disbursal under
some inance commitments. A simple comparison of REDD+ emission reduction targets versus available inance provides
an important illustration of the inance gap in principle, but must be understood in the context of the signiicant progress
still required before REDD+ can be implemented at the scale required to meet these targets.
3.4 Current mechanisms for inancing REDD+ in Indonesia
Currently, there are several formal mechanisms for inancing REDD+ in Indonesia. This subsection provides a brief
description of these mechanisms.