16 An Indonesian Ministry of Finance CPI Report
This landscape study tracks the lifecycle of climate inance through the lens of a small but critical group
of actors. We ind that domestic actors especially, play multiple roles throughout the lifecycle of lows
in Indonesia, and act as sources, intermediaries and disbursement channels. The overlap in roles is
in part a product of implementing the governance requirements described in the previous section, and
the real-life complexity of the landscape and lifecycle of public climate inance lows in Indonesia. In this irst
detailed exploration of the lifecycle of climate inance in Indonesia, we organize our analysis by focusing on
pivotal actors in the landscape in their role as both providing and intermediating or disbursing inance
throughout its lifecycle. We explore which inancing instruments and mechanisms they use, how they deliver
inance, and for what end uses. Figure 3, The Indonesian Public Climate Finance Flows
diagram also known as the ‘climate inance spaghetti diagram’ illustrates the land-scape of public climate
inance lows in Indonesia along their life cycle for the year 2011. The width of the arrows in the diagram
represents the relative volume of the lows. Local governments’ and state-owned enterprises’ lows
are presented without quantiication since our case study analysis for these components did not allow for
a comprehensive estimation. Figure 2 provides a more simpliied overview of the main sources, instruments,
disbursement channels and sectors of climate inance identiied in the study.
4. The Public Climate Finance Landscape
• In 2011, at least IDR 8,377 billion USD 951 million in public climate inance was disbursed in Indonesia. 66 of disbursements originated from national sources, while international sources
contributed 34. • Although 2011 public climate inance expenditure is signiicant, inance from public and private
sources will need to be increased in future years to meet Indonesia’s emission reduction targets. • Most inance was delivered through domestic budget expenditure 71, complemented by loans
12 and grants 16 from bilateral development partners. • In 2011, the Indonesian government implemented the majority of climate actions and activities 77,
while State-owned enterprises also played an important role in implementation 12. International development partners, private sector, NGOs and others were responsible for the minor share of
implementation approx 2-3 each.
• Around 60 of the total climate inance supported ‘indirect activities’ or the establishment of enabling environments to support future climate action. Policy development accounted for the
majority of this indirect spending IDR 3,225 billion USD 366 million. • Around 40 of the total climate inance went to ‘direct’ mitigation and adaptation actions on the
ground. IDR 3,004 billion USD 341 million supported mitigation, while at least IDR 384 billion USD 44 million went to adaptation.
• There is signiicant uncertainty around the total amount of public climate inance spent in 2011. We identiied an additional IDR 10,008 billion USD 1.136 million that supported key development
activities, which may also have contributed to climate outcomes, and particularly to adaptation outcomes. However, we could not estimate or verify the climate-speciic share of this development
inance.
• Some of the most emission-intense sectors beneit from the highest share of climate inance, including forestry 41, energy 19, agriculture and livestock management 10, transport 9,
and waste and waste water 7.
Figure 2: Simpliied breakdown of public climate inance lows in Indonesia in 2011
Energy 413 Transport 515
Waste and waste water 424
Industrial process emissions 60 Infrastructure and coastal protection 14
Disaster risk management 178 Other 140
Agriculture 796 Forestry and
land use 2,986 Non-
structural agency 163
Ministries and Central Gov. 5,333
Local Gov. 1 Private 30
Budget Expenditure 5,496
Revolving Fund 30
Central Government
933 Private 165
Other 279 International
Development Partner 253
State- Owned
Enterprises 998
NGO 160 Local Government 49
Non-structural agency 14 Budget expenditure
from intl. loans 464
Budget pxpenditure from intl. grants 15
Intl. Grant 1,327
Others 12 Concessional
loans 1,024
Equity 9
Domestic Public Climate Finance
International Public Climate Finance
State budget 5,526
Bilateral Development
Partners 2,576
Local Government
50
Forestry and
land use 3,467
Industrial process
emissions 63
Transport 719
Infrastructure and coastal protection 288 Waste and
waste water 621
SOURCES INSTRUMENTS
DISBURSEMENT CHANNELS SECTORS
Intl. Grant 1,327 Revolving Fund 30
Others 12
Concessional loans 1,024 Equity 9
Budget expenditure 5,975 Ministries
and Central Gov. Agencies 6,265
Non- structural
agency 177
Private 195 Other
279 NGO
160 International
Development Partner
253
State- Owned
Enterprises 998 Energy 1,623
Other 404
Agriculture 817
Disaster risk management
374
PUBLIC CLIMATE FINANCE FLOWS IN INDONESIA IN 2011
Infrastructure and coastal protection 275
Waste and waste water 197
Disaster risk management 195 Industrial process emissions 3
Agriculture 21 Forestry and
land use 481 Transport 204
Energy 1,211 Other 264
The green hashes above represent the volume of finance in each sector that is sourced from international development partners but ultimately spent via the Indonesian Government.
Other 170 Intl. Climate Funds 68
National Climate Funds 21 Multilaterals 16
INSTRUMENTS DISBURSEMENT CHANNELS
SECTORS
INSTRUMENTS DISBURSEMENT CHANNELS
SECTORS
ALL FIGURES
IN BILLIONS
OF INDONESIAN
RUPIAH IDR
Source: Study team analysis of budget data and international development partner survey Note: Flows are expressed in IDR billions and are rounded to produce whole numbers, and as such may not add up. We exclude movements of inance between actors
which did not result in disbursements to projects.
Notes: Figures are indicative of annual flows for 2011. All data presented relates to disbursements or movements of finance between actors in 2011. Flows are expressed in IDR billions and rounded to produce whole numbers; and as such values might not add up.. We show finance that we could identify clearly as climate-specific as “solid” flows. The diagram captures upfront capital investment costs for low carbon and climate resilient activities, plus activities that indirectly support
mitigation or adaptation, such as policy development, capacity building, setup of MRV systems, or research and development. We only track upfront investments and not lifetime inflows. There is significant uncertainty around how much climate-specific finance is being disbursed from the state budget to support indirect activities in general, and adaptation activities in particular. We represent the full range, including the band of uncertainty up to an additional IDR 10,008
billion, in the diagram as a “shadow,” reflecting the scale of climate-specific finance and portion of potentially relevant finance that we could not verify. We included movements of finance between actors where we know they happened ICCTF, Geothermal Risk Mitigation Fund, Eximbank, although there were not disbursements to projects in 2011. Equity participation is comparable to what we call balance sheet financing in the global landscape.
Budget Transfer Central Government
State Budget
Intl. Development Partners
Low-cost Project Debt Budget Transfer
Sources Intermediaries
Instruments Disbursement Channels
Uses
THE LANDSCAPE OF PUBLIC CLIMATE FINANCE IN INDONESIA IN 2011 - IDR 8,377 BN TOTAL
CENTRAL GOVERNMENT
7,242 BUDGET
EXPENDITURE 5,975
NATIONAL FUNDS
INTL. FUNDS - 56 LOCAL
GOVERNMENTS
PROJECT-LEVEL EQUITY - 9
OTHER - 12 AGRICULTURE - 817
SECTOR
FORESTRY - 3,467
INDUSTRIAL - 63 TRANSPORT - 719
WASTE - 621 DISASTER RISK - 374
INFRASTRUCTURE 288
OTHER 404 DIRECT USE
LOCAL BUDGET
STATE BUDGET
7,242
INT’L DEV’T PARTNERS
3,123 479
1,2 66
30
LOW-COST PROJECT DEBT - 1,024
LOCAL GOVERN- MENTS - 50
PRIVATE ACTORS - 195
NGO - 160 OTHER - 279
STATE-OWNED ENTERPRISES
INT’L DEV’T PARTNERS - 253
NON-STRUCTURAL AGENCIES - 177
MITIGATION 3,004
ADAPTATION 384
MRV - 308 RD - 517
OTHER - 578 INDIRECT USE
POLICY DEV’T
3,225 BUDGET EXP. THRU
LOCAL GOV. NE REVOLVING FUND
EQUITY PARTI- CIPATION NE
GRANTS - 1,327
PROJECT-LEVEL MAR- KET RATE DEBT - 264
ENERGY - 1,623
28 21
1,262 CAPACITY
BUILDING - 361 997
MINISTRIES CENTRAL GOVERNMENT AGENCIES
6,265
998
19 An Indonesian Ministry of Finance CPI Report
Box 3: Uncertainty in our estimates of climate inance lowing through Indonesian state budget in 2011
There is signiicant uncertainty about how much money the state and local budgets actually disburse to support climate change action in general, and adaptation actions in particular. We illustrate the impact
of this uncertainty in the climate inance spaghetti as a ‘grey’ shadow that represents the possible upper bound of total public climate inance lows. We could not verify this upper bound largely due to lack
of clear and suiciently detailed deinitions that made it diicult to determine which budget items are climate speciic.
1
With respect to state budget expenditure for mitigation, we identiied but could not verify around IDR 22 billion USD 2 million, related to direct actions targeting agriculture and waste, and waste
water sectors. Meanwhile, we identiied but could not verify IDR 1,594 billion USD 181 million of disbursements that supported indirect activities such as policy development, RD and monitoring
systems, mostly related to forestry and infrastructure development.
For adaptation, the uncertainty is greater still. We identiied IDR 8,392 billion USD 952 million worth of development activities that may be contributing to climate outcomes. The majority of funding
included in this upper bound relates to development infrastructure, such as improving environmental infrastructure of settlements, water supply and–resources management, irrigation networks, coastal
protection, or dam inspection. These actions have climate beneits, but we have been unable to quantify the climate-speciic portion of funding.
2
Figure 4 highlights those sectors and uses that are most afected by questions of uncertainty.
1 The RAN-GRK and RAN-API frame how climate inance is currently being deined in Indonesia. Therefore, some ministries were hesitant to identify
the climate speciic actions in their budget according to the CPI deinition of climate inance. They preferred their numbers to be in line with what they reported to Government of Indonesia, even if that excluded activities that had a climate co-beneit already in 2011. In addition, neither the RAN-GRK
nor RAN-API were in efect in 2011 so ministries did not want to apply them retrospectively. Additionally, where ministries’ planning departments were interested in applying the RAN-GRK and RAN-API deinitions, this was not always easy to do, as generally only the ministries’ technical departments
know the budget activities in suicient detail to allow them to be easily match deinitions with activity components.
2 The Government of Indonesia is currently developing a new budget tagging system. As a result we did not estimate the climate-speciic shares of some
climate-applicable activities, in part because we did not want to pre-empt upcoming government decisions on how activities might be scored. We note that the CPEIR has already pioneered an approach to budget marking that provides a basis for monitoring change. Our marking system was more
conservative, and therefore excluded some activities that might have been included under the CPEIR. Because we could not calculate climate-speciic shares, our range of uncertainty includes the whole cost of activities that potentially provide climate speciic outcomes.
ALL FIGURES
IN BILLIONS
OF INDONESIAN
RUPIAH
218
8,610
1,725
5,657
4,063
M I T I G AT I ON I ND I R EC T
A DA PTAT I O N
500 bn rp
100
bn rp
Upper estimate of financial flows Identifiable climate finance
Scale:
1,747
Uncertainty in Tracking 2011 Public Climate Finance in Indonesia
2,960
3,949
Forestry
37
3 57
Industrial process emissions
Transport
586 19
195 178
Disaster Risk Management
9 131
174
Others
21
11
398
397 399
464
Agriculture
264
406
Energy
149
41
Waste and waste water
553
572
2
2
8,384
14
369
Infrastructure and coastal protection
S E CTO R S
Source: Study team analysis of budget data Note: Flows are expressed in IDR billions and are rounded to produce whole numbers, and as such may not add up.
21 An Indonesian Ministry of Finance CPI Report
4.1 Indonesian central government