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Funding of GHG emission reduction programs implemented by the regions are basically conducted through APBD. GHG emission reduction programs are
not completely new special programs, but are also within local governments’ existing programs with adjustment so that they can contribute to GHG
emission reduction. Therefore, the inancing can as much as possible use
the existing APBD. Considering the limited local inancial capacity, it is likely that funding will be chanelled from APBN to APBD.
Other potential fund sources to deal with climate change are domestic grants from the private sector and community managed by the government. The
government will develop regulations and mechanisms that enable grantors to channel the funds.
Some expected domestic private fund sources that can inance GHG emission reduction activities come from banking, non-banking and Corporate Social
Responsibility CSR. Fund sources coming from banking general banks and syariah banks and non-banking domestic capital markets, insurance,
inancial institutions, pension fund institutions, etc can be mobilized to inance
private investment by beneicial inancial returns. Therefore, there needs to be an incentive policy from the government to banking and non-banking
institutions that provide soft loans to industries that apply green technologies or support GHG emission reduction. To realize that, it is necessary to have
coordination between the government and the Bank Indonesia in developing banking and non-banking strategic policy.
CSR is a voluntary initiative from an enterprise to provide positive contribution to the surrounding community, so that it opens up opportunities to use it for
inancing activities related to GHG emission reduction efforts in line with the economic growth and green technology campaign. In the future potential
funds from CRS are predicted to be fairly large.
5.1.2 International Funding Sources
International funding for GHG emission reduction programs consists of bilateral and multilateral cooperation and the carbon market. International
fund use should not, as far as possible, put excessive burden on the state’s inance.
At Copenhagen’s 15th COP and Cancun’s 16th COP, it was agreed that developed countries must provide new and additional fund sources to support
developing countries in implementing mitigation actions and climate change adaptation. The fund is predicted to reach US30 billion for 2010-2012 and a
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longer period until 2020 amounting to around US100billion per year must be able to be mobilized both from public and private funds.
Until today, several countries have promised to support Indonesia in implementing adaptation and climate change mitigation actions whose funds
reach around US4.4billion for some years ahead.
International funds can take the forms of grants and loans. For loans, existing real needs should be calculated. Because they are earmarked for funding
GHG emission programs which are a global responsibility, the form of loans requires special treatment with low risks and loan cost. The form of loans such
as Debt to Nature Swap DNS is one of the mechanisms used for inancing environmental management. The mechanism can also be continued for GHG
emission reduction inancing purposes.
5.2 Funding Mechanism
The use of funds coming from domestic and international sides must follow the mechanisms as stipulated in the regulations related to the state’s inancial
management sector.
Generally, the fund managed by the government for inancing GHG emission reduction initiatives is carried out through the APBN. To inance
activities that are the central government’s functions, the APBN funds are channelled through ministryagency’s budget in the forms of sectoral funds,
deconcentration funds and co-administration funds.
Whereas, for inancing activities that are the regions’ functions, the inancing uses the APBD. Due to limited local funds, it is likely to add funds from the
central government through transfer and grants mechanisms.
Nowadays, management of international grants is regulated in the Government Regulation No. 102011 on Procedure for Provision of Loans
andor Receipt of International Grants as well as International Sub-Loans and Sub-Grants, which is followed up by Regulation of Minister of Finance No 40
PMK.052009 on Grants Accounting System as well as Regulation of PPN Minister Head of Bappenas No. 052006 on Procedure for Proposal Planning
and Submission and Evaluation on Activities inanced by International Loans and Grants PHLN.
