International Seminar
REDD+ Finance Mechanism and Its Optimum Use:How to incentivize forest conservation

Beyond Bilateral Funding:Creating New Mechanisms for
REDD+ Operationalization in Indonesia

Hideyuki Kubo
4 February 2015

Talk about
1. Scope of REDD+ in Indonesia
2. Sources and scales of REDD+ finance3. Emerging financial mechanisms
4. A way forward

1. Scope of REDD+ in Indonesia
 Institutional arrangement (e.g.)

MRV; Safeguard; Funding instrument
 Policies and measures as well as projects (e.g.)
Policy:Moratorium; Customary rights

Institution:

Forest Management Unit (FMU)

Project:

Input-based / Investment

Private sector: Zero deforestation
Finance for REDD+  How to finance these activities

2. Sources and scales of REDD+ finance(1) Sources
REDD+ related activities (e.g.)
Institutionalarrangement

Policies andmeasures;projectDonor

Nat’lbudget

LoI*

Other

MRVY

Y

Y

SafeguardYYY

Funding instruments

Y

Y

Y

Moratorium

Y

Y

Customary rightY

Y

FMU

Y

Input-based Projects

Y

Privatesector

YY

Y

Y

Y

Investment projectY

Zero deforestation

Y* The work conducted by REDD+ Agency, which is funded by Norwegian government under the
Letter of Intent (LoI).

(2) Scales Public climate finance in 2011: US$0.95 billion
By Government of Indonesia – US$0.63 billion(66%)
By Int’l development partner – US$0.32 billion (34%)
 Int’l commitment on climate finance as of 2011$4.4 billion (Norway $1 billion) for multiple years
 Financial requirement on REDD+ until 2020
$5-10 billion (REDD+ Taskforce 2012)
Source: CPI (2014); GCP (2014)

3. Emerging financial mechanisms
 Trust Fund: to follow Presidential Regulation 80/2011
ResponsibleAgency
Ministry ofIndonesia Climate National
Change TrustDevelopment
Fund (ICCTF)
Planning(Bappenas)
Trust Fund

Fund for REDD+Indonesia(FREDDI)

REDD+Agency(1)Funding
Sources

Focus Area inMitigation

International
Land based
Development
mitigation;
Cooperation &Energy
State budget
International
Development
Cooperation

Implementationof Nat’l REDD+
Strategy

Remark: (1) Presidential Regulation 16/2015 stipulates the revoke of Presidential Regulation 62/2013
on the establishment of National REDD+ Agency.
Source: ICCTF Business Plan 2014-2020 (2014) ICCTF: Indonesian Climate Change Trust Fund
• So far $16 million of International contribution• Grants provided to Ministries, CSO, research inst.
• Plans to apply as a National Implementing Entity(NIE) of Green Climate Fund (GCF)• Pilot projects in the land based mitigation sector(1) Sustainable Peat Management (2010-14)(2) Community-Based Wood Pellets Production (2012-14)

 Instrument and mechanism under preparation(1) FREDDI – Four funding windows
Strategic (Readiness, Nat’l priorities, Emergency)
Sub-national priority (CB, Performance-based payment)
Competitive (Proposals)
Small scale grant (For community-based activities)(2) JCM: Joint Crediting MechanismBilateral crediting mechanism between Indonesia andJapan (initially) as non-tradable credits.

4. A way forward• Scope of REDD+ activities is broad and they aresupported by multiple sources. On addressing
deforestation and forest/peatland degradation, bothpolicies and measures as well as investment projects
need to be continuously funded.
• As REDD+ Agency used to take key roles in designingand implementing REDD+ activities, newarrangement of dealing with readiness work needs
to be urgently developed, including theoperationalization of FREDDI and the mechanism offostering funding from Green Climate Fund.