– Landmark report indicates finance is generally well-aligned with national priorities including RAN GRK.The joint study highlights opportunities to unblock bottlenecks that are slowing disbursements at all levels and preventing finance from reaching its intended scale

– Significant information gaps make it difficult to understand how much finance is reaching the local level, where most climate activities will take place

– Green Climate Fund governance discussions could learn from bilateral partnerships where finance is flowing more readily

BALI – Indonesian and international interest in curbing emissions have resulted in significant public spending on climate finance activities in the country in recent years – to the tune of IDR 8,377 billion (USD 951 million) in 2011, according to a new study. “The Landscape of Public Climate Finance in Indonesia,” conducted by the Fiscal Policy Agency of the Indonesian Ministry of Finance and Climate Policy Initiative, is the most comprehensive inventory of public climate finance undertaken in the country to-date.

Overall, both domestic and international public finance was aligned with Indonesia’s priority sectors and emerging national level plans, such as the RAN GRK. Some of the most emission-intense sectors received the highest share of all climate finance flows, including forestry (41%), energy (19%), agriculture and livestock management (10%), transport (9%), and waste and waste water (7%).

The Government of Indonesia contributed the largest share of public climate finance, disbursing at least IDR 5,526 billion (USD 627 million) or 66% of the total. International development partners added an estimated IDR 2,851 billion (USD 324 million) to domestic public resources. These public funds support Indonesia’s goal to reduce emissions by 26% on business as usual levels by 2020, or by 41% with international support.

International finance is less than intended levels; bilateral finance partnerships may offer lessons relevant to Green Climate Fund
In 2011, disbursements by international partners fell short of expected levels, given their overall commitments. Bilateral financing appears to be flowing more smoothly and accounted for 90% of the international finance disbursed. Governance arrangements, which effectively link national development planning priorities and the funding interests of bilateral development partners, appeared to facilitate flows of these funds.

“Ongoing discussions to finalize governance arrangements for the Green Climate Fund (GCF) may benefit from a closer examination of lessons we are learning in Indonesia”, said Dr.Irfa Ampri, Head of the Centre for Climate Change Policy and Multilateral Financing in the Ministry of Finance. “This report shows that international and national public resources play a complementary role supporting national priorities. Building effective governance frameworks that bring international and national partners together can unlock capital without compromising national ownership,” he said.

More work is needed to understand the extent to which existing transfer mechanisms could be used to scale up finance flows to local governments, and whether more tailored mechanisms might increase finance for local actions.

“The good news is that public finance for climate activities in Indonesia is already significant, and we expect that it will continue to grow as policies to encourage climate activities are implemented,” Jane Wilkinson, Director of Climate Policy Initiative.

“However, the analysis we conducted indicates there is more public climate finance sitting in Indonesia, than is currently being spent. Urgent work is needed to unlock these valuable resources to help Indonesia meet its ambitious targets. National and international contributors both have a role to play.”

This landscape of public climate finance conducted by the Indonesian Ministry of Finance’s Fiscal Policy Agency and Climate Policy Initiative (CPI) breaks new ground. It is the first time CPI has undertaken a landscape in a developing country and adds to extensive CPI work mapping climate finance flows at the global and national level. It is valuable both as an overview of public climate flows in Indonesia, and an insight into the significant challenges in tracking and collecting this information.

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Climate Policy Initiative (CPI) is a team of analysts and advisors that works to improve the most important energy and land use policies around the world, with a particular focus on finance. CPI works in places that provide the most potential for policy impact including Brazil, China, Europe, India, Indonesia, and the United States.

Centre for Climate Change Financing and Multilateral Policy (PKKPIM) was established in 2011 within the Fiscal Policy Agency of the Ministry of Finance, Republic of Indonesia. The Centre performs functions such as formulating policy re-commendations, as well as analyzing, evaluating, coordinating, implementing and monitoring climate change financing related issues. The Centre also deals with economic and financial cooperation within the G20 and other multilateral forums.

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