Indonesia’s INDC – A step forward or a missed opportunity?
As the Paris climate negotiations draw closer, countries have been asked to submit their Intended Nationally Determined Contributions – INDCs – by 1 October. INDCs identify the actions a government intends to take as the basis of post-2020 global emissions reduction commitments, that will be included in the future climate agreement. The process of setting the INDC is bottom-up and country-led, in contrast to the top-down approach of the Kyoto Protocol. INDCs already submitted have been heavily scrutinized and judged for the level of ambition or leadership.
Given the importance of the INDCs as a way for nations to take stock of their goals and needs and to chart paths towards an ambitious outcome in Paris, our question here is whether Indonesia has taken full advantage of this opportunity to close the gaps in existing and newly proposed policy frameworks, to pave the way for a prosperous, decarbonized economy.
Baselines – going back to the drawing board
Indonesia is presenting its INDC as a deviation from business as usual using projections based on the historical trajectory (2000-2010). It assumes projected increases in the energy sector in the absence of mitigation actions, however details of these assumptions and how they are modelled have not been disclosed in the INDC document.
As Indonesia’s INDC sets out a 26% emission reduction by 2020 and 29% emission reduction by 2030 based on a 2010 projected business as usual scenario, at a glance, this seems to imply that the first target was very ambitious, or perhaps that the new one, which adds a further 3% over the next 10 years, is hedging bets. It could also imply that the Government of Indonesia has calculated the variables with extra care and has set a more realistic target. In any case, because inventory and monitoring systems have not been able to estimate progress to date, it is hard to decipher where Indonesia stands with respect to business as usual and where they could go.
Casting more light on this situation in the latest inventory, and outlining in detail the baseline as well as assumptions and modelling underlying it, for each sector, would add credibility to Indonesia’s upcoming Third National Communication to UNFCCC in 2016.
Capitalizing on low hanging fruits
Since forestry emissions (from land and land use change, as well as peat and forest fires) as per Indonesia’s Second National Communication to the UNFCCC of 2010 account for 63% of the emissions profile, a landscape-scale ecosystem management approach, emphasizing the role of sub-national jurisdictions to decarbonize the economy, could be highly relevant to Indonesia. The INDC document describes its strategic approach as recognizing that climate change adaptation and mitigation efforts are inherently multi-sectoral in nature and require an integrated approach. However current on-going efforts, such as the moratorium on the clearing of primary forests, are not enough to curtail rising pressures on land. Increased palm oil production and the recent push for expanding markets for biodiesel, upcoming food security programs which open one million hectares of new paddy fields, and 35 GW of power to be installed by 2019 – much of it coal based, while all important to Indonesia’s growing economy, could threaten Indonesia’s sustainability goals if not managed properly.
Climate Policy Initiative’s protection and production and land management approach (PALM), applied in applied in Central Kalimantan, in collaboration with the University of Palangkaraya, aims to lead the way in this regard by bringing together private, public, and smallholder-farmer stakeholders to unlock a new, collective approach to agriculture that will promote food security, energy security, socially inclusive economic development and environmental sustainability. The project has already identified opportunities to increase profitability and productivity for smallholder farmers through larger scale management in the form of cooperatives. Such opportunities reduce pressure on land, support sustainable development of the palm oil economy, and provide livelihood benefits to the smallholder community. Such initiatives could also potentially lead to quantifiable emissions reductions.
Scaling up climate finance required to deliver the INDC
The Landscape of Public Climate Finance in Indonesia conducted by the Indonesian Ministry of Finance’s Fiscal Policy Agency and CPI found that public climate finance in 2011 reached at least IDR 8.377 billion (USD 951 million). The Government of Indonesia disbursed at least IDR 5,526 billion (USD 627 million) or 66% of those flows. The finance was well targeted, with most of it flowing through to the forestry sector (73%) and laying a strong foundation for decarbonizing the economy through policy development and capacity building.
The INDC submission doesn’t indicate how much additional finance is required to deliver the 29% target and how much is required from international community to unlock the 41% target by 2030. However, based on early assessment (for consultation with Indonesian NGOs) uploaded in draft form on the Ministry of Environment and Forests Website on 29th of August, the estimated abatement cost under the unconditional 29% scenario is at least USD 12.98 billion in 2030, implying that Indonesia needs to scale up finance more than 35% annually from 2020-2030 compared with what it disbursed in year 2011 from national sources. In order to achieve the 41% target, additional international financing of at least USD 5.92 billion over 2020-2030 will be required. This would mean an increase of over 82% international finance support every year of what was disbursed in year 2011 ( USD 324 million).
Even though it is unclear at this stage as to how the abatement costs were estimated, it highlights the challenge lying ahead for Indonesia to continue to do its best to secure adequate national budget resources for the implementation of mitigation actions. Now more than ever, it becomes important to use both national and international public finance to complement and support national efforts to scale up private sector flows and align international climate finance with country-led priorities. Examining how past successes were achieved (for example, as in the Sarulla Geothermal project) and possibly increasing revenue from better natural capital accounting, may provide opportunities to do so.
Finally, beyond scaling up financial resources, significant difficulties tracking climate finance for adaptation and private investment flows, mean investment is almost certainly greater than our estimates. This is indicative of systemic challenges tracking adaptation flows around the world, including because of definitional questions. CPI identified an additional up to IDR 10,008 billion (USD 1136 million) more might contribute to climate outcomes (mostly on adaptation), but could not be verified due to definitional uncertainties. A single national system or database to collate comparable information from the full spectrum of actors together with more readily accessible guidelines to explain existing and emerging reporting requirements would go a long way in terms of assessing flows and determining where and how to scale up in order to achieve INDC targets.
Making the most of this opportunity
Indonesia’s INDC is a commendable effort and comes at a critical juncture of development and amidst slowing economic growth. There may be additional key opportunities for Indonesia to strengthen national action on climate change and to extend the global leadership role Indonesia established in 2009, to help push toward a successful UN climate outcome. Our analysis has shown just how important the land use sector, in particular, is to Indonesia’s economic growth and indicates there are opportunities to achieving development and INDC targets together, helping Indonesia pave the way to a bright, low-carbon future.