Climate finance is an important element to enable developing countries implement its climate actions as reflected in their Nationally Determined Contribution (NDC) and/or National Adaptation Plan (NAP). In accordance with Decision Decision 1/CP.21 paragraph 53, all Parties to the Convention agreed to set a new collective quantified goal (NCQG) with USD 100 billion as a floor. In 2021 during COP26 in Glasgow, all Parties agreed to establish a three-years-work programme to set the new goal. The new goal is expected to be agreed at CMA6 in Baku, which will be held in conjunction with COP29. To set the new goal, Parties agreed that it must be based on the needs and priorities of developing countries, as reflected in the Decision 1/CP.21 paragraph 53.
However, defining the needs and priorities of developing countries is not an easy task; which made setting up the quantum of the new collective quantified goal, becomes difficult as there is no definite number that is close enough with the real needs and priorities of the developing countries. The Standing Committee on Finance (SCF), as mandated by the Parties, is currently developed the second report on the determination of the needs of developing country Parties related to implementing the Convention and the Paris Agreement, known as NDR. The biggest challenge in developing the report is the lack of information regarding the financial needs of developing countries to implement its NDCs and NAPs. Equally important with the quantum is how the developing countries can access available climate finance.
Indonesia Research Institute for Decarbonization (IRID) in collaboration with the Center of Climate Finance and Multilateral Policy of Fiscal Policy Agency, Indonesia’s Ministry of Finance, held a session on how Indonesia determines its needs and priorities. At the same time, the discussion also raised issues regarding to Indonesia’s access to multilateral funds available for climate actions.
Indonesia’s readiness to access multilateral climate finance
The discussion was heavily emphasized on Indonesia’s readiness to access the available climate finance, particularly the multilateral funding under the UNFCCC (United Nations Convention on Climate Change), such as Adaptation Fund and Green Climate Fund. Although the two funds are dedicated for developing countries, yet to access the funds itself, is not easy for developing countries like Indonesia. The discussion highlighted the capacity of the climate finance intermediaries – through which the fundings are channeled – is still low. This is one of the many reasons of why not so many Indonesia’s institutions could access the multilateral funding.
Another issue that was identified is on the proposal development, particularly in providing sufficient basis to define the ‘climate rationale’ ofthe proposed project. The lack of capacity to develop such basis, separating between the adaptation, mitigation,development and disaster risk reduction,is often the case.
Co-financing becomes another issue which made the project proponent was reluctant to access the available multilateral fundings. This component provides a lesson that to access a big amount of finance under multilateral pocket, requires a big amount of funding as initial capital for proposal development. Other issues such as time spent in the proposal development followed by its submissions that can take around 5-6 years before it is approved by the fund manager, were also raised. The lengthy process of approval then leads to the question of whether the proposal is still relevant as it was developed in the context of 5-6 years before the approval.
Determining and defining Indonesia’s needs and priorities
Relating to determining and formulating Indonesia’s needs and priorities for climate finance, a The blueprint of climate actions that are needed for Indonesia in the next years, is recommended. The blueprint is expected to provide the big picture of what kind of climate actions that can be funded through which kind of financial source: either from the multilateral sources, bilateral, philanthropy, or even through the national budget. The blueprint will enable blended finance to occur, in achieving the same goal. In the absence of the blueprint, at this moment, NDC is sufficient to be the temporal basis to know Indonesia’s climate actions’ needs and priorities.
Optimize Indonesia’s access to climate fund
Despite of Indonesia’s limitations in accessing climate funds, Indonesia still has several options that can be done to increase its access to climate funds. Facilitating meetings with relevant stakeholders, becomes one of the identified needs in the discussions to increase the number of proposals that can be submitted by Indonesia to the multilateral fund. Matching event between project proponent and accredited entities – institutions that are eligible to access multilateral funds – is important. These meetings can also be the avenue for information exchange on climate finance in Indonesia.
Aside from that, information about the ongoing projects, needs to be available for wider-public. The goal is to have more people or stakeholders to know and understand about various climate finance in Indonesia, and also on climate actions in Indonesia that are supported through the international supports.
