The Fiscal Policy Agency (FPA) throughout 2019 has carried out various activities to reach out to stakeholders who can play a role in assisting Indonesia in mitigating and adapting to climate change. Through information dissemination activities about the GCF and training, the FPA helps stakeholders understand the GCF and how to access the global funding. The main objective is to encourage various stakeholders ranging from central government agencies, local governments, businesses, financial institutions and non-governmental organizations (NGOs) to be interested in submitting a Project Concept Note to access the GCF climate change funds.
During 2018 and 2019, the FPA has held roadshows to visit stakeholders in East Kalimantan, East Java and West Papua. The FPA also provided gender and social inclusion trainings in climate change in collaboration with the Ministry of Women’s Empowerment and Child Protection. To increase the awareness of the climate finance in the media, the FPA and GGGI have held training on green growth and climate change for journalists.
To increase the national capacity in efforts to access GCF funding opportunities, in 2019 the FPA has undertaken several strategic activities which include consultation process in determining national priorities, collaboration with various development partners namely Hivos, Conservation International, The Nature Conservancy and USAID’s Climate Change Adaptation and Resilience (APIK), provincial government engagement in project submissions, the initiation of the Call for Project Concept Notes (PCN) with an independent expert evaluation panel system accompanied by technical support from the FPA and accessing the GCF funding under the Readiness Program to increase the capacity of the FPA and national actors. The FPA also held Call for Expression of Interest initiative to be accredited by the GCF and encourage more institutions, especially in the financial sector, to access global climate finance.
In addition, the FPA has also prepared several guidelines to access GCF funding. First, the technical guidelines document as a technical guideline that outlines the general procedures to be taken to access climate fund. Second, the Country Programme Document as a reference to find the priority themes in Indonesia that can be developed and are aligned with Indonesian government’s climate change adaptation and mitigation programs. Both documents, publicly accessible through the GCF NDA in Indonesia secretariat (the FPA), help national actors to understand more easily the processes and procedures for accessing GCF funding in Indonesia.
Proactively, the FPA invites banking institutions that have strategic roles to participate in channeling climate change funds. This is done in two ways; first by cooperating with the Financial Services Authority (OJK) and the Indonesian Sustainable Financial Initiative (IKBI); and second, by meeting the banking community one by one and inviting them to be involved in channeling GCF funds as an accredited entity. Financial institutions have great potential to become AEs with direct access (DAE), as one of the unique features of the GCF is direct access to GCF funding for developing countries through national entities. This DAE will forward the GCF funds to the climate change project owners in Indonesia.
Challenges Faced by the GCF NDA
There are several challenges in discussing GCF funding for climate change. Explaining scientific issues underlying climate-related policy making and its impacts is a challenge in reaching diverse stakeholders. In addition, the FPA also needs to explain the investment criteria related to climate and the GCF standards.
The FPA also faces challenges in encouraging the involvement of civil society organization and vulnerable groups in climate finance, one of which is related to high-risk projects that require the involvement of these groups in the project review process. The FPA is still looking for the ideal project consultation format so that it still actively engages the CSOs of vulnerable groups without hampering the project approval process.
Of the overall challenges, the most difficult to date is to raise the interest of the national banking sector to access GCF funds. At present, only Bank Artha Graha has submitted Expression of Interest to become an Accredited Entity. The FPA hopes that in 2020 there will be more banks, especially state-owned banks, who are interested in becoming DAE and participate in channeling the climate change fund.
The GCF NDA’s Plans in 2020
The FPA has prepared various programs to increase the interests from Indonesian institutions to access and channel GCF fund. First, by increasing institutional capacity and coordination mechanism through the implementation of monitoring and evaluation tools, expansion of information exchange between the FPA and other NDA GCF in several countries, and in increasing the FPA’s internal capacity in assessing project feasibility.
Secondly, the stakeholder engagement consultation process. In this case, the FPA will hold the Annual Participatory Forum III. As preparation, the FPA will develop communication materials on climate change projects and develop technical guidelines to integrate gender perspective into climate change policies and programs for project developers.
The third program is the GCF accreditation for national entities that will be carried out through technical assistance for the preparation of national institutions accreditation process that also develop specific technical accreditation for Indonesia based on PT Sarana Multi Infrastruktur (Persero) experience that has become a DAE.
The final program is related to the Climate Financing Strategy and Projects in the pipeline. Learning the lessons from the previous Call for PCN, the FPA will hold another Call for PCN to capture more Concept Notes from EE and AE/DAE by strengthening the climate rationale aspects so that the proposed Concept Notes are more relevant to climate change issues. Aside from having a clearer selection criteria, the next Call for PCN can also use the Country Programme Document for Indonesia as a guideline.
Furthermore, the FPA is developing a climate funding strategy and funding facilities for Badan Pengelola Dana Lingkungan Hidup (BPDLH) or the Environmental Fund Management Agency which is under the Ministry of Finance. BPDLH establishment process is the result of cooperation between the Center for Climate Change and Multilateral Financing (PKPPIM) in the FPA with the Directorate General of Treasury of the Ministry of Finance and the Ministry of Environment and Forestry.
All of these plans are expected to encourage even more concept notes submissions that will result in more GCF funds that can be channeled to assist Indonesia in its efforts to adapt and mitigate the impacts of climate change. It is understood that the COVID-19 outbreak will add to the challenges in the implementation of various program activities in 2020. For instance, stakeholder engagement events cannot be done directly, but rather through virtual meetings.
Through this website, among others, the FPA will reach out and distribute information about the GCF to a broader range of stakeholders including informing various agendas related to GCF activities, such as Phase III of APF and the next Call for PCN.
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