Efforts to achieve Indonesia's climate targets must be balanced with the effective and efficient use of funding sources. This utilization process must consider several key aspects, such as sector needs, a supportive environment facilitating access, and its broad impact. To help allocate Green Climate Fund (GCF) funding in Indonesia effectively, the Fiscal Policy Agency (BKF), as the primary liaison known as the National Designated Authority (NDA), has prepared a study to determine priority sectors in the use of GCF funding. Discussions on preparing and delivering the Priority Sector Selection Study results for GCF Funding were held in June and August 2023 by inviting relevant Ministries/Institutions, private sector representatives, and other partners, including CSO representatives.

Studi ini didasarkan pada hasil kajian awal dari kebutuhan yang dilakukan NDA pada tahun 2021. Salah satu tantangan utama yang teridentifikasi dari penyaluran pendanaan iklim di Indonesia adalah alokasi pendanaan yang masih didominasi untuk sektor-sektor tertentu, terutama mitigasi. Hal ini antara lain disebabkan oleh keterlibatan swasta yang masih mendominasi sektor tertentu, belum adanya strategi pendanaan baik fiskal maupun non-fiskal untuk investasi iklim, serta kesiapan dari para pemangku kepentingan untuk mengakses pendanaan tersebut.

This priority sector identification study began with determining indicators based on compliance with national development planning documents and indicators in the GCF Country Programme Document for Indonesia. Furthermore, a synthesis result emerged, which became seven main indicators, then developed into an assessment matrix for prioritization. From the assessment results, priority sectors for mitigation were obtained, namely energy, agriculture, and forestry as well as land use (Forestry and Land Use/FOLU). In contrast, the food, water, and health sectors were obtained as priorities for adaptation. Following the identification results, Indonesia could prepare a proposal for programs or activities to obtain GCF funding.

In the meeting with partners, several inputs were also obtained including from PT. Sarana Multi Infrastruktur (PT SMI), the Directorate of Climate Change Adaptation of the Ministry of Environment and Forestry (API KLHK), and the Indonesia Business Council for Sustainable Development (IBCSD), such as several questions related to the alignment of priority sectors with GCF interests and the need to increase stakeholder capacity. There was also input on proposing ways to minimize budget losses.

Perwakilan dari Direktorat API KLHK selaku NDA Adaptation Fund juga mengungkapkan pentingnya koordinasi antar penghubung utama pendanaan iklim. Ia menceritakan beberapa tantangan Adaptation Fund, yang juga dialami oleh GCF. Salah satunya adalah kesenjangan yang muncul akibat proses organisasi internasional yang relatif rumit dan kapasitas pengusung proyek yang masih terbatas.

The determination of priority sectors is the basis for NDA to formulate a concept note with a program approach. In the future, several proposals for policy frameworks and investment strategies will be developed to support investment in priority sectors. It is hoped that Indonesia can access funding from the GCF more strategically through national programs, have a sophisticated mixed funding scheme, and involve financing from the private sector.