Since its establishment in 2010, the Green Climate Fund (GCF) has supported developing countries, including Indonesia, to increase their capacity in accessing international climate funds as well as achieving the various climate targets. This support is implemented through Readiness and Preparatory Support Program (Readiness Program), which can be accessed by the National Designated Authority (NDA) as the focal point between the GCF and countries. Fiscal Policy Agency, Ministry of Finance, as Indonesia’s NDA, has accessed this grant facility to strengthen the capacity of national stakeholders and institutional capacity of the NDA as well as provide other technical assistance to increase Indonesia’s readiness in accessing climate finance.

Throughout the implementation of the two phases of Readiness program, the NDA has strengthened its institutional capacity through the establishment of NDA Secretariate, development of monitoring and evaluation tools, and provision of training for NDA staffs. Mainstreaming of gender and social inclusion principles has also been conducted to program implementation and stakeholder engagement. Additionally, the NDA has also succeeded in developing national project pipelines by identifying potential project ideas and conducting matchmakings between project proponents and accredited entities. As a result of this activity, Korea Development Bank’s project on energy efficiency financing, in collaboration with the ASEAN Centre for Energy, has been approved in the GCF 34th board meeting. Other support provided through the Readiness program also include national entities accreditation process.

As Indonesia’s readiness to access GCF funding has improved from the implementation of the Readiness program, there are still capacity gaps in stakeholders, especially in adherence with the global standard. To clearly identify the remaining challenges and required support, the NDA has conducted a Readiness Needs Assessment which became the basis of the Readiness Program Phase 3 development.

Challenges in Accessing Indonesia's Climate Finance

To answer the challenges, the Readiness Program Phase 3 proposes several solutions integrated to outcomes and activities. Through the program, NDA aims to balance funding allocation between priority sectors by strengthening coordination between stakeholders, especially between ministries/institutions and climate finance focal points. NDA also aims to further strengthen project pipeline development in priority sectors by encouraging proposal submission by national DAEs, as well as building the capacity of DAEs and DAE candidates. Finally, to encourage private sector’s involvement, the NDA will develop various recommendations for blended financing facility and appropriate fiscal incentives to attract private investments. focal point pendanaan iklim. NDA juga akan memperkuat pengembangan pipeline proyek untuk sektor-sektor prioritas dengan mendorong pengumpulan proposal oleh entitas terakreditasi nasional, serta membangun kapasitas entitas terakreditasi nasional serta kandidat entitas terakreditasi nasional. Terakhir, untuk mendorong pelibatan sektor swasta, NDA akan mengembangkan berbagai rekomendasi untuk fasilitas pendanaan campuran dan insentif fiskal guna menarik investasi swasta.

Readiness Program Phase 3 is the first multi-year readiness program accessed by Indonesia and will be implemented until 2025. As in the previous Readiness program, Global Green Growth Institute (GGGI) is the delivery partner of this program.