Day two at the Regional Workshop in Indonesia produced rich discussion between participants regarding the preparation of the FCPF REDD+ Project Document, carbon accounting and MRV systems, Reference Level calculations, the FCPF-CF Funding Mechanism, and the Benefit Sharing Mechanism.
Preparing the FCPF-CF Emissions Reductions Program Document (ERPD)
Bpk. I Wayan Dharmwan of the Ministry of Environment and Forestry explained the necessary components enabling success of the Emissions Reductions Program Document (ERPA) prepared by East Kalimantan for the FCPF-CF. Namely, the document was prepared using a methodological framework, including the technical components of national versus subnational policies, a stepwise approach to capacity building from program development to implementation, and explicit links between the emissions reduction program and deforestation drivers. Throughout, the ERPD includes clear, measurable, and operational commitments. The emissions reduction program for the FCPF was designed around the key drivers of emissions from land use in East Kalimantan: oil palm, poor concession management on timber plantations, mining, illegal logging, and agriculture.
Notably, the EPRD contains key elements intended to secure maximum benefit from the FCPF-CF payment:
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Safeguards for indigenous peoples and local communities
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Benefit sharing mechanism distributing payment benefits at the national, provincial, district, city, and community levels
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MRV and data management system with improvements on the classification of forest land cover, plus monitoring emissions from forest fires, former logging forests, and peat decomposition—with an emphasis on data transparency.
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Transfer of carbon rights considering results-based payment is a new, unregulated mechanism in East Kalimantan, wherein carbon is considered a commodity which can be bought and sold. Therefore, intensive communication and coordination between Ministries is essential to ensure equitable carbon trading.
The Final ERPD was approved by FCPF-CF in June 2019—after nearly two years of multi-stakeholder review and feedback since the initial formulation in July 2017. In fact, over 40 people were involved in the various stages of ERPD development, including experts from the World Bank, UNDP, local NGOs, national and subnational governments, and partner organizations. Dpk. I Wayan Dharmwan emphasized that the ERPA stage will never be achieved without the successful development of the ERPD. Thus, the arduous process of ERPD development and approval intends to ensure success on emissions reductions during the program period (2020-2024).
Critically, East Kalimantan parties are highly committed and supported by the national government in producing and finalizing the ERPD, emphasized participants.
In the discussion following Bpk. I Wayan Dharmwan’s presentation, Peter Kamarea, GCF Task Force delegate from Papua, reminded participants that the FCPF-CF process is “a long-term investment and learning for the future.”
The next step in the process is signing the Emissions Reductions Payment Agreement (ERPA), which is expected to occur at COP 25 (Santiago) in December 2019.
The ERPA preparation process
Proposed Benefit Sharing Plan and Results-Based Payment Funding Distribution
Technical Components of the FCPF-CF
Next, Bpk. Fadli (DLH Provinsi Kalimantan Timur) explained the process of calculating the Reference Level used for the FCPF-CF, plus the institutional MRV system.
East Kalimantan established a team for MRV of climate change mitigation actions following a decree in 2015—now, in 2019, the Forest Management Unit is involved as a member of this team. In East Kalimantan, the monitoring system for mitigation actions is managed by the local Environmental Agency (rather than by the Development Agency, as is the case in other Indonesian provinces).
The established MRV portal currently contains data and information on forest carbon, using the national FREL as the Reference Level, along with national land cover maps and plot sampling. On this portal, East Kalimantan seeks to consolidate and synchronize data across of the registry systems managed by the Environmental Agency (including SIGN-SMART, SRN, PEP-ONLINE, and MRV) in order to more effectively monitor mitigation actions.
Before the ERPA signing in December, East Kalimantan will establish a Public Service Agency for Environment Fund Management (BPDLH), through which REDD+ benefits will be collected and distributed using an International Standard for the management and distribution of funds.
Dr. Wahyu Marjaka, Director of Mobilization of Sectoral and Regional Resources at the Ministry of Environment and Forestry, clarified the legal basis for the BPDLH:
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Law No. 32/2009 on Environmental Management and Protection Gives mandate to government to develop Governmental Regulation (PP) on Environmental Instruments (Article 42 and 43)
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Governmental Regulation No. 46/2017 on IELH (Environmental Economic Instruments) Gives mandate to government to establish BLU on environmental funds, including climate change funds (Article 26, 27 and 30)
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Presidential Regulation 77/2018 on Environmental Regulation Gives mandate to BLU to manage Environmental Funds
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Ministerial Degree 70/ 2017 on REDD+ Governance Gives mandate that REDD+ Funding should be managed by Public Service Agency
The FCPF-CF is expected to generate 61 million tons of CO2 emissions reductions during the program period 2020-2024. 94% (57 million tons) of those emissions reductions will be kept in-country to assist in achieving Indonesia’s NDC target, while the other 6% (4 million tons) will be traded as part of the program.
Although the direct financial benefit to East Kalimantan may appear small, with a profit margin of just $10-20 Million USD due to the high cost of implementing the program (estimated at $90 Million), the FCPF-CF will generate immense social, ecological, and indirect financial benefits from subnational to global levels. Additionally, the FCPF-CF is expected to set a precedent for collaboration from other partners to garner additional benefits to East Kalimantan over time. At the close of the workshop, participants emphasized the value obtained by preserving standing forests and setting a precedent for climate action over the economic value derived from FCPF-CF.
The first payment is expected to be received in 2023.
Discussion Highlights
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Committed and focused leaders in East Kalimantan are motivating key players across Indonesian provinces and partners. Specifically, participants commended Prof. Daddy Ruhiyat for garnering a spirit of cooperation across the region.
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Each participating province will proceed with a strong vision and mission towards achieving the Sustainable Development Goals, especially in the formation of partnerships across jurisdictions and with NGOs.
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East Kalimantan’s success in FCPF-CF development serves as a guiding beacon for provinces across Indonesia seeking to improve MRV and carbon accounting systems.