Norway funds 530 million NOK for Indonesia in result base carbon reduction and deforestation project

Indonesia rainforrest: Photo: Ramdan Nain.

The Norwegian government published an official announcement regarding the latest achievement on emission reduction and deforestation with Indonesia on 3 July 2020. It is the first time Norway supporting funds on this 10 years project – result base payment worth of 530 million NOK or Rp812.86 billion. So far the result on emission reduction were lower in 2016-17.

This year, Norway and Indonesia are celebrating 70 years of diplomatic cooperation. Since 2010, Norway and Indonesia have cooperated to reduce Indonesia’s emissions from deforestation, forest degradation and peatland conversion. An independent third party has now verified Indonesia’s results for the forest year 2016-17 and 2018-19.

After 10 years of hard work, deforestation in Indonesia is going down. Emissions from deforestation and forest degradation in Indonesia were lower in 2016-17 than in the preceding decade. In response, Norway will pay up to 530 million NOK (approx. $56 million) for the good results. This is the first time Norway pays for Indonesia’s results in emission reductions.

The report confirms that Indonesia – home to the world’s third largest rainforest – has reduced emissions amounting to approximately 17 mill tons CO2. This is equal to one third of all annual emissions from Norway.

-Groundbreaking

Norway’s Minister of Climate and Environment, Sveinung Rotevatn said in a meeting with the Indonesian Ambassador to Norway Todung Mulya Lubis on 17 June 2020.

“This is a groundbreaking moment. Indonesia has embarked on a remarkable journey, and the forest and land use reforms undertaken by President Joko Widodo and Environment and Forestry Minister Siti Nurbaya are yielding impressive results.

These are good news for Indonesia, for the world, and for our partnership. Indonesia is all set to continue delivering further reduced deforestation, and we are delighted to make our first results-based payment and enter a new phase of our partnership”

Recently published figures from the Indonesian government indicate that deforestation has stayed at the same level or lower in 2017-18 and 2018-19.

The disbursement is the first manifestation of the two countries having completed the two first phases of their partnership and entered the results-based phase, as announced in 2019. The calculation of Indonesia’s results is based on jointly agreed rules.

– Encouraging
Minister Rotevatn added “This is very encouraging. These numbers will, if and when verified, be the basis for further results-based payments from Norway to Indonesia, enabling us – if Indonesia continues to deliver over the next few years – to continue to fulfill our 6 billion NOK pledge from 2010 through results-based payments.”

The Indonesian Ambassador Lubis said “We hope that this cooperation continues and will be intensified in coming years,”

Indonesia is working to finalize the establishment of the government’s Environment Fund (the BPDLH), which will be Indonesia’s official channel for receiving results-based payments. The full disbursements will happen when the Fund becomes operational and a grant agreement is signed, which is planned to happen this fall.

Indonesia and Norway are also working closely to agree to a framework for continued collaboration beyond 2020 through an addendum to their Letter of Intent from 2010, to guide their partnership with even higher ambition into the Paris Agreement period.

Results -based payment
The maximum number of emission reductions Indonesia can be rewarded for by Norway and other financiers is 11,2 mill tons CO2, after the deduction of a 35% set-asides for uncertainty, other risk factors, and Indonesia’s own ambition, as agreed between the two countries. For the result year 2016-17, Norway will provide result-based payment for all results available. The price is 5 USD per ton CO2 of the reduced emissions, totaling 530 million kroner (56 million USD) to Indonesia.

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