Establishment of Indonesia Climate Change Trust Fund (ICCTF) and Formulation of Climate Change Program Loan (CCPL)

Tri DewiVirgiyantiDeputy Director for Environmental Pollution and Degradation ControlMinistry of National Development Planning/National Development Planning Agency (BAPPENAS) - Republic of Indonesia

Presented at ADAPT Asia Pacific 1st Annual ForumBangkok, 14th March 2012

DEVELOPING COUNTRY EXPERIENCE IN PREPARING ADAPTATION PROJECTS AND ACCESSING ADAPTATION FUNDS

ICCTF

The ICCTF is a Trust Fund receiving non-refundable contributions from bilateral and multilateral contributors serving as a channel to attract, mobilize and manage investments and financial resources for climate change mitigation and adaptation programs, projects and activities

Establishment Process Started in 2007-2008 with a study on Climate Change

Financing possibilities of CC financing Real work started in 2008 with establishment of core

team in Bappenas to prepare concept of ICCTF Prepare options for trust fund scheme, governance,

procedures, mechanism, timeframe, organization, legal basis compare 3 options

Involve core stakeholders: Ministry of Finance, Coordinating Ministry of Economy, Ministry of Environment, National Council of Climate Change

Gain Political support from Minister level Discussed in Donor Coordination Meeting get feedback

from bilateral and multilateral financial institution

Establishment Process (2) Detailed concept of: procedures mechanism,

Blueprint of ICCTF, Standard Operating Procedures (SOP)

Establishment of Steering Committee (GOI parts), Technical Committee, Secretariat

Commitment from donor (Sweden, Australia and United Kingdom)

Launched in August 2009 at national level, and launched internationally in Copenhagen December 2009.

Transition …. Option 2 was chosen for ICCTF however with

limited time and capacity, decided to use interim trustee Fund Manager (UNDP) Prep ICCTF

Detailed Monitoring Evaluation System, Audit and Exit Strategy National Trustee 2012

Operationalized in 2010 3 pilot projects land based (agriculture), energy (industry), and resilience (public awareness)

ICCTF has been proposed as NIE for Adaptation Fund

CCPLis a policy loan to support general budget

Purpose of CCPL To fill national fiscal gap (by general budget

support) To support climate change policy program with

steady implementation of Policy Matrix (indirect) Policy Matrix includes sectors:◦ Forestry – CO2 absorption; forest management ;

◦ Energy and Industry- renewable energy; energy efficiency;

◦ Water Resource Management and Water Supply and Sanitation;

◦ Agriculture - food security;

◦ Marine, Coastal and Fisheries;

◦ Disaster Management; and

◦ Cross-sectoral issues – spatial plan, early warning systems, fiscal incentives, national communication, climate change integration into development plan.

Follow up of Joint Statement between President RI dan Prime Minister of Japan on Enhancement of Cooperation on Climate Change, Environment and Energy Issues (20 August 2007)

Follow up of Donor Coordination Meeting on Indonesian Financing Program for Climate Change (Bali, 12 December 2007)

Internal meeting between Ministers (Finance, Coord. Min of Economy, Bappenas, MoE, MoForestry) decided to take CCPL

Formulation Process (1)

Formulation Process (2)

Bappenas to coordinate formulation of policy actions with Donors (JICA and AFD) and 13 Line Ministries + Ministry of Finance

Phase 1-II of CCPL – Policy Actions for 2007-2009

In 2009 formulate Phase III of CCPL –Policy Actions for 2010

Policy Matrix for the Climate Change Program Loan Phase 1-2 covering 2007-2009 was agreed in Aug. 2008, and CCPL 2010 (phase-3) started in 2010

Disbursement of loans 1st tranche (2008): USD 300 million (JICA) and USD 200

million (AFD) 2nd tranche (2009): USD 400 million (JICA) and USD 300

million (AFD) 3rd tranche (2010): USD 300 million (JICA) and USD 300

million (AFD) and 200 million (World Bank)

Development of CCPL

Thank you

Annex

Climate Change Financing Scheme

Options of ICCTF Governance and Scheme

Option 1 Option 2 Option 3

TF Mechanism Established Proposed Proposed

National Capacity Building Marginal Creation of additional capability on managing fund 

Enhancement of existing 

Trustee Experienced but limited availability

Open bidding Selected (MoF)

Role of trustee Financial and Program Management Unit

Financial Management Unit

Treasury

Rate for Management Fee  Relatively fixed  Competitive Free

Audit trustee Internal audit by MI; limited intervention by GOI

Independent auditor External auditor – BPK

DIPA Bappenas and K/L (Project Executing / Implementing Agency)

Bappenas and K/L (Project Executing / Implementing Agency)

Bappenas and K/L (Project Executing / Implementing Agency)

Disbursement mechanism Grant mechanism (according to MI standard)

Grant mechanism (to be proposed and negotiated)

Special Account (Reksus) through KPPN Mechanism

Procurement According to grant agreement

According to grant agreement

GoI regulation

Comparison between Options

GOI Members

Chairman : Chief Secretary, Bappenas;Co-Chair : 1. Deputy for Natural Resources and

Environment, Bappenas 2. DG Debt Management, MOF3. Head of Secretariat NCCC

Members : Echelon I of MoF, Bappenas, MoE, and Related Ministries

ICCTF Steering CommitteePlenary Members

Selected Development Partner Representatives (DFID, AUSAID, GTZ, UNDP, JICA)

Chairperson : Director of Environment, BappenasMembers : - Echelons-II of MoF, Echelons II of Bappenas,

- Echelons-II of Related Ministries, - Dev. Partner Representatives

Technical Committee (TC)

Executing Agency/Implementing Agency : Ministries / Agencies / Local Government/ NGOs

Multi Donor Fund*

Financing

Approval and Assignment

Fund Channeling

Prep ICCTF Trustee

Project Proposal

Monitoring and Supervision

Notes :

ICCTF Secretariat(Administration Staff & Thematic Working Groups)

PREP-ICCTF Governance Structure

Observers (no vote)

CSO representatives

Steering Committee

Non-implementing GOI, Donor

Technical Committee

Secretariat(Consultant) for technical, monev, supervisi, financial

Multilateral

Proposal

Bilateral

Donor

Others (CSR, etc)

Indonesia Climate Change Trust Fund:Procedures and Mechanisms

Management Team

Trustee

ApprovalTechnical Review

Information Only

K/L

NGOs, community,

others

Recipient

Fund DisbursementPayment Request

Coordination Structure of CCPLRPJM

RKP

POLICY MATRIX

STEERING COMMITTEE

Chaired by BappenasCo‐Chairs: Menko Ekonomi, Kesra, MoFMembers: Eschelon 1 of Line Ministries

Meeting 2 times a year

JICA(Japan) and AFD (France)

Technical Committee

Chaired by BappenasMembers: Eschelon 2 of Line Ministries

Meeting 4‐6 times a year

JICA/AFD Team of Experts

s

Members: Eschelon 2 of Line Line Ministries

Policy MonitoringPolicy MonitoringPolicy DialoguePolicy Dialogue

Technical DialogueTechnical Dialogue

Indicators

Technical MonitoringTechnical Monitoring

Technical Assistance Scheme (CCPL)Program Loan/ General Budget Support

Pillar 1： Mitigation

1.1:LULUCF

1.2:Energy

Pillar 2： Adaptation

2.1:Water Resource

2.2:Water Supply

and Sanitation

Pillar 3： Cross-cutting Issues

2.3:Agriculture

3.1:Understanding the Impact of Climate Change

3.2:Mainstreaming Climate Change

3.4:CDM

3.7:Early Warning System

TA

Project

Projects/TAs addressing climate change

JICA/AFD Ministry of Finance

Line ministry A

Line ministry B

Line ministry C

Line ministry D

Project

TA

TA

Project

TA Project

TA

Possible AssistanceLoan

Technical CooperationGrant

Should be reported toDirector of Environment

BAPPENAS

Donors includingJICA/AFD

3.3; Spatial

Planning

3.5:Co-Benefit

3.6 :Fiscal

Incentives