Interim Forest Finance Roundtable – Scaling up Demand for REDD+ Emission Reductions before 2020

Jakarta | 13 February 2014: To discuss the urgent need to scale up demand for emission reductions generated by avoided deforestation and forest degradation, REDD+, partners of the Interim Forest Finance (IFF) project – the Global Canopy Programme (GCP), Fauna & Flora International (FFI), the UNEP Finance Initiative (UNEP FI), the Amazon Environmental Research Institute (IPAM) and the United Nations Office for REDD+ Coordination in Indonesia (UNORCID) – hosted a roundtable that brought together Indonesian REDD+ stakeholders from government, civil society, research institutions, and international organizations.

The discussion was based on the recently released report ‘Stimulating Interim Demand for REDD+ Emission Reductions: The Need for a Strategic Intervention from 2015 to 2020’ which points to the lack of demand for medium to long-term emission reductions from REDD+ in the period between 2015 and 2020 (the ‘interim’ period). The focus of the roundtable was to seek feedback from stakeholders in Indonesia on the findings of the report.
Welcoming participants, Satya Tripathi, Director of the UNORCID, emphasized the catalytic role that REDD+ can play in forest governance reform. Mr Tripathi added that the demand challenges currently faced by REDD+ and how they are addressed by the IFF project “demonstrate that we can emphasise different priorities and shift revenue streams to a different set of incentives”, easing the path for “a more holistic and sustainable development paradigm to emerge”.
Following on from this, in an energetic keynote address that set the tone for the day, Pavan Sukhdev, UNEP Goodwill Ambassador, insisted on the need for a renewed focus on the rights and responsibilities of corporations and the central role carbon disclosure can play in creating public awareness. This could potentially stimulate action from the private sector and in turn, demand for REDD+ emission reductions. Mr Sukhdev said, “Corporations should have no right to emit unless they take the responsibility to mitigate”.

Total potential demand for REDD+ emissions reductions is currently much lower than the total projected supply between 2015 and 2020. The report estimates that currently the total potential demand in the interim period is 253 MtCO2. Meanwhile, potential supply of REDD+ emission reductions is 3 – 10 times greater than current demand – based on an assumption that only 25% of these will be paid for through international REDD+ payment mechanisms. To bridge the gap, the Interim Forest Finance project asserts that a “strategic intervention by donor and forest country governments and multinational institutions” is required. GCP’s Executive Director, Andrew Mitchell, noted with humour that a “little bit of love” was needed between private sector financiers, forest-countries, and donor governments.

He called for a “coordinated approach” between supply and demand, possibly in the form of a public-private partnership on a grand scale to provide solid incentives and price signals. FFI’s Jeni Pareira elaborated further on this, highlighting the success of the Global Alliance for Vaccination and Immunisation (GAVI), which makes long-term financial commitments to increase the immunisation of children in its partner countries, as a demonstration of an international partnership successfully scaling up demand.

From the Indonesian government’s perspective, Mr Agus Sari, Head of the Planning and Financing Unit of the Special Team of the REDD+ Agency and Co-Chair of the Work Programme on REDD+ Financing at the United Nations Framework Convention on Climate Change (UNFCCC) presented the structure and role of Indonesia’s REDD+ funding instrument ‘FREDDI’. This ‘fund of funds’ will help to mitigate investment risk in REDD+ projects by aggregating credits into portfolios. He underlined that while the $1 billion from the Norway Letter of Intent to Indonesia was extremely generous and much welcomed, Indonesia was in need of further finance, both public and private, before 2020 for full operationalisation of REDD+ in Indonesia.

Beyond the financing infrastructure, Dr Suzanty Sitorus, Secretary of the Financing Working Unit at the National Council on Climate Change (DNPI) advocated for diversifying sources of funding according to various needs. She stressed the necessity of robust and legally binding emission reductions commitments by developed countries before and beyond 2020 in order to ensure sufficient demand. Simultaneously, emerging economies like Indonesia should not exclusively rely on resources from international entities – predictable domestic financing can be the backbone to a REDD+ mechanism that promotes the forest as a source of growth, wealth and emission reductions.

To streamline delivery and administration, Dr Nur Masripatin, Director of the Centre for Standardization and Environment at the Ministry of Forestry, emphasised ongoing efforts to build capacity at all levels of government, especially at sub-national levels. Indonesia is at an advanced stage with REDD+ readiness, however Indonesia REDD+ infrastructures need improving before full implementation can take place, she noted.

Dr Irfa Ampri, Head of the Centre for Climate Change Financing and Multilateral Policy at the Ministry of Finance outlined the ministry’s “last assessor” role in the fiscal policy related to REDD+, and the potential role fiscal policy strategies could play in anticipating the demand issue in the context of REDD+.

Fruitful discussions followed, addressing the potential challenges and opportunities linked to a strategic intervention to stimulate demand. Exchanges delved into various possible arrangements such as public-private partnerships, advance market commitments, and forest bonds. Another discussion point was the importance of deploying Interim Forest Finance leveraging existing institutions in Indonesia.

Concluding the event, Mr Andrew Mitchell and FAO Assistant Director-General for Forestry Dr Eduardo Rojas-Briales emphasised the uncertainty around results of the upcoming climate conferences, and called in consequence for ‘no regrets’ solutions.

Mr Mitchell evoked the “bottom-up world” that emerged from Copenhagen in 2009 and that rather than a global integrated carbon market, it was more likely that this configuration could enable a progressive integration of regional carbon markets; an outcome which he contended could be at least as satisfactory as a global multilateral architecture created ex nihilo. He also proposed that a High-Level Intergovernmental Working Group to scale-up demand for REDD+ emission reductions and maintain momentum behind REDD+ before 2020.

However, conclusive steps need to be taken soon to consolidate finance as a “critical link in the chain” in delivering REDD+, said Dr Rojas-Briales – a chain that goes from citizens protecting forests to the intergovernmental negotiations on climate change.

Concluding remarks by HE Mr Heru Prasetyo, Head of Indonesia’s REDD+ Agency, provided insights into the complexity of the REDD+ context, and about the various building blocks where making headway is required. Mr Prasetyo closed the day’s proceedings on an optimistic note, emphasizing the natural time required for market designs and investments to mature. He did however note that resources are necessary immediately, stating: “Give us the means, and we will do the work. Give us the means to transform calculations into something tangible.”

Mr Darmawan Liswanto, Indonesia FFI Programme Director, thanked participants for attending the encouraging proceedings, and renewed the day’s call for “corporations to leave a good legacy for the next generation”.