International financial support despite Indonesia’s failures

A father and son in an oil palm plantation in Boven Digoel regency.

As Part 1 of this report notes, although West Papua’s deforestation rate within oil palm concessions has fallen in recent years, this fall has been to a large extent market-driven, thanks to pressure from companies that buy palm oil and civil society organisations, and local Indigenous opposition to plantations. Meanwhile, as this report’s analysis shows, the key national government policies aimed at reducing deforestation have not been effectively implemented in practice. New concessions covering forest areas have been issued, and old and flawed permits have been allowed to remain valid. The government has allowed the same failures of governance that have led to widespread forest destruction in the past to continue without reform, including conditions conducive to systemic corruption, poor transparency, an ambiguous regulatory environment and lack of recognition of Indigenous sovereignty.

© Albertus Vembrianto

Based on this record, the Indonesian Government deserves no reward. Nevertheless, in 2020 Indonesia was awarded significant international funds for its supposed achievements in reducing deforestation. Both the Norwegian Government and the Green Climate Fund (GCF, an organisation set up by the UN Framework Convention on Climate Change [UNFCCC]) have released results-based payments to Indonesia in 2020 under their ‘Reducing Emissions from Deforestation and Forest Degradation – Plus’ (REDD+) programmes.

The GCF payment covered the years 2014–2016, based on an averaged estimated reduction in emissions from deforestation, forest degradation and peat loss compared with the average in the reference period 1993–2012. In fact the calculated emissions for both 2015 and 2016 were higher than the reference period average, but because 2014’s emissions were considerably lower531 the GCF accepted that there had been a net reduction in the three-year period taken as a whole, and paid Indonesia US$103.8 million.532

The Norwegian payment was for estimated reduced emissions from deforestation in 2017, as compared with a shorter and more recent reference period (2006–2016). Once again, the emissions reduction was not spectacular – a reduction of 17.3 million tonnes CO2 equivalent, or just 6.2% less than the average over the reference period.533 Norway’s payment to Indonesia for this reduction was US$56 million534 and was the first payment made to follow up Norway’s 2010 promise to donate up to US$1 billion to Indonesia if its emissions from deforestation and forest degradation should fall.535 Announcing the payment in June 2020, Norway’s Minister of Climate and Environment, Sveinung Rotevatn, said: ‘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.’536

Both payments represent a mark of donor countries’ trust in Indonesia’s efforts. The GCF is funded by governments around the world and the United Nations Development Programme (UNDP) applied for the grant on Indonesia’s behalf.537

The GCF assumed that the emissions reduction that it was rewarding was the result of the implementation of Indonesia’s national REDD+ strategy,538 although in its write-up it made no effort to verify a causal relationship. To check compliance with its social and environmental standards, the UNDP commissioned an Environmental and Social Analysis of the REDD+ strategy,539 focusing on two of its key elements, the country’s Forest Moratorium and its Social Forestry programme (not addressed in this report). This analysis makes the direct claim that the moratorium policy was at least partly responsible for a reduction in emissions, without presenting any evidence for this.540 Indeed, although this analysis takes the Forest Moratorium as one of its main focuses, it fails to provide any assessment or criticism of the moratorium’s implementation. The changes to the moratorium map to excise concession areas, and the risk that corruption may have been involved, are not addressed, even though this issue raises legitimate concerns about how this or any other Indonesian Government policy bearing on land use can be relied on not to breach the environmental and social safeguards required by the UNDP (or those of the GCF or UNFCCC).

531 The average for 1993–2012 in the Forest Reference Emission Level was calculated as 569 million tonnes CO2 equivalent. The figures for the years 2014, 2015 and 2016 were 369, 574 and 618 million tonnes CO2 equivalent, respectively. Source: Green Climate Fund (2020). 532 Yong C (2020) 533 Prihatno J et al (2020) 534 NICFI (2020) 535 Government of the Kingdom of Norway & Government of the Republic of Indonesia (2010) 536 NICFI (2020) 537 Green Climate Fund (2020) 538 Indonesian REDD+ Task Force (2012) 539 UNDP (2019) 540 ‘Nevertheless, the Moratorium, together with other national efforts (ie in some places the Moratorium increased prohibitions over areas already legally protected as conservation areas), Indonesia reported the initiative achieved a reduction of emissions during the period of 2013–2017 emission reductions [sic] of 48,978,427 t CO2 eq annually (average of annual emissions) and 244,892,137 t CO2 eq as the total for 2013–2017.’ Source: UNDP (2019) p5.

Even leaving aside the question of whether the reduction in emissions from deforestation is attributable to the country's REDD+ strategy, multiple criticisms have been made of the basis on which the GCF’s results-based payment to Indonesia was calculated. Methodological flaws that have been pointed out include a reference emission level (baseline) which is inflated by including high deforestation rates from many years ago,541 and a failure to account adequately for the huge emissions caused by forest fires.542 The resultant overly generous methodology only serves to compound the counterproductive message conveyed by awarding funds without evidence that the emissions reductions being rewarded can be attributed to government action. By giving ‘money for nothing’ in this way, foreign donors are squandering a potential incentive for Indonesia to rise to the challenge of reforming the structural weaknesses in its forest governance.

The Indonesian government is optimistic that the country can attract a lot more REDD money. In anticipation of a forthcoming presidential regulation on carbon trading, Coordinating Minister for Economic Affairs Luhut Pandjaitan has spoken of the potential income that could be earned by conserving and restoring the nation’s forests, mangroves, peatlands, seagrass meadows and coral reefs.543

While it is doubtless the case that international donors and partners have a potential role in supporting Indonesia in embarking on a genuine transition to a more ecologically sustainable development pathway, it is vital that they establish clear criteria to ensure that they are contributing to meaningful change. If they do not do so, then in view of the severity of the climate and biodiversity crisis they will be open to the charge of greenwashing government failure. It is not enough for policies intended to reduce emissions from deforestation to exist on paper: they must be placed in a coherent legal framework to ensure that they are enforceable and do not contain loopholes, and they must be seen to be implemented effectively. They must also be commensurate with meeting the global climate goal of keeping warming to within 1.5 °C. At the same time the basic rights of Indigenous peoples, including the right to their ancestral lands, must be protected.

By these standards there should be extreme concern at some of the Indonesian Government’s recent conduct, such as the failure to use the Oil Palm Moratorium to cancel old or problematic permits and protect the remaining forest, or the plan to create vast new food estates in areas of southern Papua with high conservation value.

541 REDD-Monitor (2020) 542 Lang C (2020) 543 Meilanova DR (2020)