This presentation was made by Kunta Nugraha, Indonesia, at the 14th OECD-Asian Senior Budget Officials Meeting held in Bangkok, Thailand, on 13-14 December 2018

1. 1
Government Support for Climate
Change Financing in Indonesia
2018 Annual OECD-Asian Senior Budget Officials Meeting
Bangkok, 13-14 December 2018
MINISTRY OF FINANCE
REPUBLIC OF INDONESIA
Kurnia Chairi, MSc.
Deputi Director of Macroeonomy Analysis, DG Budget

2. 2
2
OUTLINE
Overview of Climate Change Mitigation in Indonesia1
2
3
Budget Tagging of Climate Change
Alternatives of Financing
Future Challenges4

3. 3
Overview of Climate Change
Mitigation in Indonesia
1

4. 4
Climate Change Has Serious Potential Impact To Indonesia
The damage of 2007
floods in Jakarta
was more than $900
million.
(WORLD BANK GROUP, 2018)
7.5 million
Indonesians
facing acute food
shortage in 1998,
caused by severe
drought –
attributed to El Nino.
(WORLD BANK GROUP, 2018)
Those poorest hit the
most by disasters :
11.3% of population
living below the
national income
poverty line.
(GFDRR, 2018)
2020-2050
+1⁰C
2070-2100
+2-3⁰C
Projection of Increased Surface Temperature in
Indonesia
Impact to
3-5% increase of vector borne diseases
and its distributions
Rice : -4,6% Maize : -20% Soy : -65.2%
Sugar : -17.1% Palm Oil : -21.4%
Health Sector
Agricultural Sector
Climate Change ImpactKey Hazard in Indonesia
(ICCSR, 2009)

5. 5
Historical Emission
Emisi GRK
2000 2010 2030
GtonCO2e
29 %
41 %
Target of Reducing Greenhouses Gas :
•26% in 2020 and 29% in 2030 (Unconditional /
own financing)
•41% (conditional / support of international
financing)
Indonesia became a party to theUnited Nation Framework Convention on
Climate Change (UNFCCC) in Rioin 1992,which was ratified in 1994
through Law no.6/1994
At the end of 2009, Indonesia announced its voluntary
commitment to reduce Greenhouse Gas (GHG) emission until 26% from Business as
Usual (BaU) emission by 2020 and further emissions reductions up to 41% are
expected with international support.
Applying green & low carbon development strategy will provide opportunities for
the government to achieve High Income Country status by 2033, by planning and
managing the environmental risks associated with climate change and the losses
and degradation of the country’s natural resources.
In Paris COP-21, Presiden Joko Widodo announced Indonesia’s INDC
with new voluntary commitment to reduce Greenhouse Gas (GHG)
emission to 29% from Business as Usual (BaU) emission by 2030.
RAN-GRK (National Greenhouse Gas Action Plan)
Indonesia Has High Commitment to Mitigating and
Adapting Climate Change Risk

6. 6
Ministry of Finance’s Domain to Support Climate Change
Mitigation Efforts and Financing
Indirect Influences
Technology Policy,
StrategicIndustries
Tech. Transfer
R&D, Trade, dll
Int’l Institutions&
Mechanisms
IFIPolicies, Global Funds,
Carbon Mkts, Debt swaps
Fiscal Policy
Policy Tools Available For Influencing
Climate Change Mitigation / Adaptation
By managing
• Investment climate
• Pricing (fiscal) policies
• Direct spending
• Risk and financial mkts
• Sectoral rules & law
Can influence:
• Incentives
• Investments
• Industry
• Int’l $flows
• Pro Poor Approaches
Financial/Investment
Policies
• Invest Climate (attract
capital)
• Banking Sector
• Non Bank Finance
Inst’s
• Municipal Finance
Rules
Taxes / Subsidies
• Tax/Fees/Charges
• Royalties/Rent Capture
• Subsidies/Tax breaks
Expenditure Policies
• Strategic Budget
Priorities
• Direct Investment
• Public Service
Obligation
• Green Procurement
• Education –Awareness
Direct Regulation
• Enforcement /
Incentives
• Zoning and Land Use
• AMDAL/ Env Audit
• Building / Design
Standards
• Vehicle Emission Stds
IFI : International Financial Institution

7. 7
The main strategy in implementing the commitment to
tackle climate change
Budget
Tagging
Green Bond
Fiscal
Incentives
Encourage
Local Gov’t
Participation
Develop
Specific unit
in managing
climate
change fund
(BLU)
• Tax Allowance, VAT
exemption  encourage
private participation
• Plastic packaging
arrangements are being
prepared as goods subject to
excise (2019 budget)
• Identification (tagging) green
program has started in 2015
• Marking budget for adaptation
aspects starting at 2018
Indonesia is the first green
sukuk publisher (in USD)
issued by the government
(March 2018)
• Managing carbon trading
• Raise funds from loans, grants
etc.
BLU : Public Service Agency
• Targeted program funded by
revenue sharing allocation
fund
• Funding opportunities from
Green climate Fund (GCF)

8. 8
Budget Tagging of Climate Change2
... a tool for the government to track how much we spend on climate change
spending out of the national budget..

9. 9
“Budget Tagging” And Performance-based Budgeting For Sustainable
Development Goals.
7
Scale up
Identifying the budget expenditures on projects that deliver specified climate change benefits

10. 10
Benefit of Budget Tagging
Mapping activities (output) related to climate change issues
Become a data source for preparing periodic reports to the UNFCCC
regarding the implementation of climate control activities in Indonesia
Increase accountability and transparency
Encouraging Ministries / Agencies in preparing planning activities and budgets related to climate
change issues, including increasing the capacity of Ministry/Institution (MI) in managing
budgets effectively and efficiently in the stages of planning, implementing and evaluating
activities.
Assist Government to Develop financing mechanisms / schemes for climate change

11. 11
Result from Recent Budget Tagging (1)
Budget Allocation for mitigation of climate change reach IDR 72,2 trillion in 2018
Minstry of
Industry
Ministry of
Agriculture
Ministry of
Environment
and Forestry
Minstry of
Energy and
Mineral
Resources
Ministry of
Transportation
Ministry of
Public Works
and People's
Housing
Total
2016 Revised Budget 53,8 4.265,5 1.619,7 2.173,7 21.004,3 43.234,8 72.351,8
2017 Revised Budget 40,3 5.381,3 1.132,1 2.844,1 34.233,5 51.950,6 95.581,9
2018 Budget 28,0 442,1 2.198,1 2.597,8 16.586,9 50.387,5 72.240,4
-
20.000,0
40.000,0
60.000,0
80.000,0
100.000,0
120.000,0
BillionRupiah
7,3 37,1 87,4 139,1 231,2 350,9
1.122,7
47.333,7
5 6 5 4 3 4 15
100
0
20
40
60
80
100
120
-
10.000,0
20.000,0
30.000,0
40.000,0
50.000,0
AgencyforGeospatial
Information
Agencyforthe
Assessmentand
Applicationof
Technology
MinistryofFisheries
Affairs
Agencyfor
Meteorology,
Climatology,and
Geophysical
MinistryofAgriculture
MinstryofEnergyand
MineralResources
Ministryof
Environmentand
Forestry
MinistryofPublic
WorksandPeople's
Housing
TotalOutput
BillionRupiah
Budget Allocation
Output
The tagging result for the adaptation budget : more than IDR 40 trillion in 2018

12. 12
Berbasis Lahan Berbasis Energi Pengelolaan Limbah
Minstry of Industry 0,0 28,0 0,0
Ministry of Transportation 0,0 16.587,0 0,0
Ministry of Energy & Mineral Resources 0,0 2.597,8 0,0
Ministry of Public Works & People's
Housing
11.815,4 36.114,8 2.475,3
Ministry of Agriculture 442,1 0,0 1,8
Ministry of Environment and Forestry 1.961,2 0,0 142,8
0,0
10.000,0
20.000,0
30.000,0
40.000,0
50.000,0
60.000,0
BillionRupiah
Based on sector division, it is known that the 2018 Budget for Mitigation are allocated to energy based sector (76%), land-
based sector (20%), and waste management sector (4%)
Indonesia's National Determinant Contribution (NDC) policy placed the land sector as the biggest contributor to the reduction in emissions
of 17%, followed by the energy sector 11%.
Result from Recent Budget Tagging (2)
land-based sector (20%) Energy based sector (76%) Waste mgmnt sector (4%)

13. 13
Alternative of Financing3

14. 14
Sovereign Green Sukuk
• In March 2018, the Government of Indonesia has issued
Green Sukuk worth USD 1.25 Billion, with a 5 year
tenor.
• Obtained a review of Medium Green by CICERO
Norway, and is the first Sovereign Green Sukuk in the
world.
 Based on reviews from CICERO, green projects in sukuk
green publishing get the criteria of dark green and
medium to dark green
• Green Sukuk is one of the initiatives and strategies of
the Indonesian government in developing financing
instruments to support activities and implementation
activities of efforts to control the impact of climate
change.
Innovative Financing Instruments (1)
CICERO : Center for International climate and Enviromental Research - Oslo

15. 15
Innovative Financing Instruments (2)
SDGs Indonesia One
• In supporting efforts to achieve the goals of sustainable
development / Sustainable Development Goals (SDGs), the
Ministry of Finance through PT. Sarana Multi Infrastruktur (PT. SMI)
on October 5, 2018 launched the SDGs Indonesia One. An
integrated funding cooperation platform to support infrastructure
development to reach 15 of the 17 SDGs targets.
• Priority sectors in the Indonesia One SDGs are Health,
Education, Renewable Energy, and Urban Infrastructure
(transportation, water, and waste / waste management) *. (* can be
developed for other sectors)
• Products prepared by Grant, Loan and Equity, Technical
Assistance, Capacity Building, Research to support 93 projects
(Urban Transport, Ports, Special Economic Zones,
Telecommunications, Renewable Energy, Roads, Railways, Health,
Clean Water).

16. 16
Encourage Local Government Participation Through Green
Climate Fund (GCF)
The GCF is a financing mechanism for
the United Nations framework
Convention of Climate Change
(UNFCCC)
Formed to provide financial support to
countries like Indonesia to achieve
their emission reduction targets
As of May 2018, the GCF has 76
projects in the world worth USD 12.6
billion with an estimated equivalent of
1.3 billion tons of CO2 reduced and
increased resilience to 217 million
people
Estimating the potential funding that Indonesia
can obtain from the GCF for climate change
mitigation and adaptation of $ 2.8 billion / year.
Mitigation
• Energy sector: generation and
distribution
• Forestry and other land-based
sectors
• Transportation
• Green, urban, and industrial and
appliances buildings
Adaptation
• Health and food and water security
• Livelihoods of Residents and
Communities / Communities
• Ecosystems and Environmental
Services
• Environmental infrastructure
Financing Area
Local governments have a large role
in meeting country driven
approaches, but knowledge of the
GCF is still limited
Why ?
East Kalimantan province was chosen
as the location of the kick off road
show (end of November 2018)
the other location will be determined
later
Kick Off

17. 17
Future Challenges4

18. 18
Future Challenges
Budget Tagging
Continuing budget marking (Climate
Tagging) Mitigation & Adaptation to
Climate Change with the support of
related Ministries/Institution.
Synergy Central and Region
In mainstreaming climate change
mitigation and adaptation issues in work
programs in the regions.
 This includes the development and
implementation of climate change budget
tagging mechanisms at the local (sub-
national) level.
Encourage Local Gov’t
Develop the parameters related to the
actions
 to control climate and environmental changes
to Transfer Funds to Regional facilities
 such as Incentive Fund for Local Gov’t (DID),
Specific Allocation Fund (DAK) – Physical and
Non-Physical.
Optimizing non-Budget funding
By involving the role of the private sector,
multilateral development banks (MDBs), and
other financing schemes that can support
development programs

19. 19
Thank You
The first commercial wind power plant in indonesia
(Sidrap, South Sulawesi)
Website
www.kemenkeu.go.id
www.anggaran.kemenkeu.go.id