Hans Nicholas Jong, Jakarta – A U.N. fund has approved a $103.8 million payment to Indonesia for preventing deforestation-based carbon emissions – its biggest payout yet, and one that critics say can't be justified.
The Green Climate Fund (GCF) was set up in 2010 to distribute money, largely from developed countries, to developing ones to keep their forests standing. Last November Indonesia submitted a proposal claiming it had prevented deforestation that could have emitted 20.3 million tons of carbon dioxide equivalent (CO2e) from 2014-2016. On Aug. 21, the GCF approved the proposal during an online meeting, making Indonesia the biggest recipient of the fund to date, and the first one outside Latin America.
But the proposal drew expressions of concern from several GCF board members, specifically over the way Indonesia had calculated its prevented emissions. Board member Hans Olav Ibrekk, who is also the energy and climate policy director at Norway's Ministry of Foreign Affairs, said Indonesia's proposal "has some characteristics that in our view affect environmental integrity of the result."
For one, Ibrekk said the reference period used by Indonesia in its proposal was too long.
To measure its performance in reducing emissions, Indonesia used average forest-related emissions over a 20-year period, 1993 to 2012, as its baseline, or Forest Reference Emissions Level (FREL). It then measured its average emissions from 2014 to 2016 against this baseline.
In its technical guidance, however, the GCF recommends a baseline of 10 to 15 years, although it allows a maximum of 20 years.
"We note that the [GCF] scorecard permits this, but would highlight that the shorter reference period than 20 years would provide higher environmental integrity," Ibrekk said during the GCF's online meeting.
He cited Indonesia's use of 10-year baselines in similar programs that the country participates in as part of efforts to reduce emissions from deforestation and forest degradation, or REDD+. These include the Indonesia-Norway bilateral partnership, and the World Bank's Forest Carbon Partnership Facility (FCPF) program.
Other observers have also seized on this discrepancy to denounce how REDD+ programs can be gamed by governments to maximize funding rather than reflect true levels of avoided emissions.
In an open letter to GCF board members signed by 85 civil society groups, including 15 from Indonesia, activists say baselines determined from periods of peak deforestation mean that any claimed reductions now "must thus be regarded as paper reductions that bear little resemblance to the actual emissions that were avoided."
"By using inflated reference levels, a country can calculate emission reductions from avoided deforestation even if deforestation rates are rising," they say.
Indonesia has shown actual progress in reducing deforestation, so the country should use a more recent baseline period, said Anggalia Putri Permatasari, a researcher at the environmental NGO Madani. But for the government this would yield a smaller volume of reduced emissions, and thus a smaller payout from the GCF, she said.
"Will Indonesia become more ambitious [in reducing deforestation] if the baseline period is shortened? Not really," Anggalia told Mongabay.
GCF board member Tobias Von Platen-Hallermund, from Denmark, acknowledged that Indonesia has experienced consistent deforestation in recent years and that it's therefore best to focus the funding on "countries that have been successfully keeping deforestation rates low during the [GCF's] reporting period to claim payments," which runs from 2014 to 2018.
Double counting and Indigenous rights
Ibrekk also raised concerns over the possibility the Indonesian government had double counted project-level reductions under other REDD+ initiatives and claimed them in its proposal to the GCF.
Fellow GCF board member Paola Pettinari, from Italy's Ministry of Economy and Finance, said there's a need to coordinate strategies and work with other actors to avoid double counting of emission reductions, given that Indonesia is involved in multiple REDD+ financing initiatives, both multilateral and bilateral. She called the risk of double counting a "very serious issue."
Another concern raised during the GCF's meeting is the inadequate protection of Indigenous peoples, a required safeguard in REDD+.
Erika Lennon, a senior attorney at the Center for International Environmental Law (CIEL) and an observer to the GCF, said Indigenous peoples in Indonesia still face an uphill battle in getting their rights respected and recognized.
"Respecting the rights of Indigenous peoples is still a major challenge as land use planning, forestry licensing and agricultural policies do not respect or acknowledge that community's rights," she said during the GCF meeting.
To provide better protection for Indigenous communities' land rights, the Indonesian government has run a program called social forestry in the past few years, aiming to grant access to 12.7 million hectares (31.4 million acres) of land to communities across the country.
But Lennon noted that the program only allows communities to access forest resources and doesn't give them the right to ownership of the land, forest and resources.
"They could only use the forests for 25 years and then return the land back to the state," she said. "This scheme does not enable the Indigenous peoples to claim their rightful ownership over the land and forest."
Under the social forestry program, Indigenous groups can submit a request to the Ministry of Environment and Forestry to reclaim their ancestral forests from state control, but it's a costly process that can take years as they first need to gain formal recognition of their Indigenous status through a local bylaw. As a result, only about 72,000 hectares (178,000 acres) of customary forests have been recognized by the Ministry of Environment and Forestry to date, with recognition for another 915,000 hectares (2.26 million acres) still pending.
That figure is still a far cry from the total area of customary forests where Indigenous groups live, estimated by the NGO-run Ancestral Domain Registration Agency (BRWA) at about 11.1 million hectares (27.4 million acres) – an area 11 times bigger than what the environment ministry's map identifies.
Deforestation despite a moratorium
Besides the lack of Indigenous rights protection, Lennon also criticized Indonesia's forestry moratorium policy, saying it's not effective in preventing deforestation. The moratorium, in place since 2011, bans the issuance of new permits for commercial exploitation of primary and peat forests, in a bid to limit the expansion of oil palm, pulpwood and logging concessions into natural forest areas.
The government says the policy has proven effective in curtailing deforestation, but environmental activists call these claims mere "propaganda," citing evidence to the contrary. An analysis of satellite imagery by Greenpeace shows that deforestation rates in areas protected by the moratorium actually increased after 2011.
Another study, published in 2015 in the Proceedings of the National Academy of Sciences, also looked at the effectiveness of the moratorium in reducing deforestation and the resultant emissions. It found that if the same moratorium been imposed a decade earlier, from 2000 to 2010, it would have resulted in a less than 3% reduction in deforestation and less than 7% reduction in emissions from what actually occurred.
Activists attribute the moratorium's lack of effectiveness on loopholes inherent in the system that allow the "leakage" of ostensibly protected areas into non-protected categories. Notably, the ban on new permits doesn't extend to areas categorized as secondary forest, defined under Indonesian law as those that have previously been logged to any extent. As a result, some parties have deliberately cleared areas of primary forest within moratorium zones for the express purpose of degrading them. Once that happens, these areas are recognized as secondary forest, and thus fall out of the scope of the moratorium.
Activists have long called on the government to include secondary forests in the moratorium. Failing to do so will leave large swaths of forest unprotected from industrial expansion, they say. The government has not heeded the calls.
A new study by researchers at the University of Sheffield's Grantham Centre for Sustainable Futures and the National University of Singapore found that 83% of Indonesia's rainforests, mangroves and peatlands most vulnerable to being cleared for palm oil production are completely unprotected by the moratorium.
GCF board member Pettinary said there's a need to strengthen the moratorium to prevent leakage, adding that "this is a typical and very serious problem regarding REDD+ financing." She said this need wasn't fully addressed in Indonesia's REDD+ proposal to the GCF.
The concerns over deforestation in Indonesia come as the country experiences an increase in the rate of forest loss this year, linked to measures aimed at slowing the spread of the COVID-19 pandemic. The rate of deforestation was up 50% in the first 20 weeks of this year compared to the same period in 2019, according to data from the Global Land Analysis and Discovery (GLAD) laboratory at the University of Maryland, which operates a global warning system for forest loss, and analyzed by Greenpeace.
Analysis of the same data by WWF Germany found that in March alone, forest clearance in Indonesia was up 130% compared to the three-year average for March 2017 to 2019, with an estimated 130,000 hectares razed – the greatest recorded loss of any country that month.
Activists have warned of an even greater rate of deforestation as the government looks to jump-start the economy out of the current pandemic-induced slump. In their open letter to the GCF, the activists highlighted the Indonesian government's deregulation agenda, in the pipeline since before the pandemic. This includes the loosening of environmental protections laws in the amended mining law, which was passed by parliament in May 2020.
Key changes in that law lift size restrictions for mining concessions and allow the automatic extension of permits. Activists say this change will benefit especially coal mining companies whose permits would otherwise expire soon.
"How can the GCF Board award US$100 million of REDD+ funding to a government that actively promotes deforestation on such a massive scale?" the letter says.
Lennon said the GCF should not have approved the payout to Indonesia until all the concerns had been fully addressed.
"We feel that the proposal isn't ready for approval at B26 [the GCF meeting] and in its current form, it does not reflect the real needs of local communities and indigenous people, nor addresses the real drivers of deforestation and forest degradation in Indonesia," she said.
Indonesia's environment minister, Siti Nurbaya Bakar, acknowledged the concerns raised in the NGOs' letter but said Indonesia's proposal and the GCF approval of the payout were both carried out in a transparent manner. The United Nations Development Programme, which is supporting the REDD+ program in Indonesia, also said Indonesia's proposal had been evaluated accordingly and passed the GCF's criteria, including the use of an FREL baseline spanning 20 years.
Despite the shortcomings in Indonesia's efforts to combat deforestation and protect Indigenous peoples' land rights, Madani's Anggalia said the approval of Indonesia's REDD+ proposal is ultimately a good thing as long as the money is well spent.
"In REDD+, we do need the money," she said. "If we deprive the Indonesian government of the money, will it make Indonesia better? I don't think so."
The government has estimated it will take $247.2 billion to achieve its voluntary emissions reduction goal of 29% from the business-as-usual scenario by 2030. But it has only been able to allocate about $6 billion a year toward that goal, or less than 4% of the national budget, over the past five years. And as the country faces the threat of recession due to the pandemic, the government has to reduce its climate spending even further this year.
"Until 2020, Indonesia has funded 34% of the total cost" of cutting its emissions, said Sri Mulyani Indrawati, Indonesia's finance minister. "There's a 66% gap in that need. This funding gap is actually [part of the] international commitment of $100 billion every year until 2020."
The GCF itself has raised only about $21 billion since 2014, far short of the $100 billion per year pledged by rich countries. Yet even that target is only a fraction of the amount needed by developing countries to tackle climate change, estimated at $1.5 trillion per year.
"Developed countries have an ecological debt, with the coffers of the GCF not fully filled yet," Anggalia said.
What's important now that the GCF payout has been approved, she said, is for the money to be used wisely and transparently. Based on its proposal, the government plans to use the money for its social forestry program and forest management units, which serve as the first line of defense against deforestation and degradation. But to date, these units have been underfunded, Anggalia said.
"They exist, but there's no budget, that's why they rely on money from companies and NGOs," she said. "That's why they need to be strengthened by giving them a mandate, resources and authority. Their job is to monitor Indigenous peoples, land tenure issues, and permits."
The government should also push for the swift passage of an Indigenous rights bill, which has languished in parliament for years. The bill was supposed to be passed in the wake of a landmark Constitutional Court ruling in 2013 that rescinded state control over Indigenous lands and gave it back to Indonesia's Indigenous peoples. Since then, various laws and regulations have been issued that touch on the issue of indigenous rights to some degree, but the central bill that would tie them all together remains locked in legislative limbo.
A lawmaker on the committee responsible for the bill said they already have the latest draft of the bill but can't technically start deliberating it without a letter from the president. Anggalia said the government needs to step up its game.
"The government hasn't been active in pushing for the Indigenous bill," she said. "It seems like they've left the bill in the hands of lawmakers."
She called the Indigenous rights bill the "missing piece of the puzzle," which could get rid of the Byzantine bureaucracy that currently prevents Indigenous communities from having their land rights recognized by the government.
"Indigenous peoples' presence isn't acknowledged, and so the Indigenous bill is really an enabler," Anggalia said. "What's sad is that the bill is perceived as not having anything to do with climate change commitments and REDD+. That's a misunderstanding because our NDC" – Indonesia's emissions reduction target lodged with the U.N. – "clearly says that land tenure security is an enabler [in reducing emissions], especially in forest areas."
Peat fires not counted yet
Despite the criticism over Indonesia's accounting of its REDD+ emissions reduction, the country could have justifiably claimed a far greater reduction.
That's because the proposal it submitted didn't account for emissions from peatland fires. The annual burning constitutes a significant source of emissions in Indonesia; during the particularly disastrous fire season of 2015, the burning of forests and peatlands in Indonesia emitted more greenhouse gases than Japan emits in a year.
Yet despite being a significant carbon pool, Indonesia doesn't include emissions from peat fires in its FREL, due to the complexity and high uncertainty of the data, including hotspot detection, size of burned area estimation, fire frequency, burned peat depth, and mass of fuel available for combustion.
In its proposal, the government said it's in the process of including emissions from peat fires in its updated FREL, due to be submitted at the end of 2020. It said it was making progress on peatland fire emissions estimates by collating new findings from published studies. It added that advanced remote-sensing technology would also help improve the accuracy of those calculations.
Anggalia said the omission of peat fires from Indonesia's FREL and REDD+ proposals was a lost opportunity in terms of the payout that Indonesia could have claimed.
"The biggest peat fires [in Indonesia] occurred in 1997-1998," she said. "If our baseline includes that, then we'll actually get more money. Regardless of whether it's acceptable or not, we need the money to rehabilitate the environment and for the social forestry program. If that money can help those programs, then why not? But it's true that there can't be foul play" in calculating reduced emissions.
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