Indonesia Climate Change Trust Fund pools domestic and international resources to address mitigation and adaptation projects
This article is based on a presentation delivered by Ms. Syamsidar Thamrin, Head of ICCTF Secretariat and Deputy Director for Weather and Climate, Indonesia National Development Planning Ministry (BAPPENAS), at the Asia LEDS Partnership “Workshop on Accessing Finance for LEDS and Green Growth”, held in Hanoi, Vietnam on March 12-13, 2014. Download her full presentation here.
Indonesia Climate Change Trust Fund
Established in 2009, the Indonesia Climate Change Trust Fund (ICCTF) is aimed at helping to achieve Indonesia’s goal of moving towards a low-carbon economy and climate resilience. ICCTF functions in a strategic role, supporting implementation of the National (RAN) and Provincial Action Plans for Reducing GHG Emissions (RAD-GRK) and National Action Plan on Climate Change Adaptation (RAN-API), and provide a medium to streamline climate finance flows from diverse sources to improve effectiveness and delivery. ICCTF will also serve as the Nationally Appropriate Mitigation Actions (NAMA) support facility for Indonesia.
ICCTF blends climate finance received from international development cooperation, climate change funds, and private sector, with domestic public resources in order to support mainstreaming of climate change issues into national, provincial, and local development planning, and implementation of greenhouse gas mitigation and adaptation initiatives. The fund operates across three priority windows (1) land based mitigation (2) energy, and (3) adaptation and resilience. ICCTF is open to receiving proposals from government, communities, private sector, and other stakeholders. Priority is given to “triggering initiatives” such as strategic and innovative pilot projects with high replication potential.
ICCTF also seeks to improve coordination of national climate change initiatives, build institutional capacity, and build partnerships between government, civil society, and private sector.
In its initial phase as an Innovation Fund (2010-2013), over USD 11.2 million was raised to finance six strategic and innovative pilot projects in all three priority windows. Examples of mitigation projects supported by the fund and implemented by the Ministries of Agriculture, Forestry, and Health include sustainable peat management for enhancing carbon sequestration, community-based production of biomass energy, and Assessment, Mapping, and Community Based Adaptation on Dengue Hemorrhagic Fever and Malaria Diseases. These pilot projects have resulted in significant improvements in addressing climate change mitigation and adaptation in Indonesia.
In 2013, ICCTF received formal and legal status as a National Trust Fund through a ministerial regulation. On 23 March 2014 ICCTF Board of Trustees was appointed by way of ministerial decree from Bappenas and in June 2014 Bank Mandiri was approved as the National Fund Manager. A web-based Enterprise Resource Planning (ERP) platform was established in August 2013 to facilitate financial management of projects.
As of March 2014, ICCTF was operating under the UNDP supported Preparatory Arrangements for ICCTF (PREP-ICCTF) project and several lessons have been learned during this phase, including:
- Ensuring regular and well-communicated call for proposals is critical to ease selection of quality projects and managing resource allocation.
- Fund applicants must be able to meet fiduciary standards related to financial management, and demonstrate transparent and efficient spending.
- Integrating state budget and human resources into the work plan of an implementing ministry or institution is important for ensuring sustainability and scale-up.
- ICCTF must continue to build credibility by maintaining a clear institutional structure, establishing a track record of delivering successful development programs, following robust financial management and monitoring and reporting procedures, and investing in institutional development.
In the future, ICCTF is expected complete its transition to a self-managed National Trust Fund. Financial sustainability has been identified as a major challenge and a resource mobilization strategy drafted by the ICCTF Secretariat is expected to be approved in 2014 by the Steering Committee. ICCTF also aims to apply to become a National Funding Entity for direct access (such as for the Green Climate Fund), achieve compliance with fiduciary standards and direct access requirements of international climate funds, and support implementation of the first NAMA project in Indonesia.
Additional milestones and targets through 2020 include: becoming a fully functional National Funding Entity that effectively channels international climate funds, improving engagement with civil society through a Small Grants Program, increasing involvement of a wider group of beneficiaries in project implementation, building up private co-financing of projects such as through public private partnerships, and expanding geographic scope to the Asia region.