BADAN KEBIJAKAN FISKAL

KEMENTERIAN KEUANGAN RI

SUSTAINABLE DEVELOPMENT FINANCING

FOR FULFILLING CLIMATE CHANGE
MITIGATION AND ADAPTATION COMMITMENT

Presented by:
Dr Parjiono
Director of Centre for Climate Change Financing and Multilateral Policy
Fiscal Policy Agency – Ministry of Finance
Jakarta, 20 December 2017
OUTLINE
DEVELOPMENT CHALLENGES AND OPPORTUNITIES

DEVELOPMENT AND CLIMATE ROADMAP

CLIMATE COMMITMENTS AND FOLLOW UPS

BUDGET TAGGING AND CLIMATE FINANCE

FISCAL POLICY STRATEGY AND DIRECTION

ALIGNING PRO GROWTH POLICIES

BADAN KEBIJAKAN FISKAL - KEMENTERIAN KEUANGAN RI

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MITIGATION CHALLENGES AND OPPORTUNITIES
Sector Challenges
Transport Private vehicles waste large amounts of fuel and
ation cause congestion in cities, leading to economic
losses to businesses.
Forestry Indonesia’s tropical rainforests are the third
largest in the world, but revenues from forestry
licensing are only $300 million annually; some $4
billion is lost every year through illegal logging.
Industry It is estimated that around 57 per cent of
deforestation in Indonesia in the first decade of
the millennium was attributable to palm oil.
Energy Coal accounts for over half of Indonesia’s
electricity’s energy source.
Waste Indonesia produces 64 million tons of waste
annually and almost 70% ends up in landfills. A
lot of the waste doesn’t even get that far and
ends up in the streets, nature and the ocean.
Opportunities
Green urban transport solutions such as
mass rapid transport can transform
expanding cities into sustainable high-
growth centers.
Better governance is needed to ensure
that forestry resources are well
managed.
By implementing ISPO and RSPO and
train smallholder farmers
Indonesia has 40% of the world’s
potential geothermal resources, which, if
tapped, could help double the share of
renewable energy for electricity
generation to 23% in 10 years.
Waste-to-Energy can contribute
immensely in tackling the complex waste
issues, as well as play an important part
in supporting the government’s target of
35 000 MW.
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ADAPTATION CHALLENGES AND OPPORTUNITIES
Sector Challenges
Water Indonesia’s growth has contributed to
environmental degradation, ranging from
flooding in urban areas, forest fires, to
overfishing and coastal ecosystem
deterioration.
Agriculture Indonesia is still a net importer of cereals,
pulses and sugar and is facing the challenge of
hunger and malnutrition with nearly 38% of
its children suffering from under weight and
malnutrition.
Maritime Indonesia has over 2.6 million fishermen, but
and unreported and illegal fishing leads to $20
Fisheries billion worth of lost revenue.
Health Over 24 million families in Indonesia use
wood for cooking, which contributes to
165,000 premature deaths each year from
indoor air pollution.
Opportunities
The country must shift to a green growth
model to ensure its development remains
sustainable.
Indonesia should use climate smart
farming system to produce sufficient food
for the country to meet the food and
nutritional security while not degrading
the environment and contributing to the
climate change.
Well-managed maritime resources,
however, can ensure food security,
promote sustainable tourism, and build
resilience.
Investments in clean technology such as
cook stoves that use cleaner energy will
help save lives and prevent families from
losing hard-earned savings to health-care
spending.
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 DEVELOPMENT AND CLIMATE ROADMAP FOR INDONESIA

Mitigation Strategy 1. Food Security Adaptation Strategy

1. Transportation 2. Natural and Built 1. Water
2. Forestry Environmental 2. Agriculture
3. Industry Degradation 3. Maritime and
4. Energy 3. Cross-Sectoral with Fisheries
5. Waste Forestry 4. Health

6 Ministries ICCSR, 2010: 16 Ministries/ Agencies

RAN GRK, 2011 RAN API, 2014

Ministry Environment & Forestry, Ministry
Transportation, Ministry of Energy &
Mineral Resources , Ministry of
Agriculture, Ministry Public Work &
Housing, Ministry of Industry
Ministry of Environment & Forestry, Ministry of Transportation, Ministry of Energy & Mineral
Resources, Ministry of Agriculture, Ministry of Public Work & Housing, Ministry of Marine
Affairs & Fisheries , Meteorology, Climatology & Geophysics Agency, Technology Research and
Implementation Agency, Indonesia Institute of Sciences, Ministry of Internal Affairs, National
Board for Disaster Counter, Statistics Indonesia, Ministry of Agrarian & Spatial Planning ,
Ministry of Law and Human Rights, Indonesian Geospatial Information Agency, Ministry of
Health

• In 2009, at the G20 Pittsburgh summit, Indonesia pledged to achieve a 26 percent reduction in
emissions in 5 sectors against the business-as-usual scenario in 2020, or 41 percent with
international support.
• In 2010 Bappenas compiled the ICCSR (Indonesia Climate Change Sectoral Roadmap) which
became the basis for the preparation of the National Action Plan for Greenhouse Gas Emission
Reduction (RAN GRK) and the National Action Plan for Climate Change Adaptation (RAN API).
• In 2011, Presidential Regulation 61/2011 on RAN-GRK was issued.
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COMMITMENT TO CLIMATE ADAPTATION: NDC

Climate Smart Farming Water Resilience Energy Resilience Forest Preservation

Maritime Resilience Healthcare Self Reliance Public Service Reliability Infrastructure Reliability

Follow-ups:
• Strengthening local capacity
• Knowledge management
• Convergent policy between climate change adaptation and disaster
risk reduction
• Application of adaptive technology
Urban System Reliability

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BADAN KEBIJAKAN FISKAL - KEMENTERIAN KEUANGAN RI
COMMITMENT TO CLIMATE ADAPTATION: RAN-API
As per the RAN API (National Action Plans for Climate Adaptation), there are 5 (five) areas of
resilience to be considered in the planning and development process.

Economic
Livelihood Special
resilience: Ecosystem Bearing
System Region
food and Resilience Capacity
Resilience Resilience
energy

SUSTAINABLE DEVELOPMENT &

ADAPTIVE TO CHANGES

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 CLIMATE BUDGET TAGGING - MILESTONES
Climate Mitigation Budget Tagging Sub-national Climate Status of
Base Year GRK • SDF Program on ADIK System Budget tagging GRK emissions
emissions MFF Study Climate Mitigation and
• RAN-API
PMK 143/2015 Adaptation Budget Tagging on Budget tagging
Perpres 61/2011 LESS Study KRISNA System Implementation
Climate Budget Tagging
RAN-GRK
2020
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Climate budget tagging process flow within planning and budgeting cycle
Climate Budget,
Emission Ministry & Ministry/Agency Worlk Plan and Emissions
Emissions Status,
Reduction & Agency Work Work Plan & Budget (RKA K/L) Reduction
and Resilience
Resilience Target Plan (RENJA K/L) Budget (RKA K/L) Implementation Indication
Index

Ministry/Agency Ministry of Planning Ministry of Finance Ministry/Agency Ministry of Planning, Ministry of

& Ministry/Agency & Ministry/Agency Ministry of Environment Environment and
and Forestry Forestry & Ministry of
& Ministry/Agency Finance

Supporting the emission reduction policy within RAN-GRK, the Ministry of Finance has done the following:
 A study on Mitigation Fiscal Framework / MFF (2012) to analyze the effectiveness of public finances used for
mitigation actions in the forestry, peatland, energy and transportation sectors.
 A study of Low Emission Budget Tagging & Scoring System / LESS (2013) to identify total budget allocations
and budget realizations used for mitigation activities, as well as to determine the amount of budget
required to reduce a ton of CO2e emissions.
 As a follow-up to the recommendations of the MFF and LESS studies, the Sustainable Development Finance
/ SDF (2014) program was introduced to strengthen the government's capacity to manage climate
budgets and to develop sustainable fiscal instruments for financing climate change related activities.

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CLIMATE BUDGET TAGGING – CURRENT RESULTS
State Budget supports 6 ministries (based on MOF ADIK data),
• 2016 Revised State Budget for 6 ministries amounting IDR72,285T related to climate mitigation
• 2017 State Budget amounting IDR77,654T supports climate mitigation.

Alokasi Anggaran (miliar rupiah) APBNP- APBN-

Ministry 2016 2017
APBNP Output Output
2016
APBN 2017 Ministry of Environment and
71 19
Forestry

Ministry of Agriculture 21 27

Kementan KLHK ESDM Kemenperin Kemenhub KemenPUPR Ministry of Energy and

APBNP 2016 4.266 1.620 2.174 54 21.050 43.235
25 29
Mineral Resources
APBN 2017 4.838 1.459 3.520 45 32.076 48.054

Ministry of Transportation 100 39

Total 2016 27,630 5,895 7,741 2,980 42,902 97,031
Revised State
Budget Ministry of Industry 12 9
2016 Rev 4,266 1,620 1,653 11 21,050 30,714
State Budget Kementerian PUPR 25 13
Component
Level
Percentage 15 27 28 2 49 39 TOTAL 254 123

BADAN KEBIJAKAN FISKAL - KEMENTERIAN KEUANGAN RI

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Landscape of Public Climate Finance in Indonesia, CPI, July, 2014.
The study concluded that 67% of climate finance in Indonesia in 2011 was originated from the state budget, while the remainders
were from international donor. Private sectors have yet to contribute to climate actions in Indonesia.

BADAN KEBIJAKAN FISKAL - KEMENTERIAN KEUANGAN RI

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 MULTILATERAL CLIMATE FINANCE

Multilateral Climate Finance

(as of October 2017)
($ billion)
12,00

10,00

8,00

6,00

4,00

2,00

0,00

Source: www.climatefundsupdate.org, accessed in November 2017

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MID-TERM FISCAL POLICY STRATEGY AND DIRECTION

Inclusive economic growth and consolidation of fiscal sustainability to achieve prosperity:

OBJECTIVE

Poverty Reduction, Unemployment and Inequality

Human Dimensions Priority Sector Equity & Territory

Dimensions Dimension
DIRECTION

FORTIFY FISCAL MANAGEMENT TO SUPPORT SUSTAINABLE AND EQUITABLE ECONOMIC

GROWTH IN REALIZING WELFARE:
STRENGTHENING ALLOCATION, DISTRIBUTION, AND STABILIZATION FUNCTION

Improving Quality Spending Maintaining Resilience and

(big push policy)
1. Infrastructure Improvement;
2. Effectiveness of social
STRATEGY
Expanding Fiscal Capacity
Risk Control
1.Improvement of tax ratio & 1.Controlling deficits and debt
asset management; ratios, as well as gradually

protection programs & 2.Efficiency of non-priority reducing them

priorities; expenditure; 2.The primary balance becoming
3. Improving the quality of fiscal 3.Efficiency & effectiveness of positive;
decentralization subsidies and social 3.Strengthening fiscal resilience
protections; (fiscal buffer, flexibility and use
4.Strengthening bureaucratic of SAL budget surplus to
reforms. anticipate uncertainty)

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BADAN KEBIJAKAN FISKAL - KEMENTERIAN KEUANGAN RI
2018 FISCAL POLICY STRATEGY AND DIRECTION
2018 Government Work Plan (RKP) Theme
Accelerate Investment and Infrastructure for Growth and Equity

2018 Fiscal Policy 2018

Strengthen fiscal management to accelerate equitable economic growth
Productive Efficient Resilient Controlled Risk

Revenue Spending Financing

Optimalization Strengthening spending quality
1.Tax Ratio; • Increased quality of capital expenditure;
2.Natural Resources and • Non-priority expenditure efficiency (goods
Assets Management spending and subsidies on target);
• Synergy between relevant programs (social
protection programs);
• Maintain and Refocusing priority budgets
(Infrastructure, Education, Health and Transfer
to Local and Rural Funds).
Sustainability and Financing
Efficiency
• Deficit and debt ratios are under
control and should be reduced in
the medium term;
• The primary balance is positive;
• Develop creative financing.

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ALIGNING PRO GROWTH POLICIES – THINKING PROCESS

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A GREEN ALIGNMENT SAMPLE CASE

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ANOTHER GREEN ALIGNMENT SAMPLE CASE

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BADAN KEBIJAKAN FISKAL
KEMENTERIAN KEUANGAN RI

Terima Kasih – Merci – Thank You