Climate Finance and Forest Conservation
Bimo Dwisatrio
December 19, 2022 – VNUF, Hanoi, Vietnam

Climate change
• As temperatures rise, more
moisture evaporates, which
exacerbates extreme rainfall
and flooding (UN)
• Increased rain and flooding have
increased the occurrence of
diseases (IPCC 2022)
• Between 2010–2020, human
mortality from floods, 15 times
higher in highly vulnerable
regions (high confidence) (IPCC
2022)
• Water-related hazards will
continue to increase (high
confidence) (IPCC (2022)
• Wildfires start and spread more
easily and rapidly (UN)
• Wildfires, have affected
ecosystems (medium to high
confidence) (IPCC 2022)
• Increases in the frequency
and intensity of fire weather
(high confidence) (IPCC 2022)
• Forest fires, threats related to
climate change (UN)
Greenhouse gas concentrations rise, so does the
global surface temperature (UN)

How do we pay?
Who should pay?
Where the money comes from?

In this presentation
1.Climate Finance
2.Financial Mechanism for conservation
and challenges
3.Financing forest through REDD+

What is climate finance?
• “Local, national or transnational financing—drawn from public,
private and alternative sources of financing—that seeks to support
mitigation and adaptation actions that will address climate change”
(UNFCCC).
• A call for financial assistance: Parties with more financial resources →
parties with less endowed and more vulnerable
• Mitigation: large-scale investments are required to significantly
reduce emissions
• Adaptation: needed to adapt to the adverse effects and reduce the
impacts of a changing climate.
Source: UNFCCC

Who is paying?
The principle of “common but differentiated responsibility and respective capabilities”
• Developed country Parties are to provide financial resources to assist developing country
Parties
• Developed country Parties take the lead in mobilizing climate finance:
• Wide variety of sources
• Instruments and channels
• The significant role of public funds
• Variety of actions
• Supporting country-driven strategies
• Taking into account the needs and priorities of developing country Parties
• Encouraging voluntary contributions by other Parties.
Source: UNFCCC

Global climate
finance
architecture
(potential
funding
available):
Source: ODI climate funds update

What is the financial mechanism?
• Existing international entities for financial mechanism”
• The Global Environment Facility(GEF), the oldest since 1994.
• At COP 16, in 2010, Parties established the Green Climate
Fund (GCF), at COP 16 2010
• Two special fund managed by the GEF and the Adaptation Fund
(est. in 2001 under Kyoto Protokol)
• the Special Climate Change Fund (SCCF)
• the Least Developed Countries Fund (LDCF)
• Paris Climate Change Conference in 2015: GCF, GEF, SCCF and
the LDCF to serve the Paris Agreement.
Source: UNFCCC

International climate target and how to finance it
1.Climate target:
a. Paris’ nationally determined contribution up to 2030
b.Long-term low carbon and climate resilience up to 2050
c. Net zero emission target – 2035-2070
2.Financing the climate target:
a. Commitment for USD 100 billion annually up to 2025
b.Public money first
c. Beyond public money – role of financial NSA, role of other
actors, role of blended finance
d.Other innovative financing
Source: Soejachmoen 2022

What to fund?
Other international initiatives:
a. Global coal to clean power transition
b.Just energy transition
c. Zero emission vehicles
d.Forest, agriculture and commodity trade
e.Nature based solution
f. Carbon pricing including market and non-market
g.Resilience – communities and businesses
h.Just transition – socio-economy impacts
i. Loss and damages
Source: Soejachmoen 2022

Context of Indonesia
• Commitment: Updated NDC 2030 to Enhanced NDC
• Strategy: LTS-LCCR 2050
• Target: NetZeroEmission (energy – power sector)
• Operational plan: Net sink 2030 (FoLU)
What about loss and damages?
How to divide role of stakeholders – government and
non-state actors?
Source: Soejachmoen 2022

Climate: small yet growing
Climate: 220
Environment:
980
Sustainable: 4 047
Conventional and
sustainable: 36 535
12
2018
2016
2014
2012
2010 2020
-10
0
10
20
%
-10
0
10
20
%
Net Flows into Funds
By fund label*; Per cent of lagged assets under management**
Conventional
Climate
Sustainable
(excluding environment)
Environment
(excluding climate)
A fund is labelled as 'climate-themed' if it has a climate-related fund
name or if it as flagged as climate-themed by Bloomberg, Lipper or
Morningstar. A similar classification approach applies for 'sustainable'
and 'environment' themed funds.
Value-weighted
Sources: IMF Global Financial Stability Report; October 2021
Source: IMF Global Financial Stability Report, October 2021

Drivers of the increase in climate flows
• COVID-19 increased awareness of climate-related financial risks (such
as zoonotic spillover) to the global economy
• Climate change featured strongly in the agenda of the UK-hosted G7
and COP26, and the Italian G20 Presidency
• Broader capital market demands for deeper information on climate-
related risk and opportunity (elaborated upon in the next section)
13
Source: Treasury.gov.au 2022

Impact on Climate Finance
• Unintended consequences of the Russian invasion of
Ukraine
• Ensuing sanctions continue to reverberate globally
• Testing the resilience of the financial system through
various potential amplification channels
• Market disruptions in commodity markets and
increased counterparty risk
• Acceleration of cryptoization in emerging markets;
and possible cyber-related events.
Source: Hales 2022; IMF 2022

• Address energy security concerns while implementing the 2021 United Nations
Climate Change Conference (COP26) road map to achieve net-zero targets
• Take measures to increase the availability and lower the cost of fossil fuel
alternatives and renewables while improving energy efficiency
• Scale up private finance in the transition to a greener economy
• Strengthen the climate finance information architecture
• Directors considered that international cooperation in corporate taxation and carbon
pricing could also help mobilize resources to promote the necessary investments and
reduce inequality.
Source: Hales 2022; IMF 2022
Cont.

Climate actions
needs propeller:
- Policies &
regulations
- Governance
- Technology
- Capacity
- Finance
• Policies & regulations:
- Stability
- Coherency
• Governance:
- Role and authority
• Technology:
- Access to existing
technologies
- Techs cooperation and
development
• Capacity development:
- The need of human capital
- Institutional setting
• Finance:
- State/province budget
- Other sources and schemes
- Innovative financing
Source: Soejachmoen 2022

Financing forest through REDD+

Norway
• The REDD+ superpower, more than 50% of international funding
• A long efforts to get international partners
• G20+Norway, REDD+ partnership, Lima, GNU, NYDF, LEAF, etc.
• New initiatives are coming
• The domestic role of REDD+/NICFI
• A political offset
• Ways to delinking oil & gas exploration and climate action
• Can afford it:
• Oil fund is USD 1.4 trillion or 250 000/capita
Source: Angelsen 2022

Lowering Emissions by Accelerating Forest
finance (LEAF)
• Launched in 2021, a result-based payment (PES) outside UNFCCC:
• Receive opposition from Indonesia, Peru, and others
• Potential to bypass national level
• Another standard to be follow
• Stricter standard than ex. UNFCCC/GCF:
• ART-TREES certification (2018)
• More funding:
• USD 1 billion over five years
• 50% funding from private companies (e.g. Amazon, Bayer, Nestlé og Unilever)
• 50 % from governments (Norway (NICFI), US, and UK government)
Source: Angelsen 2022

The future of Result-Based Payments (RBP)
• The good idea:
• Incentives and compensation
• However, the design & implementation is difficult:
• Defining emission reductions (reference levels), who to pay, sufficient buyers,
transparency, etc.
• Insufficient funds to make it RBP
• Brazil (6%) and Guyana (22%) of verified results
• “Results-based contributions for a portion of national level and third party
verified emissions reductions from forests and land use” (Contribution
agreement, Norway-Indonesia, 19 October 2022)
• Likely to still be a key part, but also beyond REDD+
Source: Angelsen 2022

Conclusion
• Climate change impact is part of our experience, and its frequency
and intensity is increasing
• International agreement on who pays what
• Funding is available, size is relative, distributing it is another issue
• REDD+ is one of the trending incentive mechanism to protect forest
• RBP is a good idea, but sharing benefit is challenging

cifor.org | worldagroforestry.org | globallandscapesforum.org | resilientlandscapes.org
The Center for International Forestry Research (CIFOR) and World Agroforestry (ICRAF) envision a more equitable world where forestry and
landscapes enhance the environment and well-being for all. CIFOR–ICRAF are CGIAR Research Centers.
https://www.cifor-icraf.org/gcs
Thank you