Djoko Hendratto, CEO of BPDLH: the environmental fund management agency is like a locker


TEMPO.CO, Jakarta – THE Indonesian government has raised its greenhouse gas emission reduction targets for 2030, from 29% to 31.89% to be achieved through its own resources, and from 41% to 43.2% through the international aid received through the Environmental Funds Management Agency (BPDLH). The ratios were based on emissions of 2.87 billion tonnes of carbon dioxide (CO2) equivalent projected for 2030.

Such a massive amount of emissions is an effect resulting from development. Despite having one of the largest rainforests in the world, Indonesia is among the top 10 global emitters. To cap global warming at 1.5 degrees Celsius, the United Nations has urged countries to set emission reduction targets. One of the ways to reverse the course of global warming is through environmental protection. Greenhouse gases, including CO2, are emitted by environmental degradation and pollution resulting from the climate crisis. The world has seen devastating manifestations of the climate crisis through droughts, floods, erratic rainfall, extreme temperatures, crop failures, etc.

To achieve its ambitious goals, Indonesia needs more than 4 trillion rupees, of which only 30% will come from the state budget (APBN). The rest will be covered by collaboration with regional governments, the private sector and the public. One of the incentive instruments for non-governmental parties is carbon trading. On October 20, the Minister of Environment and Forests issued Ministerial Decree No. 21 regarding the procedure for implementing the economic value of carbon which includes a set of technical regulations for domestic carbon trading. The BPDLH acts as a mainstay for financial assistance, particularly from international agencies, for environmental conservation programs.

BPDLH chief Djoko Hendratto said that although the agency was only established in 2019, it enjoys a high level of trust from the state and international agencies as more more international aid continued to flow. Who are these funds for? Below is the conversation between Djoko and Tempo journalists on September 29 in his office.

What is the BPDLH used for?

Since the Earth Conference in Rio de Janeiro, Brazil, in 1992, everyone has realized that government cannot bear the burden of environmental protection alone. But the 2015 Paris Agreement obliges governments to take the lead. We can no longer rely on the market. In the past, there were no opportunities for collaboration between the government and the private sector. Aid from the Fund, for example, for Reducing Emissions from Deforestation and Forest Degradation (REDD+) had to go through the state budget, meaning no other party had a say. say in government decisions.

So, the government has put itself in a delicate situation?

You see that the funds could not be placed in the state budget, and then marked specifically. Consequently, REDD+ could not be used. Once in the state budget, those with authority are the government and the House of Representatives (DPR). This type of fund management was clearly not what the donors wanted. This is why innovation has been sought to manage environmental protection funds from government, private sector or international agencies in parallel collaborations. This is the context of the creation of the BPDLH.

What was the philosophical basis?

If our environment is healthy and able to absorb huge carbon emissions, other countries also benefit. We certainly benefit from it too. But we need a mechanism to accommodate collaborative funds. An early concept (for the BPDLH) came from Minister of Finance Sri Mulyani and Minister of Environment and Forests Siti Nurbaya. When I was recruited, I grasped the concept of “aid guardianship”. It’s like a pool locker. The pool owner owns the locker, but the contents of the locker belong to me. I am the user. In international terminology, this is called the fiduciary. But since this is under the jurisdiction of the Indonesian government, it must comply with our regulations. The ministries and state institutions in charge will ensure that the policies do not clash, are in harmony and are intended for the environment.

Can donors choose where funds should go?

The entire distribution structure of the fund must be specified in a mandate. Departments and fund owners will determine this mandate. We only monitor the (adherence to mandate). This is the nature of guardianship. This is the function of BPDLH so to speak.

Which institutions can deposit funds?

Any establishment. Not only foreign governments, but also multi-agency donors such as the World Bank, United Nations Development Program (UNDP), etc. Private philanthropists are also welcome.

Also companies?

Why not?

What about companies that cause damage to the environment?

They can too. The BPDLH fund aims to rehabilitate the environment, right? If they damaged the environment, they can do it right by contributing (funding), right? What we do not accept is money from terrorism. Or for greenwashing.

The BPDLH dare to refuse?

Why not? We refused help from Norway. But they finally agreed to follow (our rules).

What was the reason for ending carbon trading cooperation with Norway?

The question is: do you buy goods or do you want to offer subsidies? Or start projects? They decided to buy some goods, so okay, do it. But you can’t intervene. It was discontinued because they wanted to interfere with government collaboration programs.

Now they have reconciled…

It’s good now. They wanted to finance green projects.

(On October 19, Djoko Hendratto and Norwegian Ambassador to Indonesia Rut Krüger Giverin signed the Cooperation Agreement for Reducing Emissions from Deforestation and Forest Degradation which was suspended in 2021. Norway s is committed to paying Indonesia $56 million for 11.2 million tonnes of CO2 equivalent emissions reduction in 2016-2017 to avoid deforestation, and support Indonesia’s net carbon sink program in forestry and other land uses or FOLU Net Sink 2030.)

Who are the donors for the past two years?

Green Climate Fund (GCF), FGF, BioCarbon, etc. The Ford Foundation is already working with us. The Global Environment Facility (GEF) will provide funds for rooftop solar power systems (PLTS). We have also signed debt-for-nature (DNS) swaps and secured a $400 million commitment from the World Bank for mangrove rehabilitation. Then we have reforestation funds from the Ministry of Environment which amount to about 8 trillion rupees.

So, how much total funds from state and international agencies has BPDLH collected?

US$103 million from GCF, US$110 million from Forest Carbon Partnership Fund (FCPF), US$70 million from BioCarbon Fund, about Rp56 billion in DNS, US$1 million from Foundation Ford and a GEF PLTS fund in the amount of Rp 23 billion.

What about the budget of the APBN?

Only Rp2.1 trillion from now.

A business contribution?

Not yet.

What is all this money for?

Continue and improve working capital disbursed by the Ministry of Forestry.

(The BPDLH is a continuation of the BLU P3H, a public service agency called the Forestry Development Finance Center of the Ministry of Environment and Forests, which had managed reforestation funds since 1999. The BLU P3H channeled credit to small businesses and to the public to protect forests, for example, loans to delay timber harvesting when trees have been used as collateral.)

What is the scheme?

There are two schemes: direct transfer to the beneficiary or through remittance institutions. The goal is reforestation. For example, communities living around forests plant trees. They usually have other means of support and we offer them loans using the trees as collateral.

What kind of livelihood?

All kinds. Sale of groceries, agriculture on the outskirts of forests, cattle breeding or agroforestry. The fact is that the loan recipients are rangers. We give them loans as long as they go in that direction and they do it for a living.

How many have benefited?

About 28,000 people, they are distributed in almost all the provinces and regencies.

Since these are loans, what is the interest rate?

Three to four percent.

What is the form of collaboration with the Ford Foundation?

It involves indigenous communities. Aid is channeled by call for proposals and we and FF determine which proposals are eligible. How do we rate them? We have the standards and a team that does not include BPDLH elements.

How do you regulate and monitor disbursements of funds?

We appoint project directors who supervise professionals. Funders have recruited these professionals independently to avoid conflicts of interest and (recruitment) is project-based to ensure maximum efficiency. Part of the fund is used to remunerate these professionals.

With the funds currently available, what kind of proposals should be made?

It depends on the theme of each donor.

What proposals are available today?

Dana Terra (a funding program for well-being and sustainable development
economy for indigenous and local communities). Another is the rooftop PLTS, but it is an incentive program.

Motivation?

If you buy a solar panel worth Rs 100 million, through this program, we will give you 30% cash back on the price. But the Ministry of Energy and Mineral Resources and the state-owned electricity company PLN are the decision makers. They determine whether someone should get the cashback or not.

How big is this rooftop PLTS incentive fund?

About 23 billion rupees.

How much was used?

If I’m not mistaken, around Rp4 billion. Beneficiaries are on average members of the public, micro, small and medium enterprises with some commercial institutions. The total amount committed is Rp12 or 15 billion.

How long will this PLTS program last?

The fund is expected to be depleted this year.

BPDLH programs are highly donor-dependent. How will the agency help Indonesia meet the emissions reduction target?

We cannot determine it.

Read the full interview in English time Magazine

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