Contribution Agreement Concluded: Norway Delivers US$ 56 Million In Results-Based Support For Indonesia’s FOLU Net Sink 2030 Climate Goals

The Contribution Agreement, following the signing of the Memorandum of Understanding (MoU) between Indonesia and Norway (Partners) in September 2022, was signed on October 19th by Rut Krüger Giverin, Ambassador of Norway to Indonesia, and Djoko Hendratto, President Director of the Indonesian Environment Fund (IEF).

In the Memorandum of Understanding, both partners confirmed their intention to collaborate in a new climate partnership to support Indonesia’s Forestry and Other Land Use (FOLU) Net Sink 2030 Operational Plan and for Norway to support Indonesia’s results in reduced emissions from deforestation and forest degradation through results-based contributions.

"A global leader"

“During ten working days after today’s signing of the contribution agreement, Norway will deliver its first results-based contribution of US$ 56 million in support of the ongoing implementation of Indonesia’s FOLU Net Sink 2030 Operational Plan,” said Indonesian Environment and Forestry Minister Siti Nurbaya during the signing ceremony at the premises of Indonesia’s Ministry of Environment and Forestry (the Manggala Wanabakti Building) in Jakarta on Wednesday, October 19th.

“The first and subsequent results-based contributions from Norway are channeled through the Indonesian Environment Fund (IEF/BPDLH) under Indonesia’s Ministry of Finance. Indonesia allocates its own state budget over US$ 300 million every year to support its FOLU Net Sink 2030 operational plan,’ Minister Nurbaya explained.

“I am pleased to confirm that we have concluded a contribution agreement for our financial contributions for Indonesia’s achievements in reduced emissions from deforestation in support of the newly signed MoU between our two governments”, Norway’s Minister for Climate and Environment, Espen Barth Eide said on the occasion of the signing of the agreement.

“Indonesia has become a global leader in reducing deforestation”, said Minister Eide. – “Thanks to a comprehensive set of policies implemented by the Indonesian government, deforestation is now being reported at a 20-year low. This has global significance for our fight against climate change and provides an invaluable contribution to conserving biodiversity.”

Net sink by 2030

This first results-based contribution is for independently verified emission reductions of 11.2 million tons from Indonesia’s reduced deforestation and forest degradation in the forest year 2016/2017.

In line with the MoU, further contributions will be delivered by Norway for a portion of the emission reductions achieved in subsequent years as these results are reported and verified. Both partners have agreed to an MRV Protocol that outlines principles for measurement, reporting and verification, and robust social and environmental safeguards.

Indonesia’s FOLU Net Sink 2030 Operational Plan outlines Indonesia’s ambitions for the forestry and land use sector to become a net sink (“climate positive”) by more than 140 million tons CO2 by the end of this decade, through reducing emissions from deforestation, forest degradation and carbon-rich peatlands as well as absorbing more carbon through the restoration of forests, peatlands and mangroves.

Transparent funding mechanisms

During the signing, Ambassador Rut Krüger Giverin underlined that Indonesia’s policy and regulatory framework for reducing emissions from forestry and other land use sector, which Norway’s contribution will further support, is already delivering impressive results.

“We are impressed by the many policy measures taken by the Indonesian government to reduce deforestation. Through our recent MoU and today’s Contribution Agreement we aim at supporting the Government of Indonesia to achieve its climate goals through its FOLU Net Sink 2030 Operational Plan. Norway is proud to support this work through flexible and transparent funding mechanisms.”

President Director of the IEF, Djoko Hendratto said that "the contribution agreement encompasses 21 items, among other things, detailing scope and activities, transparency, compliance assurance and dispute resolution. Indonesia has a good governance of financial management adopting international standard which is regulated comprehensively. Therefore, the implementation of the Contribution Agreement is based on Indonesian laws and regulations."