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People, Cities & Urbanisation, Planet, Asia Pacific, Climate Change

Indonesia unlocks ‘carbon payment’

Responsible Business | Feb 27, 2019

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The Indonesian government will receive its first “carbon payment” from Norway, after reporting that it has successfully reduced the rate at which its rainforests are being destroyed.

The two countries signed a landmark agreement in 2010, which committed Norway to provide up to US$1 billion worth of finance to Indonesia based on the Southeast Asian nation reducing its carbon emissions from deforestation and land use. Around 13 per cent of that funding has been drawn down to support programmes that tackle deforestation, the rest is contingent on results.

Indonesia is one of the world’s largest emitters of carbon dioxide, principally due to the destruction of its tropical rainforests and peatlands for commercial plantations. Over the past quarter of a century, Indonesia has lost more than 25 per cent of its forested area. Up until 2017, more than a million hectares of rainforest was cleared each year in the country, despite efforts from successive national governments to slow the decline. The current administration, under President Joko Widodo, put in place a moratorium on all developments on peatlands, and pledged to improve enforcement, although illegal land clearances remain common.

The country has now reported that the rate of deforestation in 2017 fell by as much as 60 per cent, with a consequent decline in carbon emissions. That fall, once it has been independently verified, will trigger a the first tranche of financing from Norway. Oslo will guarantee payments for around 4.8 million tonnes of CO2.

“Indonesia has embarked on bold regulatory reforms, and it is showing results,” Ola Elvestuen, Norway’s minister of climate and environment, said. “It may be too early to see a clear trend, but if deforestation continues to drop we stand ready to increase our annual payments to reward Indonesia’s results and support its efforts.

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