REDD+ benefit sharing in Indonesia

 65860 REDD+ BEnEfIt ShaRIng In InDonESIa a Case Study by Leo Peskett REDD+ Benefit Sharing in Indonesia I THE WORLD BANK II REDD+ Benefit Sharing in Indonesia The findings, interpretations, and conclusions expressed herein are those of the author(s), and do not necessarily reflect the views of the funders. Supporting research for this document was carried out Cover photo by Ray Witlin from July to October 2010. Indonesia’s initial regulations on REDD+ were were quickly subject to intense political debate some of the earliest national regulations to and a review that aimed at removing rules that be proposed by a REDD+ country and they overlap or clash. The draft rules on benefit resembled the ‘nested’ proposal (Pedroni et al., sharing outline 11 different options depending 2007). Under this approach, entity level carbon on the type of licence held and the type of trading from emissions reductions in REDD+ forest. The revenue split between government, projects can be carried out by the private sector, communities and the project developer would NGOs or communities, but under national vary between 10% – 50% for government, regulations. While there is still intense debate 20% – 70% for communities and 20% – 60% in Indonesia as to how exactly REDD+ revenues for project developers. These revenues would might be shared between national and local accrue from the sale of REDD+ credits. levels, the different policy proposals give some The national government plays a role in insight into the options. benefit sharing through the development of The government has set out draft rules for the regulations (which has mainly occurred REDD+ investments which detail: under a Working Group on Climate Change • Who is eligible to participate: individual, within the Ministry of Forestry) and their cooperative, state and regional owned eventual implementation. A ‘REDD Council’ enterprises or Indonesian private legal has also been created that will play a role entities. Indigenous and local peoples, in the application of REDD regulations. The women who are the permit holders of REDD regulations stipulate that REDD project customary, community, and village forests proposals (including an implementation plan) are entitled to be REDD+ project developers. are submitted to the Minister of Forestry for approval. The REDD Council will assess • Eligible forest types: including customary, project proposals on their technical aspects community, and village forests. and following the assessment the proponent • The revenue sharing arrangements between will be issued a REDD implementation different actors (see Figure 1). licence. The project commences within 90 • The role of the national government in days of this licence being issued and forest implementation of the regulations. must be managed in accordance with the implementation plan. The council should Initial plans for the sharing of financial benefits provide a structure to control the problem from REDD+ between national and local levels that many carbon brokers have been directly therefore proposed that they be governed (at approaching regents, mayors or local least on paper) by these different criteria. communities to develop REDD projects. The revenue rules under the REDD regulations were first proposed in forestry department decrees 30, 36 and 68 although REDD+ Benefit Sharing in Indonesia 1  BENEFIT TYPE ACTORS RULES International buyers • Emissions reduction purchase agreements (ERPAs) • Additional international finance • National rules on eligibility of for forest management either Government managing agency different actors to participate directly or through taxes on and eligible forest types projects • 11 draft revenue sharing rules depending on license held and forest type • Revenue sharing rules: income from carbon sales would vary between 10% – 50% for • Share of carbon revenues government, 20% - 70% for for those involved in REDD+ communities and 20% – 60% projects and wider community for project developers. (depending on definition of REDD+ REDD+ project project actors involved) • Other project benefits depend • Division of carbon revenues on activities (e.g. infrastructure Wider community varies with activity type. As development) yet unclear how communities are defined fIguRE 1: Stylized schematic of draft Indonesian REDD+ revenue sharing rules. Note that provincial and local government levels have not been included as arrangements are still unclear. that the REDD revenue-sharing formulas would alternative or have important implications for the viability of complementary systems different kinds of emission reduction activities, The revenue sharing rules developed for REDD+ and for the overall effectiveness and efficiency in Indonesia have been contentious and are of the scheme. under ongoing discussion. The main issue has An alternative or complementary approach been that the Ministry of Forestry does not have that is proposed in the Ministry of Finance the legal authority to establish such regulations, Green Paper (2009), is the use of international which are under the purview of the Ministry of fiscal transfers to run a nationally managed Finance. The Ministry of Finance also asserts revenue sharing system to support climate 2 REDD+ Benefit Sharing in Indonesia  “For REDD+, regulatory and broader fiscal measures are likely to play a relatively change action by regional governments. The greater role than direct basic operation of such a system would include emission-pricing (Ministry of Finance Green Paper, 2009): instruments.