Indonesia-Norway LoI on Cooperation on Reducing Greenhouse Gas Emission



Laila Afifa

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  • By: Linda Yanti Sulistiawati | Senior Research Fellow, Asia Pacific Center for Environmental Law, National University of Singapore, Assoc. Prof of Law, Universitas Gadjah Mada, Indonesia.

    In May 2010, Indonesia and Norway came to an agreement in the form of a Letter of Intent (LoI), entitled “Cooperation on Reducing Greenhouse Gas Emission from Deforestation and Forest Degradation” (“the LoI”). Some perceived the LoI as a semi-political move as it was signed immediately after the then-President of Indonesia, Susilo Bambang Yudhoyono, made a bold speech at the G20 Meeting London in 2009, declaring that Indonesia would be able to reduce its greenhouse gas (GHG) emissions by 21% on its own, or up to 46% if the international community rendered assistance.  The LoI, drafted and signed by both countries, shocked the world upon its announcement because of the sheer amount of money involved – according to the terms of the LoI Norway had agreed to earmark USD$1 billion to help Indonesia reduce its GHG emissions. 

    Ten years after the signing of the LoI, Indonesia is set to receive $56.15 million from Norway, the first result-based payment of the Southeast Asian countries. Specifically, the payment is for Indonesia’s success in preventing the emission of 11.23 million tons of carbon dioxide equivalent (CO2e) by reducing its deforestation rates in 2017.

    In exploring the REDD+ regulatory process, this article pinpoints the challenges for both Indonesia and Norway in achieving the ultimate goal of their partnership, that is, to reduce GHG from deforestation and forest degradation. 

    Challenges: Making Sure Everything Falls into Place

    The LoI is a comprehensive document that requires action by Indonesia, while Norway is required to facilitate accordingly. There are five milestones under Phase 1. The first is the completion of a national REDD+ strategy which also addresses key contributors to forest and peatland-related emissions which was achieved by Indonesia in 2012.

    The second milestone requires Indonesia to establish a special agency that reports directly to the President to coordinate the efforts pertaining to the development and implementation of REDD+. President Yudhoyono established the REDD+ Agency in 2011, but President Joko Widodo has since merged the REDD+ Agency into the Ministry of Environment and Forestry (“the MoEF”) with the Presidential Decree No.15/2016. Nevertheless, Norway does not seem to mind these slight modifications to the terms of the LoI.

    In 2017, the MoEF established a registry system linking REDD+ financing, REDD+ implementation, and the Safeguard Information System (SIS), as part of the monitoring, reporting and verification mechanism, stated as the third milestone of the LoI. This registry system became fully operational in 2019. 

    The fourth milestone of the LoI concerns the establishment of a funding instrument/financial mechanism. The first results-based payment was subject to the final establishment of a financial mechanism and adequate deliverables (verified emission reduction), based on Indonesia’s emission reduction report together with the independent verification of the same report.

    The last milestone under Phase 1 is the selection of an Indonesian province for the purposes of implementing a REDD+ pilot. This was done in 2010, with Indonesia choosing Central Kalimantan as the location for its REDD+ pilot project.

    Phase 2 is known as the “transformation” phase. In 2012, Indonesia developed the essential elements for REDD+ implementation, namely, the REDD+ National Strategy, Forest Reference Emission Level (FREL), National Forest Monitoring System (NFMS), Safeguard Information System (SIS), and Monitoring, Reporting and Verification System (MRV).  All of these elements were fully operationalized in 2019.

    Phase 3 begun from the moment government of Norway define results as “independently verified national emission reductions” from reduced deforestation and forest degradation. In May 2020, it was announced that Indonesia would receive a payment from Norway amounting to $56.15 million for its efforts in reducing deforestation. Indonesia is currently working to finalize the operational procedures of the financial mechanism, under the Government of Indonesia’s Environment Fund (BPDLH), a newly established body in MOEF. 

    The Eleventh hour

    There are several points of note for Indonesia and Norway in reaching their partnership goals in REDD+. First is the importance of building institutional capacity and strengthening the accountability regimes of the governmental institutions in charge of REDD+ reporting and MRV. Since the integrated system and financial mechanisms are already in place, the next step for Indonesia would be to show that there is accountability and transparency in REDD+ reporting. 

    Indonesia must ensure that these policies have reached even at the local level, and this means that local governments and grassroots communities must be engaged. There must be a continued effort to build up capacity. Although the MoEF bears primary responsibility to continue the communication and activities at the grassroots level, non-governmental organizations and local communities should also step in to lend a helping hand in engaging communities on the ground to bridge communications and introduce REDD+ activities, including the financial and MRV instruments.

    Second, the LoI is only valid till 2020. Indonesia and Norway have agreed to draft a new addendum of the current LoI, to include more efforts in protecting rainforests, peatlands, mangroves, and a social forestry program. In the context of REDD+, this means that results-based payments can be fully implemented to reduce deforestation, MRV can be given more exposure, more publicity can be given to verification processes for the national reduction of emissions, priority can be given to the inclusion of local communities, and more important things can be placed on the involvement of multiple stakeholders. 

    If these points are emphasized in the addendum, this will demonstrate, as the first LoI has already demonstrated, how external pressures for REDD+ implementation are important in Indonesia’s regulatory process. As mentioned by Sulistiawati (2013), the regulatory processes in the agencies of REDD+ in Indonesia are influenced by external pressures, in this case the LoI, through ownership and involvement in the projects. The greater the ownership and involvement of the agencies in the REDD+ projects, the more active their regulatory process for REDD+ will be. In addition, the more active the institutions of REDD+, the higher the possibility of making REDD+ success in Indonesia. 

    Third, Indonesia has established leadership in the REDD+ area. Other countries with similar REDD+ programs such as Brazil, Liberia, Tanzania, Congo, and Guyana might look for best practices from Indonesia’s experience. This increases the possibility of gaining momentum for REDD+ diplomacy. Moreover, Article 5 of the Paris Agreement also acknowledges the roles of forest and REDD+ in efforts to reduce GHG emissions. As a party to both the Paris Agreement and the REDD+ program, Indonesia is in a unique position that enables it to be an example to the world on how to involve an entire nation in REDD+ activities.  One such way would be through spreading awareness via information campaigns on social media and giving more authority to local communities.

    The goal to reduce deforestation and lower GHG emissions can only be done in tandem – countries and local communities must work together. 



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