BPDLH CEO Djoko Hendratto: Environmental Fund Management Agency Is Like a Locker

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

Such a massive amount of emission is a resultant effect of development. Albeit having one of the world’s largest tropical forests, 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 way to turn the tide on global warming is through environmental protection. Greenhouse gases including CO2 are emitted through environmental degradation and pollution resulting in the climate crisis. The world has seen devastating manifestations of the climate crisis through drought, floods, erratic rainfall, extreme temperatures, crop failure, and so on.

To achieve its ambitious targets, Indonesia needs more than Rp4,000 trillion of which only 30 percent will come from the state budget (APBN). The rest will be met through collaboration with the regional governments, the private sector, and the public. One of the incentive instruments for non-governmental parties is carbon trading. On October 20, the environment and forestry minister issued Ministerial Decree No. 21 regarding the implementation procedure for carbon economic value that includes a set of technical regulations for domestic carbon trading. The BPDLH acts as a pillar for fund assistance, particularly from international agencies, for environmental conservation programs.

BPDLH Chief Djoko Hendratto said even through the agency was only established in 2019, it enjoyed a high level of trust from both the state and international agencies as more and more international aid kept flooding in. For whom are these funds? Below is the conversation between Djoko and Tempo journalists on September 29 in his office.

What is the purpose of the BPDLH?

Since the Earth Conference in Rio de Janeiro, Brazil, in 1992, everyone realized that the government alone cannot bear the burden of protecting the environment. But the 2015 Paris Agreement obligates governments to lead the initiative. We can’t leave it to the market anymore. In the past, there weren’t collaboration opportunities for the government and the private sector. Fund assistance, for example, for reducing emission from deforestation and forest degradation (REDD+) had to come through the state budget meaning no other parties had a say in the government’s decisions.

So, the government got itself in a tight spot? 

You see funds could not be put in the state budget and then marked specifically. As a result, the REDD+ could not be utilized. Once they were in the state budget, the ones who have the authority are the government and the House of Representatives (DPR). That kind of fund management clearly was not what the donors wanted. That’s why innovation was sought so as to manage environmental protection funds from the government, the private sector, or international agencies in parallel collaborations. That’s the background of the establishment of the BPDLH.

What was the philosophical foundation?

If our environment is healthy and capable of absorbing huge carbon emissions, other countries also benefit from it. We for sure also benefit from it. But we need a mechanism to accommodate collaborative funds. An initial concept (for the BPDLH) came from Finance Minister Sri Mulyani and Environment and Forestry Minister Siti Nurbaya. When I was brought in, I captured the concept of ‘aid trusteeship’. It’s like a swimming pool locker. The pool owner owns the locker but the content of the locker belongs to me. I am the user. In international terminology, it’s called the trustee. But since this is in the jurisdiction of the Indonesian government, it must comply with our regulations. The ministries and state institutions in charge will make sure that policies do not clash, are in harmony, and are intended for the environment.

Can donors choose where the funds should go?

The entire fund distribution structure must be spelled out in a mandate. Ministries and fund owners will determine this mandate. We only keep an eye on the (adherence to the mandate). That’s the nature of trusteeship. That is BPDLH’s function so to speak.  

Which institutions may deposit funds?

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

Also companies?

Why not?

What about the companies causing damage to the environment?

They also can. The purpose of the BPDLH fund is to rehabilitate the environment, right? If they’ve been damaging the environment, they can do it right by contributing (fund), don’t they? What we don’t accept is terrorist money. Or for greenwashing.

The BPDLH dares to refuse?

Why not? We declined Norway’s help. But they eventually agreed to follow (our rules).

What was the rationale behind the termination of carbon trading cooperation with Norway?

The question is are you buying goods or do you want to offer grants? Or start projects? They decided to buy goods, so okay, just do it. But you can’t interfere. It was discontinued because they wanted to interfere with the government’s collaboration programs.

Now they’ve reconciled...

It’s okay now. They wanted to fund 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 that was suspended in 2021. Norway pledged to pay Indonesia US$56 million for 11.2 million tons of CO2 equivalent in emission reduction in 2016-2017 for averting deforestation, and support Indonesia’s program for net carbon sink in the forestry sector and other land use or FOLU Net Sink 2030.)

Who are the donors in the past two years?

Green Climate Fund (GCF), FGF, BioCarbon, etc. Ford Foundation has already been working with us. Global Environment Facility (GEF) will provide funds for rooftop solar power systems (PLTS). We’ve also signed debt for nature swaps (DNS) schemes and secured a US$400 million commitment from the World Bank for mangrove rehabilitation. Then we have reforestation funds from the environment ministry that amounts to around Rp8 trillion.

So how much total fund from the state and international agencies has the BPDLH collected?

US$103 million from GCF, US$110 million from Forest Carbon Partnership Facility (FCPF), US$70 million from BioCarbon Fund, around Rp56 billion in DNS, US$1 million from Ford Foundation, and PLTS fund from GEF amounting to Rp23 billion.

What about the budget from the APBN? 

Only Rp2.1 trillion as of now.

Any contribution from corporations?

Not yet. 

What’s all that money for?

To continue and improve the revolving fund disbursed by the forestry ministry.

(The BPDLH is a continuation of the BLU P3H, a public service agency called the forest development financing center of the environment and forestry ministry, which managed reforestation funds since 1999. The BLU P3H channeled credit for small businesses and the public to protect forests, for example, loans for delaying timber harvesting where trees were used as collateral.)

What is the scheme like?

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

What kind of livelihoods?

All kinds. Selling groceries, farming on the periphery of forests, raising cattle or agroforestry. The point is that loan recipients are forest keepers. We offer them loans as long as they are moving in that direction and they are doing it for their living.

How many have benefitted?

Around 28,000 people, they are spread across almost all provinces and regencies. 

Given that 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 through call for proposal and we and FF determine eligible proposals. How do we appraise them? We have the standards and a team that does not include BPDLH elements.

How do you regulate and monitor fund disbursements?

We appoint project directors who supervise professionals. Donors independently recruited these professionals to prevent conflict of interest and (the recruitment) is project-based to ensure utmost efficiency. Some portion of the fund is used to pay these professionals.

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

It depends on the theme of each donor.

What are the available proposals today?

Dana Terra (a funding program for welfare and sustainable 
economy for indigenous and local communities). Another one is rooftop PLTS but it is an incentive program.

Incentive?

If you buy a solar panel worth Rp100 million, through this program, we will give you 30 percent cashback on the price. But the energy and mineral resources ministry and the state electricity company PLN are the decision makers. They determine if someone should get the cashback or not.

How big is this rooftop PLTS incentive fund?

Around Rp23 billion.

How much has been utilized?

If I’m not mistaken, around Rp4 billion. Recipients on average are members of the public, micro, small and medium businesses with a few business institutions. The total committed amount is Rp12 or 15 billion.  

How long will this PLTS program run?

The fund should be used up this year.

BPDLH programs are highly dependent on donors. How will the agency help Indonesia achieve the emission reduction target? 

We cannot determine that.

Read the Full Interview in Tempo English Magazine

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