Indonesia Climate Change Trust Fund

Indonesia Climate Change Trust Fund

Summary

The Indonesia Climate Change Trust Fund (ICCTF) is a national funding entity which aims to develop innovative ways to link international finance sources with national investment strategies. Created by the Government of Indonesia (GOI), it acts as a catalyst to attract investment and to implement a range of alternative financing mechanisms for climate change mitigation and adaptation programmes. The ICCTF receives non-refundable contributions from bilateral and multilateral donors. The main funding mechanism of the ICCTF is the ‘Innovation Fund’, which provides grants to line ministries to support climate change related projects within the GOI.

Basic Description

Name of Fund Indonesia Climate Change Trust Fund (ICCTF)
Official Fund Website http://www.icctf.or.id/
Date fund proposed: September 2009
Date fund made operational: Pre-project assessments were undertaken in September 2010, which indicate the start of ICCTF’s operations.
Proposed Life of Fund Unknown.
Administrating Organisation Indonesia’s National Development Planning Agency (BAPPENAS) is the administrating organisation with UNDP currently serving as the interim Trustee for the ICCTF.
Objectives
The ICCTF aims to:
  • Achieve Indonesia’s goal of a low carbon economy and greater resilience to climate change
  • Enhance the GOI’s effectiveness in the leadership and management of addressing climate change. The design of the ICCTF is to be implemented in two stages:
    • In the first step, the ICCTF will be created as an “Innovation Fund”, which involves grant funding (mainly public finance) from development partners and other contributors to be used for activities without financial returns.
    • At a later stage, the ICCTF may advance by establishing a “Transformation Fund” which involves available funding such as public-private partnerships, loans, and world capital market sources that could harness private-sector finance. The introduction of a carbon market is also under consideration.
Activities Supported ICCTF focuses on 3 priority windows:

  • Land Based Mitigation – The reduction of GHGs emissions from deforestation and forest degradation, while moving towards efficient land uses and sustainable management of forest resources.
  • Energy Contribution to the improvement of energy security in Indonesia and reduction of emissions from the energy sector.
  • Adaptation and Resilience – Preparation of Indonesia’s national and local institutions, as well as vulnerable communities, to the impacts of climate change.
Conditions and Eligibility Requirements
Entities which are eligible to submit proposals to the ICCTF are Government institutions such as Line Ministries, Government Agencies and Local Government as Executing Agencies (EAs). EAs may partner with other institutions including universities and CSOs to implement the project.

With projects administered through UNDP, acting as the interim fund manager, eligible project duration was set to one year, while project budgets were capped at USD3 million.

In addition to project selection criteria such as impact, sustainability, scalability and synergy, the capacity and experience required to conduct large and innovative projects in a short time frame, and whether the projects were high priority for the Ministries concerned, were also considered.
Accessing the Fund
Entities which are eligible to submit proposals to the ICCTF are Government institutions such as Line Ministries, Government Agencies and Local Government as Executing Agencies (EAs). EAs may partner with other institutions including universities and CSOs to implement the project.

With projects administered through UNDP, acting as the interim fund manager, eligible project duration was set to one year, while project budgets were capped at USD3 million.

In addition to project selection criteria such as impact, sustainability, scalability and synergy, the capacity and experience required to conduct large and innovative projects in a short time frame, and whether the projects were high priority for the Ministries concerned, were also considered.

Fund Governance

Decision Making Structure
A program management unit consisting of a Steering Committee, a Technical Committee and a Secretariat and a Trustee are responsible for the programmatic and technical oversight of the ICCTF in collaboration with development partners and other contributor-supported programs.

Steering Committee: 
The Ministerial Steering Committee on Coordination of the ICCTF provides overall policy guidance and direction to the ICCTF process. The main responsibilities of the Steering Committee are for: policy and operational guidelines, management, and monitoring and evaluation. To achieve these tasks the SC will be divided into two forums; the Policy Forum and Management Forum.

Technical Committee: 
The Technical Committee (TC) consists of staff from the National Development Planning Agency (Bappenas), Ministry of Finance and other line ministries. The main job of the TC is to advise the Steering Committee (SC) in all technical matters of the ICCTF. The Director of Environment of National Development Planning Agency/ Bappenas is the chair the TC.

Secretariat:
The Secretariat supports the daily operations of the Program Management Unit (PMU). It consists of members with technical, administrative and financial expertise. The secretariat is responsible for supporting the Steering Committee (SC) and the Technical (TC) Committee on administering grant agreements, proposals and approvals.

Trustee:
A Trustee is a party who is legally trusted to manage funds provided by the Fund Contributors. The Fund Contributor will submit part or all conforming to the agreement to be used as agreed upon. In the case of the ICCTF, the Trustee will receive the funding from development partners and other contributors and manage it for the purpose of the ICCTF and report to the Steering Committee.
Non-Government Stakeholder Participation In 2010, the ICCTF organized two Civil Society Organisation (CSO) workshops in Jakarta to discuss the involvement of civil society stakeholders in the decision making process of the ICCTF. At the first workshop, the role, the structure and the governance mechanisms of ICCTF were discussed. The second workshop started a selection process to select two CSO representatives who would participate in the ICCTF Steering Committee and created a CSO forum to discuss the role of the CSO representatives. Approximately 18 CSOs involved in climate change issues attended the meetings.
Information Disclosure Partial information available on the ICCTF website.
Issues Raised Unknown.

Relationship with Official Development Assistance

Inclusion as Official Development Assistance  Yes.
Financial Instrument/ Delivery Mechanism Used (e.g. grant, loan)  Grants.
Nature of Recipient Country Involvement The ICCTF is entirely country-driven, with all funding decisions devolved to the country level. While UNDP acts as interim Trustee, there is a process in place to identify and establish a national Trustee to replace UNDP in the long term.