Indonesia scraps US$1 billion REDD deal with Norway

By Chris Lang

Indonesia has scrapped the US$1 billion REDD agreement with Norway. In a May 2010 Letter of Intent, Norway had agreed to pay Indonesia up to US$1 billion for reducing emissions from deforestation and forest degradation. Eleven years later, Norway has not transferred any “results-based” payments to Indonesia.

The US$1 billion REDD deal was fundamentally flawed from the start.

The proposed moratorium on new concessions was grossly inadequate and featured a series of loopholes. The moratorium has been in place since 2011, and has been renewed several times since then. But an area of one million hectares of primary forest remains not covered by the moratorium, according to research carried out by the Indonesian NGO Madani. At least 9.5 million hectares of forests in Indonesia are not covered by the moratorium, Madani’s analysis revealed.

In 2019, Norway agreed the first “results-based” payment to Indonesia of US$56 million, based on Indonesia’s figures for carbon emissions from deforestation in 2016/2017.

Two years later, Alue Dohong, Indonesia’s Deputy Environment and Forestry Minister told told The Jakarta Post that, “there seems to be no goodwill from the Norwegian government as we have not received a single cent from this agreement.” Alue added,

“We were wasting our time. Indonesia did its part of the deal in 2016 and 2017 [by reducing emissions]. The failing party here is the one that could not keep its promise of payment.”

“Lack of concrete progress.” By Norway, or Indonesia?

The statements from the Indonesian and Norwegian governments about the end of the US$1 billion deal are posted below in full. In its statement, Indonesia states that the decision is based on,

the lack of concrete progress on the implementation of the obligation of the government of Norway to deliver the results-based payment for Indonesia’s achievement in reducing 11,2 million CO₂eq greenhouse gas emissions in 2016/2017, that has been verified by international organization.

But Indonesia’s figures of greenhouse gas emissions from deforestation in 2016 and 2017 excluded emissions from peatlands, thus making a complete mockery of Norway’s proposed “results-based payment”. As Development Today commented at the time, “If emissions from peatlands had been counted, there might be no basis for payment at all.”

Indonesia’s statement also mentions, “the lowest rate of deforestation in the past 20 year [sic], including the reduction on forest fires.”

Norway’s statement claims that in the past decade, “Indonesia has become a world leader in combatting tropical deforestation.” And that, “Over the last four years Indonesia has delivered massive reductions of deforestation and peatland conversion.”

The statements raise two key questions:

• Why has Indonesia’s rate of deforestation decreased? and
• Will the rate of deforestation remain low?

Why has Indonesia’s rate of deforestation decreased?

Data from Global Forest Watch reveals that Indonesia’s tree cover loss has fallen from a record high in 2016:

The data for primary forest loss is similar.

Indonesia’s forestry ministry argues that the drop in deforestation is the result of policies aimed at forest protection, including: a ban on new permits to clear primary forests and peatlands; a moratorium on licenses for new oil palm plantations; a social forestry programme; and better enforcement against breaches of environmental laws.

Ruandha Agung Sugardiman, director-general of planning at the Ministry of Forestry told Mongabay that the drop in deforestation,

“shows that various efforts done by the Ministry Environment and Forestry lately have produced significant results. Their impact on reducing deforestation is tremendous.”

But other factors also played a role. The weather, for example. 2020 was one of the wettest years in the past forty years in Indonesia.

Another factor is the price of palm oil. Arief Wijaya, senior manager of climate and forests at the World Resources Institute told Mongabay that,

“Since 2013, the global oil palm prices tend to fluctuate and decline due to the decreasing demand for the vegetable oil, which might be caused by the trade war with the European Union which is looking to phase out [palm oil-based biodiesel from] Indonesia. Coupled with the COVID-19 pandemic last year, of course industries are slowing down.”

Will the rate of deforestation remain low?

On 5 October 2020, Indonesia’s Parliament approved the “Omnibus Law”, an economic stimulus plan. The law amends 79 existing laws, and removes thousands of regulations on environmental and labour rights. It removes a requirement in the 1999 Forestry Law for provinces to maintain 30% forest cover. It makes it easier for corporations to operate in protected forest areas. And it simplifies the process to convert forest land to non-forest uses.

Meanwhile, six new pulp mills have recently started up in Indonesia. In total the new pulp mills have a capacity of one million tons of pulp per year.

In addition, Nine Dragons Paper, China’s largest pulp company, is reported to be planning a US$1 billion investment in Indonesia – aimed at producing six million tons of pulp per year. The company told Mongabay “We are still looking for the best location.”

Asia Pulp and Paper, one of the largest and most destructive pulp and paper companies in Indonesia, is planning to triple the size of its OKI pulp and paper mill in South Sumatra. The pulp mill’s current capacity is 2.8 million tons per year, and the plan is to increase capacity to 7 million tons per year. The raw material required by the mill will increase from 10 million tons of wood a year to about 30.1 million tons.

Christopher Barr, of the NGO Woods & Wayside International, has researched the impacts of Indonesia’s pulp and paper industry for many years. He told Mongabay that,

“Indonesian producers have built some of the world’s largest pulp mills, and these multi-billion dollar facilities place enormous pressures on the landscapes in which they are situated.”

Much of the forest in Sumatra and Kalimantan has already been heavily logged and cleared to make way for oil palm plantations and fast-growing industrial tree plantations for the pulp and paper industry. The timber, palm oil, and pulp industries now have their eyes on the forests in Papua.

Research by The Gecko Project reveals the pressure on Papua’s forests, and the corrupt deals made behind the scenes to convert large areas of the forest to plantations.

In addition to these plans, the Indonesian government is constructing a 4,000 kilometre road network across the provinces of Papua and West Papua. The Trans-Papua highway cuts through Lorentz National Park, a World Heritage site. The road will increase access to 19 mining concessions covering a total of almost 50,000 hectares inside the park.

The road has led to increased logging inside the national park. UNESCO has called for the road through the national park to be closed. The Indonesian government has ignored UNESCO’s requests.

Indonesia Terminates the LoI on REDD+ with Norway

Ministry of Foreign Affairs of the Republic of Indonesia, 10 September 2021

The Government of the Republic of Indonesia has decided to terminate the Letter of Intent between the Government of the Kingdom of Norway and the Government of the Republic of Indonesia on cooperation on Reducing Greenhouse Gas Emissions from Deforestation and Forest Degradation (LoI on REDD+) effective on September 10, 2021.

The Indonesian Government has conveyed the decision to terminate the Letter of Intent to the Embassy of the Kingdom of Norway in Jakarta through a Note Verbale, in accordance with Article XIII of the Letter of Intent.

The Government decision to terminate the Letter of Intent after a series of thorough inter-ministerial consultations. The decision is also based on the lack of concrete progress on the implementation of the obligation of the government of Norway to deliver the results-based payment for Indonesia’s achievement in reducing 11,2 million CO2eq greenhouse gas emissions in 2016/2017, that has been verified by international organization.

The decision to terminate the LOI will in no way to affect the Indonesian Government commitment to reduce greenhouse gas emissions.

Indonesia has recorded many significant progress and achievements to fulfil its obligation under the Paris Agreement, which has been ratified, including in attaining sustainable development goals (SDGs).

Indonesia’s achievement can also be seen, among others, on the lowest rate of deforestation in the past 20 year, including the significant reduction on forest fires.

Press statement: The Indonesia-Norway climate and forest partnership

Norway’s International Climate and Forest Initiative, 10 September 2021

Today, on September 10, 2021, the Government of Norway received a formal notification that the Government of Indonesia has decided to terminate our 2010 Letter of Intent on Cooperation on Reducing Greenhouse Gas Emissions from Deforestation and Forest Degradation.

Our two nations have for more than a decade collaborated on reducing greenhouse gas emissions from deforestation and forest degradation. During this time, Indonesia has become a world leader in combatting tropical deforestation. A series of progressive regulations and policies to protect the nation’s rainforests have been put in place. The results are impressive. Over the last four years Indonesia has delivered massive reductions of deforestation and peatland conversion. This is a significant contribution to global climate change mitigation and protection of biodiversity.

Last year, Norway announced a contribution of NOK 530 million to Indonesia for its 2016/2017 deforestation results in line with the Letter of Intent. The contribution was intended to be disbursed to Indonesia’s own financial mechanism, the newly established Indonesian Environment Fund (IEF). Recently, our two governments have been engaged in discussions on a legal agreement for the transfer of the results-based contribution. Up until today’s termination announcement, discussions in this regard were ongoing and in Norway’s view constructive and progressing well, within the frameworks set by our two countries’ regulatory limits. Given our commitments in the Letter of Intent, and Indonesia’s impressive results, we were looking forward to supporting Indonesia’s efforts with similarly significant annual contributions in the years to come.

The Government of Norway would like to congratulate the Government of Indonesia with their impressive REDD+ achievements to date. We welcome the Indonesian Government’s continued leadership on this crucial climate action agenda, and its continued commitment to deliver on its emission reduction targets. We have highly appreciated our collaboration and stand ready to continue supporting – in mutually agreeable ways – Indonesia’s efforts in protecting its forests and peatlands.

 

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PHOTO Credits: Greenpeace.