Sebijak Institute and the European Forest Institute carried out a study on forest rehabilitation and restoration in Indonesia. This event aims at sharing the results of the study, including recommendations for government agencies, NGOs and the private sector to support Indonesia in achieving its climate targets.
In the lead up to the adoption of the Paris Agreement on climate change in 2015, each country was asked to outline its post-2020 climate plans, known as their nationally determined contributions (NDCs). Taken collectively, the initial plans put forward by countries did not go far enough to reach the Agreement’s goal: to limit global average temperature rise to “well below” 2 ºC above pre-industrial levels, and to “pursue efforts” to limit it to 1.5 ºC.
However, the Paris Agreement gives countries the opportunity to increase their climate ambition, by updating their NDCs every five years. It’s now time to take stock: have countries’ revised climate plans matched the increase in ambition needed to effectively address climate change?
For countries updating their plans to take more ambitious action on climate change, nature-based solutions offer essential tools and opportunities. Conserving, restoring and improving management of forests, wetlands, grasslands and agricultural lands can deliver a third of cuts in emissions needed by 2030 to help keep warming below 2 °C. These nature-based solutions also help countries and communities adapt to the impacts of climate change and contribute to achieving the Sustainable Development Goals (SDGs).
A large majority of the first round of NDCs included nature-based solutions in one form or another, but overall, these pledges were not quantified and did not outline coherent strategies for achieving them. Moreover, most didn’t consider the forest and land-use governance reforms that are essential to their implementation. The NDC revision process therefore provided an opportunity to strengthen the role of these natural solutions.
The EU REDD Facility has assessed the revised NDCs of several of its partner countries, and that of Brazil. Brazil, Colombia, the Democratic Republic of the Congo (DRC) and Indonesia are home to four of the top five largest remaining tropical forests. Looking at these countries as well as Cameroon, Ghana, Laos, Liberia, the Republic of the Congo (RoC), Thailand and Vietnam, a very mixed picture emerges in terms of increased ambition generally, and of the treatment of nature-based solutions in particular.
On overall pledges to reduce emissions, the glass is half full. Some countries have ramped up ambition in varying degrees, such as Colombia, Cameroon, DRC, Laos or Vietnam. Others, such as Ghana, Indonesia or Thailand, have resubmitted their 2015 pledges, while RoC has reduced its mitigation ambition.
In terms of NDC scope, the revision process has led most countries, apart from Thailand and Ghana, to cover more sectors and greenhouse gases than in their initial contributions. For example, Liberia’s revised NDC covers emissions from the forest sector, which were excluded in its first NDC.
In their revised NDCs, countries have an opportunity to be clearer and more specific by adopting measurable targets and explaining how they were calculated. To help determine how they can be supported to achieve their climate targets, they can also be clearer about their financial needs. On these aspects, overall, the revised climate plans we analysed made progress. For example, Colombia, Liberia and Vietnam, which had not provided cost estimates in their first NDCs, did so in their revised submissions. Cameroon, Colombia and DRC also detailed the emission estimates for each sector and planned activity.
More countries have included an overall target for the agriculture, forest and land sector in their revised NDCs, including Colombia and Liberia. All countries assessed, other than Thailand, put forward at least one quantified target related to this sector:
Nonetheless, numerous forest-related targets are still unquantified. This is a missed opportunity to enhance understanding towards countries’ commitments, raise the profile of the agriculture, forest and land sector and attract more public and private support.
Overall, forest governance is still insufficiently addressed in the revised NDCs. Few mention participatory processes, indigenous and local communities’ rights, land tenure or forest monitoring efforts. And when governance issues are mentioned, they are often not adequately articulated to ensure they will be integrated into the NDC’s implementation:
Most deforestation drivers, such as agricultural expansion, mining or the collection of fuelwood, come from outside the forest sector. A number of revised NDCs address them:
However, only Colombia, Liberia and DRC clearly draw links among sectors.
Other countries, such as Laos and Indonesia, present renewable energy targets that rely heavily on biomass or hydropower, which carry the risk of driving deforestation. These countries do not analyse the potential impact of these energy or agricultural targets on achieving their forest and land-use objectives.
The small number of countries that analyse the trade-offs across sectors of their NDC pledges illustrates that inter-ministerial coordination is still often lagging.
Liberia is one of the few countries that mentions the creation of an inter-ministerial task force on land-use planning to ensure coherence in NDC implementation. However, this task force does not include the energy and mining sector stakeholders, although mining and charcoal and biofuels production could have significant impacts on the forest emissions of this country. RoC also envisages the creation of an institutional mechanism to ensure inter-ministerial coordination. However, its articulation with the existing relevant coordination mechanisms in the country is unclear.
Overall, many of the revised NDCs analysed do not read like strategic documents integrating existing and planned national policies. For example, revised NDCs should draw linkages with the SDGs to ensure and assess the alignment and integration of climate-related policies and measures with development needs and strategies. The alignment of these two agendas, as well as with other relevant processes, such as national adaptation plans or FLEGT processes, is imperative to increase efficiency and maximise resources, technical capacity and expertise sharing. While more countries have drawn links with the SDGs in their revised NDCs, in many cases, such as in Liberia, Ghana or RoC, only general references to the SDGs are made, without specific information on how synergies and coordination will be ensured.
Achieving the objective of the Paris Agreement will depend on countries’ ability to turn their climate plans into action and work towards more ambition. By enhancing the forest sector components of their NDCs, Colombia, DRC, Liberia and Laos have paved the way to achieving their mitigation and adaptation goals. They have also raised the profile of the forest sector to attract the required investments and support to implement nature-based solutions. The increased granularity and ambition contained in these NDCs can provide the basis for future partnerships with national and international stakeholders to design and implement effective agricultural, forest and land sector policies. More countries would do well to follow suit.
Climate change is a whole-economy problem. Tackling it will require looking at every financial decision through a climate lens. Does the decision result in greenhouse gas emissions or will it reduce them? Will it improve resilience to climatic shocks or worsen vulnerability?
As countries move to implement the Paris Agreement on climate change, they need to know the answers to such questions. They need to be able to track and understand domestic flows of finance so they can better align them with their climate goals, identify gaps and unlock the private investment needed for green, resilient development.
Earlier this year, the EU REDD Facility, Climate Policy Initiative (CPI) and the United Nations Development Programme (UNDP) gathered experts from governments, donor agencies, and organisations tracking climate finance to take stock of progress, in an online workshop.
Setting the scene, Chavi Meattle from CPI gave an overview of the various ways dozens of countries are tracking climate finance and mainstreaming climate change into national and sectoral budgets. Padraig Oliver of the UN Framework Convention on Climate Change (UNFCCC) Secretariat explained how climate finance tracking can feed into countries’ national reporting under the Paris Agreement on climate change, as well as the Convention’s periodic global stocktake showing, “where we are, where we are going and what needs to be done”.
There has been considerable growth in climate finance tracking in recent years. While all of this data is great, how can we ensure it leads to policy action? As noted in the workshop, we need greater transparency, we need to ensure tracking approaches are tailored to each country’s context, and we need to better explain the benefits and opportunities for all stakeholders.
To get an idea of how national climate finance tracking is helping to increase policy ambition, improve reporting and mobilise new resources, we heard from government representatives in Ecuador, Indonesia, Kenya and South Africa.
For example, Noor Syaifudin of Indonesia’s Fiscal Policy Agency said the country has used climate budget tagging for mitigation action since 2016, and recently included tagging for adaptation actions too. Indonesia used this data for the issuance of green bonds (called Green Sukuk) that have generated more than USD 2 billion for financing climate action.
Sarah McPhail from the National Treasury of South Africa said her country was “late to the party” but was taking a “big bang” approach. Having recently mapped out the landscape of climate finance with GreenCape and The Bertha Centre for Social Innovation and Entrepreneurship, in partnership with CPI, South Africa is now piloting climate budget tagging, which it aims to roll out at national, provincial and local government levels. South Africa is also targeting its whole finance sector to improve climate-related financial disclosure.
In Ecuador, climate finance tracking is evolving to also consider the social justice aspects of spending. As Diego Teca of the Ministry of Environment and Water explained, the country is developing a gender-relevant climate index as part of an ongoing Climate Public Expenditure and Institutional Review.
In terms of building ambition, the speakers said it was necessary to provide the evidence base to inform ambition and implementation, build awareness and capacity at all levels of government, and strengthen climate finance institutional arrangements to increase private sector participation. They also highlighted the need to incorporate equity and ‘just transition’ considerations, extend tracking to adaptation and other sectors, and to strengthen budget effectiveness.
The Paris Agreement calls for all financial flows to be consistent with low-carbon, climate-resilient development. The second half of the workshop focused on how to ensure that countries, institutions and companies are aligning their financial decisions with that goal, and whether climate finance tracking can accelerate progress by public and private actors.
Clifford Polycarp of the Green Climate Fund spoke about how the fund is driving systemic change through both its investments and by helping countries to put in place strategies and frameworks and investment plans and capacities. Francisco Dall’Orso from Chile’s Ministry of Energy explained how the country is using UNDP’s Investment and Financial Flows assessments to identify ways to achieve carbon neutrality by 2050 cost-effectively.
Chris Dodwell of Impax Asset Management said that in many cases, national policy responses to climate change had not focused enough on financing requirements and so lacked baseline information from which to track progress. Citing the UK Committee on Climate Change’s 6th Carbon Budget report as a positive example, he also pointed to a need for credible sectoral roadmaps that clarify where private capital is needed and are supported by ‘investment-grade’ policies to attract that capital.
Dodwell highlighted strong growth in the amount of private capital coming into the climate solutions sector. There is a huge interest in investing in this sector, he said. What is lacking is knowledge about where that capital needs to be deployed.
Nathan Fabian of Principles for Responsible Investment added that private investors want to know their financial flows are, in fact, being invested in ways that make a substantial difference. He said a lack of alignment with climate goals is raising concerns in private markets about greenwashing. This highlighted the importance of harmonised approaches, common metrics and terms that can give private investors confidence that investments will align with stated climate goals.
Panellists also spoke a need to focus not only on decarbonisation of private investment portfolios but on increasing investment in climate solutions, including adaptation and resilience. They highlighted a need to measure both flows of finance and the effectiveness of those flows.
As CPI’s global managing director Barbara Buchner said in her closing remarks, it will not be possible to assess progress under the Paris Agreement without enhanced approaches to benchmark and measure the impact of commitments and finance on climate mitigation and adaptation goals. Enhanced approaches will also be needed to assess the contribution of public and private actors to sector transitions in the real economy across different geographies.
What’s more, the levels of finance currently available are trillions short of the sums needed to mitigate and adapt to climate change.
The workshop also highlighted the need for clear roadmaps for climate action and investment, greater transparency of financial data, harmonised approaches, and standardised criteria and benchmarks.
Fortunately, the number of organisations engaged in climate finance tracking is increasing every year, and they are digging ever deeper into this vital area. As this community of practice continues to grow, we look forward to more opportunities to develop and share methodologies, tools and best practices.
The workshop on domestic finance tracking and planning took place online on 21 January 2021. It was the latest in a series that began with a workshop that took place in 2019 at COP25 in Madrid.
Watch the recording of the workshop, read the summary report or view the presentation slides. For more on tracking the life cycle of climate finance flows, take a look at the Land-use Finance Tool, an open source tool that CPI and the EU REDD Facility have developed.
Angela Falconer
Director, Climate Finance Division
Climate Policy Initiative
