Norway and REDD+ in Indonesia: The Art of Not Governing?

Abstract

This article examines the dilemmas that Norway faces in seeking to secure good governance while minimising its role as a political actor. REDD+ (Reducing Emissions from Deforestation and forest Degradation in developing countries) is a global programme which seeks to create a financial value for the carbon stored in forests, offering incentives for developing countries to reduce emissions from forested lands. The ambitions and expectations of REDD+ are enormous, and it may be that these will never be successfully achieved. The first phase is so-called REDD-readiness which involves preparing REDD+ countries to implement the proposed programme. It is already clear that the governance challenges are daunting, at every level: global, national and local. Norway is playing a major role in REDD+, having pledged 0.5 billion US dollars per year to the programme. It has committed 1 billion US dollars to Indonesia alone, and there can be no doubt that it is now seen as a very important actor in the forest sector in that country. But Norway wields its power reluctantly and has adopted what it calls a ‘light touch’. While some commentators have questioned the efficacy of this approach, many in Indonesia apparently regard Norway as having taken an unduly active role. This article discusses whether REDD+ should be treated as aid, with conditions attached; sets out the options facing Norway; analyses the content of the Letter of Intent between the two countries and assesses Norway's actions: Do they govern too much or too little?

Keywords:

• REDD+
• governance
• forest
• Indonesia
• Norway

Acknowledgements

This article was largely written while I was an Academic Resident at the Rockefeller Foundation's Bellagio Center. I am also extremely grateful to Arild Angelsen, Daniel Murdiyarso, Linda Sulistiawati and two anonymous referees for their helpful comments. Any errors are my own.

Notes on Contributor

Desmond McNeill (PhD, University College London) is Research Director at SUM (Centre for Development and the Environment) at the University of Oslo. A political economist, he has worked in many countries in the South largely in the field of governance and sustainable development. Recent books: Development Issues in Global Governance (with Benedicte Bull), 2007; Global Poverty, Ethics and Human Rights (with Asun Lera St. Clair), Routledge, 2009.

Notes

¹REDD+ was formerly just ‘REDD’. The ‘plus’ reflects the extension of REDD to include the role of conservation, sustainable management of forests and enhancement of forest carbon stocks.

²It is not my purpose in this article to evaluate whether Norway's efforts have impacted on deforestation in Indonesia, although this is of course an extremely important issue. Some are doubtful (Lang, 2014), while Frances Seymour, former Director General of CIFOR (Center for International Forestry Research) has been far more positive (see below). The problem is that an accurate evaluation would compare today's situation with what would have happened in the absence of Norway's efforts, and this is extremely difficult to assess. A study commissioned by Norway (LTS, 2014) concluded that the bilateral agreement has generated ‘substantial political leverage' (p. 270) and that ‘substantial progress' has been made regarding readiness planning (p. 272). But it is clear that payments based on actual verified emissions reductions are still in the future.

³The original idea of REDD+ was to create a multilevel system of payments of environmental services, that is, the climate services provided by forests in developing countries in the form of sequestering and storing carbon, with the primary funding from REDD+ credits sold as offsets in a compliance carbon market (Angelsen and Wertz-Kanounnikoff, 2008).

⁴COP 15 in Copenhagen (2009) failed to deliver an agreement. The Durban platform agreed at COP17 in 2011 states that an agreement should be ready by 2015 and take effect from 2020. In parallel with the UNFCCC process, national and regional carbon markets are evolving, by far the largest being EU's Emission Trading System. Yet it remains highly uncertain to what extent carbon markets ever will become a major source of funding for REDD+.

⁵The numbers are much debated. The United Nations Food and Agriculture Organisation (FAO) Global Forest Resources Assessment 2010 gives a figure of 94,432 hectares (FAO, 2010). The figures quoted here are from the Norwegian government's ‘Fact Sheet Norway-Indonesia Partnership REDD+’ based on data from Indonesia National Council on Climate Change (Norway, 2010).

⁶It deserves to be mentioned that IFIs played a major role in financing massive transmigration programmes that promoted deforestation and lately oil palm development.

⁷For example, the Global Environment Fund (GEF) may not be pleased. To quote Development Today (3 March 2011):

Barbut (Chief Executive Officer of GEF) points out that the GEF has been in the business of protecting forests for two decades. Until 2007, the GEF provided two-thirds of all multilateral funding for forest protection projects. However, none of the Norwegian forest climate money has been channeled via the GEF. She admits that, at the time, she feared that the enormous Norwegian pledge would trigger a rush of donor funds away from the GEF; that other donors would follow Norway and put their money into the World Bank and the newly-created UN REDD programme instead of GEF. ‘We worried that the Norwegian money would leverage other funds. Happily, this did not happen,' she said.

⁸To quote the leader of the latest evaluation (LTS, 2014): ‘Norway has been made the global leader on REDD. It didn't want to be, but that's just happened' (Hardcastle, 2014). Norway has taken initiatives to encourage dialogue, such as the Oslo REDD Exchange organised in 2011 and 2013. It was also active in trying to begin operationalising elements of the Copenhagen Accord on REDD+, through the REDD partnership. But here it was cautious, perhaps in response to NGO criticism. Thus, Prime Minister Stoltenberg, in his video statement, states that ‘This partnership must supplement and inspire, not compete with, the UN negotiations’ (http://www.redd-monitor.org/2010/05/06/reply-form-norwegian-government-to-ngo-statement-on-paris-oslo-process/). Norway is probably also concerned to ensure that its very substantial funding inspires rather than crowds out additional finance from other countries.

⁹This apparently came as a surprise to many in Indonesia, who saw it as placing a considerable burden on the country. Some ministries claimed that they did not know about the commitment before they heard the president's speech (Sulistiawati, 2014).

¹⁰The situation has changed since then; now the main idea is still some kind of result-based payments, but from aid and other sources, not from a carbon market that does not exist and will not be created in the near future (Angelsen and McNeill, 2012).

¹¹Ironically, the 1 per cent aid target was not achieved, at least initially. The OECD Development Assistance Committee (OECD/DAC) objected to the aid expenditure figures that Norway reported concerning REDD+ on the grounds that only actual expenditures on REDD can legitimately be included, not commitments. Norway had to agree, thus reducing its aid performance to below the magic 1%. Even more ironically, this occurred when Solheim moved from Norway to a new post as chair of OECD/DAC. In this position, he had to insist on Norway adhering to the rule which he, as minister, had previously failed to follow.

¹²In the rush to show progress and spend money, there has been strong pressure to cut corners, and some friction between the Ministry of Environment and the Ministry of Foreign Affairs, for example, regarding Guyana (Bade, 2012).

¹³I have not included measures which Norway could perhaps take relating more directly to the private sector. Companies engaged in logging, palm oil and mining account for the greater part of deforestation in Indonesia, as in most other countries, constituting the third ‘transnational network’ identified by Gellert: international and domestic capital.

¹⁴The concept of ‘good governance’ is much debated; and what constitutes ‘good governance’, either in general or more specifically with regard to forest governance, is also much debated. (Batterbury and Fernando, 2006; Larson and Petkova, 2011) Norway was concerned both to minimise corrupt practices and encourage popular participation (see below).

¹⁵‘Cooperation on reducing greenhouse gas emissions from deforestation and forest degradation' (see http://www.regjeringen.no/upload/SMK/Vedlegg/2010/Indonesia_avtale.pdf).

¹⁶NGO criticisms are summarised in Rainforest Foundation Norway (2011). It should also be noted that a delegation from Commission IV of the Indonesian House of Representatives visited Norway from 20 to 26 March 2011 to argue against the LoI (Caldecott et al., 2011, p. 17).

¹⁷Note that the LoI qualifies ‘full and effective participation’ by adding: ‘subject to national legislation, and, where applicable, international instruments’. NGOs have criticised the wording as being unacceptably weak.

¹⁸This account takes the story up until 31 August 2013 when President Yudhoyono signed Presidential Decree No 62/2013 to set up a ‘REDD+ Agency’. Before the end of the year, Heru Prasetyo was appointed as the head, and a financial mechanism, FREDDI – Financing REDD+ in Indonesia – was established in late 2013 to facilitate the flow of funds for REDD+ financing.

¹⁹Norad, through the Civil Society Department, has allocated very substantial amounts to NGOs such as the Rainforest Foundation Norway, foundations such as the Clinton Foundation and foreign research organisations such as the CIFOR. By contrast, and perhaps significantly, there has been a marked absence of funding for independent research by Norwegian researchers.

²⁰Nevertheless, total (global) grants to civil society by NICFI are more than four times the amount allocated to Indonesia. (LTS, 2014: xix).

²¹ http://www.regjeringen.no/templates/RedaksjonellArtikkel.aspx?id=547202&epslanguage=EN-GB (accessed 27 November 2013). It should be added that NICFI has made considerable use of staff of the Rainforest Foundation Norway, the NGO which played a crucial role in garnering political support for REDD+ in Norway (Nilsen, 2010).

²²This view appears to match that of the Secretary of the REDD+ Task Force (Purnomo, 2012).

²³His Deputy there was Heru Prasetyo.

²⁴This point is also made in LTS 2014 (p. 268), based on more formal interviews.

²⁵The study examined two cases: UN-REDD and the Norwegian bilateral programme.

²⁶Of the five agencies and institutions, four have regulatory power (only DNPI is excluded); they are all at the same ‘horizontal’ level in Indonesia's governmental structure and compete with each other.

²⁷In his book, Purnomo stresses the importance of the one billion US dollars.

I reminded Hans over the phone that the agreement about including a figure for the Norwegian commitment is politically important to Indonesia, and if that figure could not be agreed upon, President SBY may change his intention to attend the Oslo Climate and Forest Conference. (2012, p. 27)

²⁸One of the recommendations from the 2011 evaluation is relevant here: ‘engage more actively with the Indonesian House of Representatives, to build support through increased understanding among parliamentarians of the strategic advantages of the LoI process for Indonesia' (Caldecott et al., 2011, p. 4).

²⁹Note: since this article was written a new president – Joko Widodo – has been elected. Of the candidates he is generally regarded as the one most likely to be favourable to REDD+.

³⁰1 NOK (Norwegian crown) is about 0.15 US dollars.

³¹According to LTS 2014 (p. xix), a total of NOK 10.3 billion (1.7 billion US dollar) of funding has been disbursed by NICFI since 2008. Brazil has received 44% of the total (NOK 4.6 billion), while Indonesia has received only 2%: less than one-quarter of the grants to civil society.