Washington DC, May 25, 2010 – The World Bank today approved its first ever development policy loan dedicated to climate change mitigation and adaptation in Indonesia. The US$ 200 million “Climate Change DPL” is designed to support the Indonesian government in its efforts to adopt a lower carbon, more climate-resilient growth path. With this investment, the World Bank joins the support provided over the last two years by the Governments of Japan (JICA) and France (AFD). The policy loan focuses on (i) addressing the need to mitigate Indonesia’s greenhouse gas emissions; (ii) enhancing adaptation and resiliency efforts in key sectors; and (iii) strengthening the institutions and policies needed for a successful climate change response. The Climate Change DPL marks the first in a planned series of four annual loans of similar value.
“Indonesia is potentially a major victim of climate change. At the same time, Indonesia’s emissions make up a significant part of the global total. We are delighted that today Indonesia is taking this step to address the threat of global climate change. Since hosting the UN Climate Change conference in 2007, Indonesia has shown strong commitment to addressing climate change. Over the last two years, the government has already managed to bring climate change into the national planning and budgeting process,” said World Bank Country Director for Indonesia, Joachim von Amsberg, referring to Indonesia’s new National Council on Climate Change and the recently published Development Planning Response to Climate Change.
“The Climate Change DPL series is a recognition of these commitments and is aimed at helping Indonesia implement its ambitious climate change agenda. With the right policies and greater capacity, Indonesia can gradually make the shift to a low-carbon growth and also reach its shorter term target of a 26 percent reduction in greenhouse gas emissions. I am happy that Japan, France, and the World Bank are jointly supporting Indonesia through this well coordinated program.”
Indonesia is highly vulnerable to climate change impacts – seal level rise, changing weather patterns, and increasing uncertainty.
Climate change could potentially impact food security; agricultural productivity; water storage; the spread of water- and vector-borne diseases; and coral ecosystems. The Climate Change DPL series – in addition to putting the country on a lower carbon growth path – is expected to help reduce Indonesia’s vulnerability against these impacts by focusing on key policy issues and governance challenges related to mitigation, adaptation and institutional development.
Government policies that are supported through the Climate Change DPL series, are expected to bring he following key benefits:
- a reduction in forest loss and peat land conversion and burning
- a reduction in the overall use of fossil fuels
- the development of renewable energies like geothermal and biomass
- the promotion of energy efficiency
- improved water resource management
- greater ability to respond to water-related climate change impacts (droughts and floods)
- farmers better prepared for climate change impacts on food production (flood, droughts, pests)
- greater government capacity for managing and reducing disaster risk
- improved climate preparedness and resilience in the coastal and marine sector
- improved knowledge, policies and legal framework for implementing mitigation and adaptation programs
- greater climate policy coordination
- greater legal and institutional framework for financing climate change actions
The Climate Change DPL draws from experiences gained from other development policy loans which the World Bank has extended to Indonesia. So far, six macroeconomic development policy loans have been disbursed while a development policy loan series targeting infrastructure has already reached its third year. Development policy loans allow governments to carry out key reform activities that span over several years, even despite fluctuating financial and political interests. These policy loans are successful when there is broad government support.
In the case of the Climate Change DPL, Bappenas – Indonesia’s National Development Planning Agency – and the Ministry of Finance are playing a central role in coordinating across all stakeholder agencies and ministries involved in mitigation and adaptation.