Monday, June 5, 2023

World Bank to pay East Kalimantan for excess carbon emission reduction

Reading Time: 2 minutes
Intelligence Author


Mahinda Arkyasa



After two days of meeting with World Bank officials, 1 million tons of excess CO2e emission reductions for East Kalimantan for the 2019-2020 period will be paid for by the Forest Carbon Partnership Facility-Carbon Fund (FCPF-CF).

Alhamdulillah, we agreed that our 1 million tons of CO2e will be paid for by the Carbon Fund, the World Bank,” East Kalimantan Governor Isran Noor said, on Sunday (14/5).

The negotiations were carried out by Governor Isran Noor in two consecutive days. The initial meeting took place on Tuesday (9/5), followed by the second meeting held on the next day, Wednesday (10/5). These productive discussions were held at the World Bank Headquarters in Washington DC, USA.

The governor emphasized that the agreement to reduce 1 million tons of CO2e emissions would contribute to East Kalimantan’s revenue through result-based payments for the province’s carbon emission reductions.

East Kalimantan’s success in decreasing CO2e by 32 million tons

It is worth noting that the World Bank’s Carbon Fund agreed to reduce emissions of East Kalimantan by 22 million tons of CO2e or US$110 million. 

According to the initial reduction report, East Kalimantan successfully decreased emissions from 2019 until December 2020 by an impressive 32 million tons of CO2e. There are about 10 million tonnes of excess CO2e emission reductions that can be traded. 

With this agreement, one million tons of CO2e from the excess was finally agreed to be purchased and the Carbon Fund will be paid as compensation for reducing emissions as much as 23 million CO2e. 

“The determination of the price per tonne of CO2e will be carried out between the East Kalimantan negotiating team and the Indonesian Government and the World Bank after the first East Kalimantan emission reduction report is received by the Carbon Fund from the World Bank auditors,” Isran Noor said. 

“We should be grateful for this agreement and hope that the excess reduction in emissions, which is around 9 million tons of CO2e, will also be paid off later,” Isran Noor added.

World Bank grants East Kalimantan for emissions reduction

East Kalimantan Province has become a pioneer in reducing carbon emission programs in Indonesia. The province entered into an agreement based on the signing of an Emission Reduction Payment Agreement (ERPA) between the Indonesian Government and the World Bank’s FCPF for activities to reduce emissions from deforestation and forest degradation (REDD+). 

Followed up by the agreement, the East Kalimantan provincial administration recorded an exemplary achievement in reducing carbon emissions by approximately 30 million tons of CO2e, while an assessment conducted by the World Bank indicates a reduction of 22 million tons of CO2e.

As a result, the province has received an advanced payment of approximately IDR 260 billion from the World Bank, as a jurisdiction-based Results-Based Payment (RBP) for this emissions reduction.

The receipt of carbon compensation funds for East Kalimantan marked a significant milestone as it was the inaugural occurrence of such payments in Indonesia. This payment is also a reward for regional governments that have successfully undertaken forest conservation endeavours.

Intelligence Author


Mahinda Arkyasa




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