Indonesia launches forestry carbon hub, approves first carbon credit projects

By Romel S. Gurky

Indonesia on Monday launched the Indonesia Forestry Carbon Hub and approved the first batch of forestry carbon projects eligible to issue carbon credits, as the government seeks to expand the country's carbon market and attract investment in forest conservation.

Forestry Minister Raja Juli Antoni said the initial phase covers verified pilot projects spanning about 225,000 hectares, with an estimated emissions reduction potential of around 30 million tonnes of carbon dioxide equivalent (CO2e).

The projects could generate carbon transactions worth around Rp 5 trillion and about Rp 500 billion in non-tax state revenue, he told a press conference in Jakarta.

The approved projects include PT Global Alam Lestari's Sumatra Merang Peatland Project, PT Rimba Makmur Utama's Katingan Peatland Restoration and Conservation Project, PT Mohairson Pawan Khatulistiwa's Mayas Project, and a community-based carbon project in Jambi managed by conservation group KKI Warsi.

The launch marks the government's latest effort to build a domestic carbon market while supporting its target of achieving a forestry and other land use (FOLU) net carbon sink by 2030.

The Forestry Ministry also announced that Indonesia's Carbon Unit Registration System (SRUK) will be launched on July 9. The system will be linked via an application programming interface (API) with the Verra Registry and the Indonesia Stock Exchange's carbon trading platform using blockchain technology to improve transparency and traceability of carbon credit transactions.

Verra is one of the world's largest voluntary carbon standards organizations.

Coordinating Minister for Food Affairs Zulkifli Hasan said the government was revising nearly 35 regulations, including government and presidential regulations, to simplify licensing, improve transparency and accelerate investment in the green economy.

Financial Services Authority (OJK) Chair Friderica Widyasari Dew said the regulator was strengthening oversight of Indonesia's carbon exchange through revisions to existing regulations and exploring carbon-linked financial products backed by revenue generated from forestry carbon credits and agroforestry projects.

Hashim Djojohadikusumo, President Prabowo Subianto's special envoy for climate and energy, said the government aims to restore 12.7 million hectares of degraded land and invited international investors to participate through carbon market projects.

"The 12.7 million hectares of degraded land must immediately be restored. This represents a concrete opportunity for the carbon market," Hashim said.

Indonesia has identified carbon trading as a key mechanism for financing forest conservation while supporting economic development and meeting its climate commitments under the Paris Agreement.

Editing by Reiner Simanjuntak