Jakarta—Forestry Minister Raja Juli Antoni said on Thursday, March 13, that carbon trading from the forestry sector will start soon as part of the government’s efforts to mitigate climate change and accelerate the green economy.
However, he did not specify a specific date for the carbon trading from forestry sector projects to start. Many international investors and business players are still waiting for forestry projects to be traded on the country’s carbon market.
The Minister said this program would open up great opportunities for Indonesia to manage natural resources sustainably and provide economic benefits to the community and business players.
He said that in the initial stage, state news agency Antara reported that this carbon trading includes a forest management scheme by the private sector (Forest Utilisation Business Permit Holders or PBPH) and Social Forestry, with different carbon absorption potentials.
He said PBPH has the potential to absorb 20-58 tons of CO2 per hectare for USD 5-10/ton CO2, while Social Forestry can absorb up to 100 tons of CO2 per hectare for 30 euros/ton CO2.
The potential for carbon trading in this sector is estimated to reach 26.5 million tons of CO2 in 2025, with a transaction value ranging from Rp1.6 trillion to Rp3.2 trillion per year.
He said carbon trading from the forestry sector has the potential to generate funds of Rp 97.9 trillion to Rp 258.7 trillion per year until 2034, with a tax contribution of around Rp 23 trillion to Rp 60 trillion and non-tax revenues of Rp 9.7 trillion to Rp 25.8 trillion per year.
In addition, this program is expected to create 170 thousand jobs in various carbon project locations.
The Minister of Forestry emphasized that carbon trading does not only focus on reducing emissions but also plays a role in accelerating reforestation through conservation and Afforestation, Reforestation and Revegetation (ARR) strategies.
The Ministry of Environment, Financial Services Authority (OJK) and the Indonesian Stock Exchange have launched international carbon trading on Jan. 20, 2025. The carbon trading is traded through the Indonesian Carbon Exchange or IDXCarbon, a unit of the Indonesian Stock Exchange.
The launch of international carbon trading is considered a milestone for Indonesia’s carbon market. It allows international buyers to purchase carbon units sourced from Indonesia.
Unfortunately, although Indonesia has abundant resources, no carbon units come from the forestry sector that can be traded on the carbon exchange.
Researcher at the Center for International Forestry Research, World Agroforestry (CIFOR_ICRAF), Herry Purnomo, said the absence of carbon units traded on the carbon exchange shows the complexity of calculating the carbon stocks from the sector. The other problems are due to the absence of clear regulations. (Roffie Kurniawan)
Banner photo: Degraded peatland in Sumatra (Taufan Kharis/shutterstock.com)
