This op-ed reflects the author’s own analysis and views and does not necessarily represent those of The Reformist.
Imagine this: You’re paying a premium for a bag of “carbon-neutral” coffee, thinking your money is helping save a rainforest. But in reality, the community living in that forest sees none of the benefits.
Unfortunately, it’s a global trend - not just an isolated (or even imagined) case.
Indonesia, home to the third-largest tropical rainforest in the world, is at the heart of the emerging carbon economy, a system where carbon is a commodity, and emission reductions can be traded to meet climate goals. Forests in Indonesia, thus, are not just ecological assets; they are political, economic, and cultural infrastructures upon which the lives of millions depend.
Yet, the country’s carbon governance landscape remains entangled in a web of regulatory inconsistencies, institutional overlap, neglected indigenous rights and climate justice, and underdeveloped financial instruments.
In this article, I explore Indonesia’s forest carbon governance landscape–particularly in light of recent institutional changes and emerging international frameworks–and how the country is standing in the intersection of climate urgency and economic opportunity.
Let’s first discuss three main problems in Indonesia’s forest carbon governance:
I. Net sink goals vs. legal sinkholes
In the climate sector, there’s a concept called a “net sink” — this means a sector absorbs more carbon from the atmosphere than it emits. Indonesia has set a goal to achieve a net sink in the Forestry and Other Land Use (FOLU) sector by 2030. This target is part of the country’s official climate pledge (Nationally Determined Contribution, or NDC) under the Paris Agreement.
However, the country hasn’t done much to support its ambitious goal. For example, the legal framework to support this goal is lagging behind. The government has yet to update key regulations, many based on outdated structures.
For example, Presidential Regulation No. 98/2021 was designed to manage the carbon economy (a system where carbon emission reductions can be traded like financial assets). But this regulation doesn’t reflect the major 2024 restructuring that split (bifurcate) the Ministry of Forestry and created a new agency, the Environmental Protection Agency (BPLH).
This gap in legal alignment is causing confusion and making it harder for Indonesia to meet international standards, such as ART-TREES 2.0, a widely recognized system for verifying forest-based carbon credits that demand strong safeguards and transparent, accurate emissions tracking.
Indonesia’s carbon market can only succeed if it’s built on a solid legal foundation. Right now, that foundation is unstable; there’s a crack in the backbone. If Indonesia fails to meet the requirements of Article 6 of the Paris Agreement (which governs international carbon trading) its carbon credits could be excluded from global markets, making them less attractive to investors and limiting their value.
II. Lost in bureaucratic tangle and institutional overlap
Indonesia’s forest carbon governance landscape is currently splintered across institutions with divergent mandates.
The Ministry of Forestry manages forest lands, BPLH oversees emissions reporting and SRN-PPI (Indonesia’s national registry for climate mitigation actions).
The Ministry of Environment (KLH) oversees emission caps, MRV, and the national registry (SRN).
The Ministry of Finance handles carbon tax and fiscal incentives.
The Ministry of Agriculture and the Ministry of Marine Affairs and Fisheries (KKP) – the latter plays a key role in developing blue carbon initiatives such as mangrove restoration and coastal ecosystem credits.
Sectoral ministries (Energy and Mineral Resources, Industry, and Transportation) set emission standards within their domains, yet operate with limited data convergence.
The Financial Services Authority (OJK) regulates carbon exchange mechanisms.
The Ministry of Investment streamlines licensing under the OSS system, often without ensuring environmental safeguards.
The Geospatial Information Agency Indonesia (Badan Informasi Geospasial, or BIG) handles spatial data.
The Ancestral Domain Registration Agency (Badan Registrasi Wilayah Adat, or BRWA) maps Indigenous territories.
The newly formed Coordinating Ministry for Food Security supervises land-based emissions.
This fragmentation undermines the monitoring, reporting, and verification (MRV) system that underpins environmental integrity. Currently, there are no accredited domestic bodies to validate ART-TREES compliant projects, rendering Indonesia reliant on foreign verifiers and stalling forest carbon transactions at scale.
Without coherent institutional infrastructure, verification becomes guesswork.
III. Indigenous rights: only a symbolic inclusion, more like a structural exclusion
Despite Indonesia’s rhetorical commitment to indigenous inclusion through Free, Prior, and Informed Consent (FPIC), the legal system has yet to grant Indigenous communities carbon tenure or access to benefit-sharing.
BRWA and BIG have mapped extensive customary territories, but these maps are not fully integrated into SRN-PPI. This absence of legal recognition means indigenous peoples are often included only ceremonially in carbon projects while the economic benefits flow elsewhere.
As what is not legally visible cannot be legally valued, indigenous rights remain the carbon market’s blind spot.
A case study of indigenous-led carbon market projects we’re not ready for: West Papua and East Kalimantan
Indonesia is building its forest carbon market, but Indigenous inclusion remains limited. In provinces like East Kalimantan and West Papua, local forest units have begun carbon-related projects, yet these efforts aren’t formally linked to the national registry (SRN-PPI) or Emission Reduction Purchase Agreements (ERPAs). Civil society groups are consulted, but legal frameworks for independent oversight are still missing.
The biggest gap is indigenous rights. These communities are de facto custodians of many high-carbon forests, but they have no legal claim to carbon benefits. While some customary lands have been mapped, there’s still no regulation guaranteeing Indigenous ownership or revenue-sharing. As a result, they’re often included only symbolically.
Indonesia’s engagement with the LEAF (Lowering Emissions by Accelerating Forest Finance) coalition could offer a chance to change this—but only if technical standards are met and Indigenous voices are meaningfully included. Without that, even optimistic credit projections for 2026 will remain out of reach.
What a forest finance overhaul could look like
So what should change in Indonesia’s forest carbon market landscape? I offer a five-point reform agenda that is essential to transition Indonesia from fragmented forest finance to a coherent carbon ecosystem:
Revise Perpres 98/2021 to reflect new institutional responsibilities.
Merge MRV systems across SRN-PPI, BRWABIG, and Forestry datasets.
Accelerate accreditation of domestic verification bodies.
Enact legislation on Indigenous carbon rights and benefit-sharing.
Mandate full transparency on carbon projects, credit issuance, and community grievances.
Each reform is necessary to shift from extractive logic to regenerative governance. Because a carbon economy without justice is just another kind of exploitation.
What we learned from COP29: Setting the stage for forest finance reform
In last year’s COP29, rules of the carbon market are taking shape fast. For Indonesia, this isn’t just a technical development; it’s a strategic opening. The decisions on Article 6 (particularly 6.2 and 6.4, which govern the carbon market) laid the groundwork for international cooperation that could align neatly with Indonesia’s emerging carbon regulations.
However, the underlying tension remains: finance mechanisms are evolving faster than social safeguards. As Brazil prepares to prioritize gender and justice at COP30, Indonesia must ensure its forest carbon governance is not left behind. The convergence of climate finance, biodiversity, Indigenous rights, and regional cooperation must now move from statements to systems.
COP29 also served as a critical springboard for Indonesia’s positioning at COP30, where the world will assess collective progress under the Paris Agreement. With its second NDC under preparation and growing scrutiny on equity and ambition, Indonesia must use this momentum to align domestic reforms with international expectations. For Indonesia, COP is not just a negotiation table; it is a litmus test for credibility, leadership, and long-term resilience in the era of climate accountability.
Rewriting the rule, claiming our leadership
From your morning coffee to forest communities in Kalimantan, the carbon economy shapes lives in quiet but powerful ways and Indonesia has the chance to rewrite the rules for all of us.
Indonesia now stands at a turning point. It can continue as a rentier state exporting raw environmental value with little accountability, or it can become a global model for regenerative climate finance that centers justice, legality, and participation. The revision of Perpres 98/2021, the institutionalization of indigenous rights, and alignment with ART-TREES and LEAF standards together offer the building blocks of a truly just carbon economy.
Forest finance isn’t just for climate experts or policymakers. It affects how much we can trust green products, whether indigenous communities benefit, and whether our forests are truly protected. If Indonesia gets this right, it’s not just the climate that wins; it’s all of us.
Emmanuel Adi is a legal analyst and ambassador of the Indonesian Civil Servants Corps at The Ministry of State Secretariat of the Republic of Indonesia. He was also a delegate of Indonesia for COP29.
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