Enviro News Asia, Jakarta — The Voluntary Carbon Market (VCM) is considered one of the strategic instruments that can bridge climate financing needs while strengthening sustainable forest management.
Through its incentive-based mechanism, VCM presents a significant opportunity to inclusively and credibly support the achievement of Indonesia’s FOLU (Forestry and Other Land Use) Net Sink 2030 target.
This issue was the main topic of discussion at the FOLU Talks titled “Understanding the Voluntary Carbon Market in the Forestry Sector,” organized by the Ministry of Forestry in Jakarta on Wednesday (July 9, 2025).
The Secretary General of the Ministry of Forestry, Dr. Mahfudz, stated that the VCM provides space for various parties—individuals, companies, and organizations—to voluntarily purchase carbon credits from emission reduction projects, including in the forestry sector.
“This not only promotes market-based climate financing, but also strengthens forest conservation and sustainable governance,” he said, as conveyed in the Ministry’s official release.
Professor Haruni Krisnawati, Expert Staff to the Minister of Forestry on Climate Change, added that the forestry and land use sector (FOLU) plays a crucial role in achieving Indonesia’s emission reduction targets.
This sector is expected to contribute up to 60 percent of the total target outlined in the Enhanced Nationally Determined Contribution (ENDC) document.
Indonesia is targeting a 31.89 percent reduction in emissions through its own efforts and up to 43.2 percent with international support by 2030, as well as achieving net zero emissions by 2060 or earlier.
“To meet the FOLU Net Sink 2030 target, we need around IDR 400 trillion in funding. VCM can serve as one of the main financing sources through an incentive-based approach,” Haruni explained.
Through the VCM scheme, market participants can purchase carbon credits from projects such as reforestation, peatland and mangrove restoration, and forest conservation.
These credits typically refer to international standards such as Verra, Gold Standard, and ART-TREES.
With its rich ecosystems and extensive tropical forest cover, Indonesia is seen as having a comparative advantage in developing nature-based projects like REDD+. “We have great potential to become a key player in the global VCM,” Haruni asserted.
She added that Indonesia already has a sufficient regulatory framework to support carbon trading implementation, including Presidential Regulation No. 98 of 2021 and several ministerial regulations issued by the Ministry of Environment and Forestry governing the Carbon Economic Value (NEK) in the forestry sector.
These regulations enable the integration of VCM projects into national targets through a nesting mechanism.
Nonetheless, Haruni highlighted several challenges, such as high validation and verification costs, limited data availability, and the need to enhance capacity at the local and regional levels.
She also emphasized the importance of incentive mechanisms for communities and transparency in benefit-sharing. “We must ensure a one-stop, fair, and accountable registration and permitting system,” she said.
Haruni concluded by calling for Indonesia to not only be a market for carbon, but also a leader in the global voluntary carbon market. “VCM is not just a funding opportunity, but a driving force for collaborative, transparent, and impactful climate action for both people and the environment.”
The discussion also featured Senior Advisor to the Minister of Forestry, Edo Mahendra, and Executive Director of the Indonesia Research Institute for Decarbonization, Moekti Handajani Soejachmoen. (*)
