Indonesia’s national carbon-trading platform opened on March 11, 2025, with the government positioning the initiative as a mechanism to monetize the country’s forests and geothermal resources through emission credits. The exchange, run by the Indonesia Stock Exchange under regulations President Joko “Jokowi” Widodo signed the previous year, debuted with 33 projects offering 1.8 million tonnes of carbon dioxide equivalents in its first auction.
On launch day, traders completed deals for 462,000 tonnes at an average price of USD 6.40 per tonne. Shortly after trading began, environmental organizations raised doubts about whether half of the listed offsets represent genuine, additional emission reductions. Critics warned that inflated baselines could introduce “ghost credits” into the market, potentially undermining Jakarta’s 2060 net-zero commitment.
Forest Offset Project Under Scrutiny
The largest single offering originates from the 234,000-hectare Rimbo Paitan forest concession in East Kalimantan. Developer PT Rimba Raya Conservation asserts the project will prevent 25 million tonnes of peat-fire emissions over three decades. The company’s baseline scenario assumes the entire area would otherwise be converted to oil-palm plantations, a projection Greenpeace Indonesia described as having “no resemblance to current zoning maps.” The Ministry of Environment and Forestry reclassified the site as a “protection forest” in 2019, which effectively prohibits plantation licenses.
Tata Mustafa, climate policy lead at the Indonesian Forum for the Environment (Walhi), stated that once the government has ruled out conversion, the threat becomes no longer credible, making any issued credit effectively “selling hot air.” Laksmi Dhewanthi, the ministry’s director-general of climate control, responded that the reference level was established using 2018 data, predating the reclassification, and thus complies with the 2022 carbon-exchange decree. Climate Analytics analysts noted that while the argument fits the rulebook legally, investors may still discount the credits.
Geothermal Projects Face Questions
Three geothermal plants on Sumatra—Sarulla (330 MW), Sorik Marapi (240 MW), and Ulubelu (220 MW)—also listed offsets, arguing that without carbon revenue they would have constructed cheaper coal units instead. These plants are already operational and hold long-term power-purchase agreements with state utility PLN at feed-in tariffs exceeding coal prices. Market rules permit “financial-additionality” tests at the investment-decision date, yet the plants began commissioning between 2014 and 2019.
Melissa Brown, director of energy finance at the Asia Society Policy Institute, described retro-crediting as a “red flag,” stating that buyers need certainty that their money drives change rather than rewarding past decisions. The exchange requires project owners to publish additionality narratives, but no independent review board exists; verification is handled by domestic auditors licensed by the Ministry of Environment.
The ministry stated that international standards such as Verra’s VCS may be used voluntarily, but only two of the 33 inaugural projects have submitted third-party certification.
Oversight Gaps and Market Volatility
Trading rules limit daily price swings to 15 percent and require sellers to deposit 5 percent of proceeds into a newly created “green fund” managed by the state budget. Secondary-market liquidity remains thin, with only 14 brokers holding trading licenses, and offshore buyers must route orders through local banks.
On March 12, the spot contract declined 8 percent to USD 5.90, prompting the exchange to pause afternoon trading. Finance Minister Sri Mulyani told reporters the volatility was “normal for a start-up market” and pledged stricter disclosure rules by June. The financial regulator OJK has not yet specified penalties for false project claims. A 2023 Supreme Court audit found the ministry’s carbon-registry database vulnerable to double-counting because logging and plantation concessions use separate serial numbers.
Officials stated a unified blockchain ledger will be ready by 2026.
Corporate Response and Outlook
Indonesia’s largest coal miner, PT Bumi Resources, purchased 50,000 tonnes of offsets on opening day, describing the acquisition as a hedge against future export tariffs. Consumer giants Unilever Indonesia and Indofood said they would “observe” the market before replacing existing Verra credits that support their net-zero plans.
Singapore-based carbon trader Climate Impact Partners reported it walked away after failing to obtain satellite evidence of deforestation threats in two peatland projects. The firm’s Jakarta representative, Andhika Mahardika, stated that while the price is attractive, reputation risk is not. BloombergNEF analysts estimate Indonesian credits trade at a 30 percent discount to similar Verra-labelled units, reflecting the uncertainty premium. The government plans to expand the market to cover domestic compliance obligations starting in 2026, when coal-fired power plants rated above 100 MW must offset excess emissions.
The Institute for Essential Services Reform estimates this could generate demand for 15-20 million tonnes of credits annually. However, analysts warned that if early vintages are discredited, the market could face the same fate as China’s regional pilot bourses, where liquidity dried up after fraud scandals.
Jakarta must also align its registry with Article 6 rules under the Paris Agreement to enable international transfers. Climate negotiators meeting in Bonn this June are expected to discuss corresponding-adjustment templates; without them, Indonesian credits cannot count toward other countries’ climate targets. Environment Minister Hanif Faisol Nurofiq stated at the launch ceremony that the government is committed to transparency and will adopt UN standards.
