Indonesia takes back its forest carbon

Three years of frozen credits, four regulations, and a market that has not caught up yet.

Indonesia holds 95.5 million hectares of forest, just over half its land area, and one of the largest stores of tropical carbon on earth. For most of the last fifteen years very little of that carbon reached a buyer through a system the government trusted. Between December 2024 and April 2026 Jakarta rewrote the rules from the state's point of view. The trade is only now starting to follow.

The timeline

What went wrong

The problems were real, and most of them were about control.

Promises that did not pay. Indonesia signed a US$1 billion REDD+ letter of intent with Norway in 2010, built a moratorium on new permits in primary forest and peatland from 2011, and made it permanent in 2019. The results payments did not arrive on the timetable Jakarta expected, and in September 2021 Indonesia ended the agreement. A new arrangement with Norway was signed a year later and has since paid out, but the lesson stuck: someone else's pace should not govern Indonesian forest finance.

Credits the state could not count. Voluntary credits issued on international registries were being sold abroad while the same tonnes sat inside Indonesia's national climate target. Two claims on one tonne. From 2022 the government stopped new registrations, issuance and international transfers for forest projects while it worked out the accounting. The freeze lasted about three years and left some of the country's most established projects unable to sell.

Concessions in dispute. In 2023 the ministry revoked the licence of one of the best-known REDD+ concessions in Central Kalimantan. The courts voided the revocation in 2024 and the appeal court upheld that. Whatever the merits, investors saw a title that could be pulled and a registry account that could be suspended, on the same asset.

Communities left out. Consent from customary landholders was treated as a formality on some programmes. Where communities withheld it, the tonnes were sometimes counted anyway, and the dispute outlived the program.

Conservation forest with no legal route to carbon finance. National parks and nature reserves hold some of the densest carbon in the country, but the licences that let a private operator restore and protect them for carbon revenue were patchy, and the rules for water, tourism, geothermal and hunting were spread across separate regulations written a decade apart.

What the new rules do

Read from Jakarta, the framework has one purpose: every tonne of Indonesian forest carbon should be counted once, recorded in Indonesia, and approved by the state before it leaves.

A national registry that records every unit. Perpres 110/2025 splits the registry in two. SRN PPI, the national climate registry, tracks mitigation actions and the country's target. SRUK, the carbon unit registry launched in July 2026, records every unit from issuance through transfer to retirement, and is linked to IDXCarbon. A tonne that is not in SRUK does not exist as far as the state is concerned.

International standards, recognised on Indonesian terms. Between May and October 2025 Indonesia signed mutual recognition agreements with Gold Standard, Plan Vivo, the Global Carbon Council and Verra. A project can still certify to an international standard, but it must register in the national system first, and the core data is mirrored back into it. Japan's Joint Crediting Mechanism was recognised the year before.

A choice at the border. Credits sold abroad now take one of two routes. A buyer counting the tonne against another country's climate target needs Environment Ministry authorisation and a corresponding adjustment, which takes the tonne off Indonesia's own ledger. A voluntary buyer who is not making that claim needs no authorisation. That single distinction is what ended the freeze.

Carbon licences inside conservation areas. Permenhut 27/2025, signed on 11 December 2025, consolidates every environmental service in the conservation estate into one regulation and adds a new licence for carbon, the PB-PJL Karbon. The terms are specific:

• It covers the utilisation zones of national parks and the utilisation blocks of nature recreation parks, grand forest parks and hunting parks, where no other licence or agreement already applies.
• It runs for up to 40 years and cannot be extended.
• It is open to state and regional enterprises, companies, village enterprises, cooperatives and foreign businesses. Foreign investors apply to the Minister through the national online licensing system.
• Credits must come from adding carbon, through ecosystem restoration or peat restoration and rewetting. Standing carbon stock cannot be traded. The holder must also protect the area against fire, logging and encroachment.
• Every project must show additionality, permanence and leakage control, carry out biodiversity and social impact assessments, obtain free, prior and informed consent, and share benefits with the park authority and local communities on terms the Director General sets.
• The operator needs ESG certification and staff certified in conservation and carbon trading.
• Any trade, domestic or international, needs the Minister's approval or recommendation first, and each transaction must be reported within 14 days.
• Areas already under a results-based payment agreement, or work done to meet a permit obligation or a CSR program, are excluded. No double dipping.

More people allowed to sell. Permenhut 6/2026 moves the rest of the forest estate from quotas to project-based offsets, and opens trading beyond concession holders to social forestry groups, customary communities, private forest owners and carbon environmental service licensees. Communities must work with a registered partner, which keeps a professional counterparty in the chain. Free, prior and informed consent, known in Indonesian law as Padiatapa, is mandatory evidence for every project, alongside a benefit-sharing agreement, and the state takes non-tax revenue on each transaction.

Two routes to market. A project chooses a domestic route, documented in a DRAM design document for national certificates, or an international route, documented in a DPP planning document for standards such as Verra. Provincial and national jurisdictional programs sit over the top, and individual projects must nest inside them so the same hectare is not claimed twice.

Where the carbon trade actually stands

The rules are ahead of the market. The numbers are worth reading plainly.

The exchange is thin. IDXCarbon opened in September 2023. It traded about 904,000 tonnes in 2025, worth Rp36.4 billion, and most of that in the first quarter. From January to August 2026 it traded about 165,000 tonnes. It has around 159 registered participants and ten listed projects.

No forest carbon has traded on it yet. Every listed project is gas-plant efficiency, geothermal, mini-hydro or palm-oil-mill biogas. The nature-based categories carry no listings.

International trading opened, then stalled. Cross-border trading on IDXCarbon launched on 20 January 2025 with 41,822 tonnes on the first day. The full-year international total was only about 48,000 tonnes. Around nine in ten buyers are domestic.

Authorisation carries a premium. In 2025 negotiated trades, ordinary domestic units averaged about Rp37,000 a tonne. Units authorised for international transfer averaged about Rp80,000. The corresponding adjustment roughly doubles the price.

Forest credits are moving, but through Verra. In July 2026 the Ministry of Forestry cleared Katingan, Sumatra Merang and The Mayas, with Bujang Raba reported as a fourth, to issue again under the new rules. Verra expects at least 20 million credits from the first three and is building a direct link between its registry and Indonesia's. Katingan alone has 17.3 million credits approved for 2021 to 2023.

Government-to-government deals are still at the letter stage. Indonesia and Singapore signed a carbon credit memorandum on 6 July 2026 that covers forest conservation, but the implementation agreement is still being negotiated. Norway's Article 6 letter of intent from November 2025 covers renewable energy, not forest. No government-to-government transfer of forest carbon has been completed.

The targets are large. At COP30 the government offered 90 million tonnes, set a Rp16 trillion sales target, and afterwards reported 13.5 million tonnes signed. Most of that appears to be non-binding, and none of it has shown up on the exchange.

The domestic demand levers are still off. The carbon tax written into the 2021 tax law, at Rp30 per kilogram, remains postponed. The emissions trading scheme for power plants did not allocate 2025 allowances. Until either one bites, domestic buyers have little reason to hold forest credits.

Is it working?

On the government's own terms, yes. The freeze is over, the registry is live, and the first forest projects are issuing again with the state's approval and in the state's ledger. The larger target is national: Indonesia's FOLU Net Sink 2030 goal is for forests and land use to absorb 140 million tonnes more carbon than they emit by 2030. The state needs private projects to deliver part of that, and it now has the accounting to let them do so without losing the tonnes from its own ledger.

On the market's terms, not yet. The exchange has no forest supply, the bilateral deals are unsigned at the operative level, and the domestic compliance demand that would pull credits through has not been switched on.

What it means for project owners

The government has traded speed for certainty. A forest carbon project in Indonesia now has more steps before its first credit: the right licence, national registration, consent evidence, benefit sharing, ministry approval, and authorisation if the credit is exported for another country's target. Each step is written down. None of them depends on a moratorium lifting.

For existing projects there is a clock. Permenhut 6/2026 gives them six months from April 2026 to report into the new system, which runs out in October 2026.

For new projects the order of work has changed. The standard comes after the state, not before it. At Numada we start with the land designation and the licence it allows, whether a production forest licence, a community scheme or the new conservation carbon licence, because that decides which route a project can take, who it can sell to and whether it is selling carbon removal or protection. The methodology follows from that. So does the buyer: authorised credits sell at about twice the domestic price, and until domestic demand arrives the buyers that matter are offshore.

Indonesia has not made forest carbon easier. It has made it Indonesian.

Sources: Permenhut 1/2024; Perpres 110/2025; Permenhut 27/2025; Permenhut 6/2026; Ministry of Environment SRUK launch, July 2026; Verra, 6 July 2026; IDXCarbon monthly reports, December 2025 and August 2026; Verra, Gold Standard and Plan Vivo recognition announcements, 2025; Ministry of Forestry forest cover data, 2024.