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B20 Indonesia Strengthens the Role of Communities in Trading Carbon Credits
B20 Indonesia Strengthens the Role of Communities in Trading Carbon Credits
Friday, 24 June 2022

JAKARTA - Indonesia's strategic role is eagerly awaited in the world's efforts to overcome the climate crisis. The important and strategic role is shown through various strategic policies, ranging from the Carbon Economic Value (NEK) policy, periodic submission of net zero ambitions by 2060 according to the Updated Nationally Determined Contribution (NDC) submission, to regulation of the domestic carbon trading mechanism,

Currently, Indonesia is preparing and will start implementing levies on carbon emissions or carbon taxes along with the ratification of the Law on Harmonization of Tax Regulations (UU HPP). The government has also issued Presidential Decree 98 of 2021, concerning the Implementation of Carbon Economic Value (NEK) and Control of Greenhouse Gas Emissions in National Development.

The commitment of the Indonesian government is also supported by KADIN Indonesia as the organizer of B20 Indonesia through various sustainable initiatives such as carbon market adoption, sustainable forest management, and Net Zero Hub. This shows Indonesia's leadership in tackling the impacts of climate change through public and private sector collaboration, thereby inspiring other countries to do the same.

As the purpose of B20 Indonesia is to provide policy recommendations that can be followed up in a concrete way for each government priority, the Indonesian Chamber of Commerce and Industry hopes that this initiative will provide encouragement and become a recommendation for the government in making Indonesia's climate policy.

The Director General of Sustainable Forest Management at the Ministry of Environment and Forestry, Agus Justianto, said that the Forest and Other Land Uses (FOLU) sector, or the forestry and other land use sector, is projected to contribute nearly 60% of the total target for reducing greenhouse gas (GHG) emissions as stated in the NDC. This shows how vital the role of the forestry sector is in efforts to handle and control GHG emissions in Indonesia and of course for efforts to control climate change on a global scale.

Agus said this when giving a speech at a hybrid discussion held by the B20 Trade and Investment Task Force in collaboration with ICDX (Indonesian Futures and Commodity Derivatives Exchange) on "Reviving Local Community Through Decarbonization Projects in Indonesia," Friday (24/06/2022). This webinar aims to provide a comprehensive understanding of the benefits of trading carbon credits which are Indonesia's great potential for local communities, and more broadly for the country's economy.

“We are very aware that implementing the FOLU Net Sink 2030 scenario will almost certainly require very large resources, both budget resources, human resources, technology and other resources, so it is certain that the support from parties will be very much needed including; Ministries/Institutions, local governments, the business world, the community, including international support,” added Agus.

In addition to the Director General of Sustainable Forest Management at the Ministry of Environment and Forestry, Agus Justianto, this discussion forum presented Silverius Oscar Unggul, WKU for Environment & Forestry at the Indonesian Chamber of Commerce and Industry; Sakariyas, Regent of Katingan, Central Kalimantan; Riza Suarga, General Chair of the Indonesia Carbon Trade Association (IDCTA), and Emmy Primadona, KKI WARSI Program Coordinator.

Currently, there are five main sectors (Energy, Forestry, Agriculture, Waste, and IPPU) that are the focus of mitigation actions to achieve NDC targets. However, currently the largest efforts made by the government are in the forestry and land use sector or known as Forestry and Other Land Uses (FOLU) and the energy sector which produce around 60 percent and 36 percent of emissions, respectively.

In the FOLU sector, Indonesia has succeeded in controlling land and forest fires, which fell by 82 percent in 2020. Indonesia has also started the rehabilitation of mangrove forests with a target of 600 thousand hectares by 2024, which is the largest in the world. Currently, Indonesia has the ambition to make the FOLU sector a carbon net sink in 2030, so that carbon neutrality occurs in the sector.

This sector has enormous economic value if it is successfully protected from damage. Indonesia's tropical rain forests are the third largest forest in the world with an area of ​​125.9 million hectares that can absorb carbon emissions of 25.18 billion tons. Meanwhile, our peatlands are the largest in the world with an expanse of 7.5 million hectares and able to absorb 55 billion tons of carbon emissions.

Not only that, the area of ​​Indonesia's mangrove forests which reaches 3.31 million hectares is able to absorb around 33 billion tons of carbon emissions. This refers to the calculation of the average carbon content of forests reaching 200 tons C per hectare, from mangroves 1,082.6 tons C per hectare, while peatlands are 460 tons C per hectare, and primary peat forests are 1385.2 tons C per hectare.

Seeing the large contribution made by the FOLU sector, Silverius Oscar Unggul, WKU for Environment & Forestry, KADIN Indonesia, said that policies and incentives to achieve net-zero targets must be designed to support economic development and more sustainable livelihoods in the sector, one of which is through the Regenerative initiative. Forest Business Sub Hub (RFBSH).

“This initiative is under the umbrella of KADIN Net Zero Emissions and is expected to be a space for dialogue between business actors, the government, and the community. This initiative is to support forestry governance as well as climate change mitigation for the development of green villages, which means prioritizing the role of the community or community around the forest,” he explained.

Maintaining intact forests is the fastest and most cost-effective way to maintain forest benefits, including the most resilient form of carbon storage. According to data from the Ministry of National Development Planning/Bappenas, globally, an investment of USD 4.5 billion per year in restoration is projected to create up to 150,000 new jobs and economic benefits of USD 6-12 billion per year.


In the social forestry scheme, indigenous peoples are not only seen as beneficiaries of the policy. If accompanied properly, communities can manage forests and keep forests sustainable while reducing emissions. This was stated by the Program Coordinator of the Indonesian Conservation Community (KKI) Warsi, Emmy Primadona who has overseen social forestry practices in Bujang Raba in Jambi Province and several areas in West Sumatra Province.

Emmy said that community involvement is important, especially in the commitment to social forestry schemes that are proven to have a high contribution in reducing carbon emissions. The social forestry that has been carried out since 2013 also has certification from Plan Vivo, one of the organizations that propose carbon credits. In early 2018, total carbon sales reached 6000 tons. The proceeds from the sale of these carbon credits are returned to the community in the form of capacity building, educational scholarships, economic incentives, patrols, and forest enrichment.

The same thing was said by Sakariyas, Regent of Katingan Central Kalimantan and Riza Suarga, Chairperson of IDCTA who said that the carbon emission absorption project through the FOLU sector has great benefits for communities around forests as well as has great economic value for the country's economy through the resulting NEK.


“Projects to sequester carbon emissions from the FOLU sector have proven to make a very large contribution to forest communities. More than just CSR, but the carbon credit trading actors who are our members have brought community development to the local community around the project. Starting from improving the quality of education through providing scholarships and improving school infrastructure, involving young doctors, empowering the local economy and integrated waste management are concrete activities that are continuously carried out and expanded. These activities even become the criteria for determining the quality of impact investment carbon projects in the Climate, Community and Biodiversity scheme," said Riza.

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