On 11 March 2025 the Indonesia Stock Exchange launched the country’s first national carbon‑trading market, a scheme designed to monetize forest conservation and geothermal generation as emission‑reduction credits. The exchange listed 33 projects that together offered 1.8 million tonnes of carbon‑dioxide‑equivalent (tCO₂e) credits for the inaugural auction.
Traders exchanged 462 000 tCO₂e on the first day at an average price of US $6.40 per tonne. Environmental organisations quickly raised concerns that roughly half of the listed offsets may not represent genuine, additional emissions cuts. They warned that overly optimistic baseline assumptions could produce “ghost credits” that threaten Indonesia’s pledge to reach net‑zero emissions by 2060.
The biggest offering came from the 234 000‑hectare Rimbo Paitan forest concession in East Kalimantan. PT Rimba Raya Conservation, the project developer, says the project will avoid 25 million tonnes of peat‑fire emissions over 30 years, basing its claim on a reference scenario in which the area would be converted to oil‑palm plantations.
Greenpeace Indonesia disputed this scenario, stating it does not match current zoning maps. The Ministry of Environment and Forestry had re‑classified the site as a “protection forest” in 2019, effectively blocking new plantation licences. Tata Mustafa, climate‑policy lead at the Indonesian Forum for the Environment (Walhi), argued that once conversion is ruled out, any credit issued merely “sells hot air.” In response, the ministry’s director‑general of climate control, Laksmi Dhewanthi, explained that the baseline was calculated using 2018 data, before the re‑classification, and therefore complies with the 2022 carbon‑exchange decree.
Analysts at Climate Analytics note that while the methodology fits the rulebook, investors may still discount such credits.
Geothermal Projects Under the Lens
Three Sumatra geothermal plants—Sarulla (330 MW), Sorik Marapi (240 MW) and Ulubelu (220 MW)—also entered the market, claiming that carbon revenue prevented them from building cheaper coal units. All three plants are already operating under long‑term power‑purchase agreements with state utility PLN, which set feed‑in tariffs above coal‑generated power. Market rules permit “financial‑additionality” testing at the time of the investment decision, yet the plants were commissioned between 2014 and 2019.
Melissa Brown, director of energy finance at the Asia Society Policy Institute, described retro‑crediting as a “red flag,” stressing that buyers need assurance that their money drives new mitigation, not rewards past choices. Project owners must publish additionality narratives, but verification is performed by domestic auditors licensed by the ministry, with no independent review board.
While international standards such as Verra’s VCS can be used voluntarily, only two of the 33 inaugural projects have secured third‑party certification.
Market Mechanics, Liquidity and Price Volatility
Trading rules limit daily price movements to 15 percent and require sellers to deposit 5 percent of proceeds into a state‑run “green fund.” Nonetheless, secondary‑market depth remains thin; only 14 brokers hold trading licences and foreign participants must route orders through Indonesian banks. On 12 March the spot price fell 8 percent to US $5.90, prompting the exchange to suspend afternoon trading. Finance Minister Sri Mulyani described the swing as “normal for a start‑up market” and pledged stricter disclosure requirements by June.
The financial regulator OJK has not yet defined penalties for false project claims. A 2023 Supreme Court audit highlighted the risk of double‑counting in the ministry’s carbon‑registry, noting that logging and plantation concessions use separate serial numbers.
Officials said a unified blockchain ledger is slated for launch in 2026.
Corporate Participation and Future Outlook
PT Bumi Resources, Indonesia’s largest coal miner, purchased 50 000 tCO₂e on launch day as a hedge against prospective export tariffs. Consumer giants Unilever Indonesia and Indofood said they would “observe” the market before replacing existing Verra credits that support their net‑zero strategies. Singapore‑based trader Climate Impact Partners withdrew from two peatland projects after failing to obtain satellite evidence of deforestation threats, citing reputational risk despite attractive pricing. BloombergNEF estimates that Indonesian credits trade about 30 percent below comparable Verra‑labelled units, reflecting an uncertainty premium.
The government intends to expand the market to cover domestic compliance obligations from 2026, when coal‑fired plants over 100 MW must offset excess emissions—a potential demand of 15‑20 million tCO₂e annually, according to the Institute for Essential Services Reform. However, analysts caution that if early vintages are discredited, the market could follow the fate of China’s regional pilot exchanges, which lost liquidity after fraud scandals.
To enable international credit transfers, Indonesia must align its registry with Article 6 of the Paris Agreement. Negotiators at the Bonn climate talks in June are expected to discuss corresponding‑adjustment templates; without them, Indonesian credits cannot be counted toward other nations’ climate targets. Environment Minister Hanif Faisol Nurofiq pledged “commitment to transparency and adoption of UN standards” at the launch ceremony.
Whether traders and watchdogs accept that promise will determine if the platform evolves into a credible climate instrument or remains a short‑lived experiment in carbon speculation.
