Indonesia launched its national carbon exchange on March 11, 2025, with the goal of monetizing the country’s forests and geothermal resources through emission credits. The bourse, managed by the Indonesia Stock Exchange under rules President Joko “Jokowi” Widodo approved last year, initially listed 33 projects offering 1.8 million tonnes of carbon dioxide equivalents.
On the first day, traders executed deals for 462,000 tonnes at an average price of USD 6.40 per tonne. Environmental groups immediately raised concerns after the opening bell, questioning 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 Indonesia’s 2060 net-zero commitment.
Forest Offset Project Draws Scrutiny
The largest single offering involves the 234,000-hectare Rimbo Paitan forest concession in East Kalimantan. Developer PT Rimba Raya Conservation claims the project will prevent 25 million tonnes of peat-fire emissions over 30 years.
The company’s baseline scenario assumes the entire area would otherwise become 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 bans 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 is no longer credible, so any credit issued is selling hot air.” Laksmi Dhewanthi, the ministry’s director-general of climate control, responded that the baseline was calculated using 2018 data, predating the reclassification, and thus complies with the 2022 carbon-exchange decree. Climate Analytics analysts noted this argument fits the rulebook legally but warned investors may still discount the credits.
Geothermal Projects Also Questioned
Three operating geothermal plants on Sumatra—Sarulla (330 MW), Sorik Marapi (240 MW), and Ulubelu (220 MW)—also listed offsets. Their developers argue that without carbon revenue, they would have built cheaper coal plants instead.
However, these facilities already have long-term power-purchase agreements with state utility PLN at feed-in tariffs that underprice coal. Commissioned between 2014 and 2019, the plants qualify under market rules allowing “financial-additionality” tests at the investment-decision date. Melissa Brown, director of energy finance at the Asia Society Policy Institute, called “retro-crediting a red flag,” adding that “buyers need certainty that their money moves the needle, not rewards decisions taken years ago.” The exchange requires project owners to publish additionality narratives but lacks an independent review board. Domestic auditors licensed by the Ministry of Environment handle verification.
While international standards like Verra’s VCS may be used voluntarily, only two of the 33 inaugural projects have obtained third-party certification.
Market Mechanics and Oversight Gaps
Trading rules limit daily price swings to 15 percent and require sellers to deposit 5 percent of proceeds into a state-managed “green fund.” Secondary-market liquidity remains limited, with only 14 licensed brokers and offshore buyers required to route orders through local banks. On March 12, the spot contract fell 8 percent to USD 5.90, prompting the exchange to pause afternoon trading.
Finance Minister Sri Mulyani described the volatility as “normal for a start-up market” and promised tougher disclosure rules by June. The financial regulator OJK has not 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 say a unified blockchain ledger will be operational by 2026.
Corporate Response and Market Outlook
Indonesia’s largest coal miner, PT Bumi Resources, purchased 50,000 tonnes of offsets on opening day as a hedge against future export tariffs. Unilever Indonesia and Indofood said they would “observe” the market before replacing existing Verra credits supporting their net-zero roadmaps. Singapore-based Climate Impact Partners declined to participate after failing to obtain satellite evidence of deforestation threats in two peatland projects.
The firm’s Jakarta representative, Andhika Mahardika, noted that “price is attractive, but reputation risk is not.” BloombergNEF analysts estimate Indonesian credits trade at a 30 percent discount to similar Verra-labelled units. The government plans to expand the market to domestic compliance obligations in 2026, when coal-fired power plants above 100 MW must offset excess emissions.
The Institute for Essential Services Reform estimates this could generate annual demand for 15-20 million tonnes of credits. However, analysts warn that if early vintages are discredited, the market could face the same fate as China’s regional pilot bourses, where liquidity collapsed after fraud scandals. Jakarta must also align its registry with Paris Agreement Article 6 rules to enable international transfers. Climate negotiators meeting in Bonn this June are expected to discuss corresponding-adjustment templates.
Environment Minister Hanif Faisol Nurofiq stated at the launch ceremony that “we are committed to transparency and will adopt UN standards.”
