Environment Minister Jumhur has revealed the significant potential of\nIndonesia\u2019s carbon trading through mangrove forest management. According\nto his calculations, an investment of Rp 200 million to rehabilitate one\nhectare of mangrove over three years could generate carbon credits worth\nRp 1.5 billion \u2014 assuming a carbon price of USD 30 per tonne and\nabsorption of 3,000 tonnes of CO2 equivalent per hectare. This figure\nfar exceeds the current market price, which ranges from USD 7\u201310 per\ntonne, indicating that revenue realisation is highly dependent on a rise\nin global carbon prices. Jumhur described the carbon market as\n\u2018invisible trade\u2019 because the commodity is intangible yet worth\ntrillions of rupiah. He stressed the importance of Indonesia not only\nbeing a supplier but also an active player in the global carbon\nmarket.<\/p>\n
The government has prepared mandatory and voluntary schemes to\nachieve the 2030 emission reduction target, which is estimated to\nrequire more than Rp 50,000 trillion in funding. Such a sum cannot be\nsourced solely from the state budget, which already recorded a deficit\nof Rp 240 trillion as of March 2026. Consequently, the carbon market has\nbecome a crucial alternative for climate funding. However, significant\nchallenges remain. Fluctuating carbon prices and global regulatory\nuncertainty could derail profit projections. Furthermore, carbon credits\nmust undergo a rigorous verification and registration process, which is\ntime-consuming and costly. For investors, this scheme offers high\nlong-term returns, but with considerable price, regulatory, and\nexecution risks.<\/p>\n
The sectors that stand to benefit most are mangrove landholders and\nland-based companies capable of converting emissions into tradeable\nassets. Conversely, high-emission issuers such as coal and cement\ncompanies will be burdened by the future cost of purchasing carbon\ncredits.<\/p>\n
The carbon market is not merely an environmental issue; it is an\nalternative funding mechanism for Indonesia amid increasing fiscal\npressure. With the state budget deficit reaching Rp 240 trillion, the\ngovernment cannot rely solely on public spending to finance climate\ntargets worth Rp 50,000 trillion. If the carbon market functions\neffectively, it could become a new source of state revenue, reduce the\nburden on the state budget, and create a new business ecosystem.\nHowever, if it fails, Indonesia could become a net buyer of carbon\ncredits in the future, burdening its balance of payments and export\ncompetitiveness.<\/p>\n
Mangrove landholders and plantation or pulp and paper companies with\nlarge land banks could gain new revenue streams from carbon credit\nsales, increasing their asset valuations. High-emission issuers in coal,\ncement, and petrochemicals will face additional operational costs if the\nmandatory scheme is implemented, potentially suppressing profit margins\nby 5\u201310 percent depending on the carbon price. Environmental\nverification services, consultants, and emissions measurement technology\ncompanies will see a surge in demand, opening up previously limited\nbusiness opportunities.<\/p>\n
Key areas to monitor include the transaction volume and price on the\nIDX Carbon exchange in the coming weeks, specifically whether there is\nan increase towards USD 15\u201320 per tonne or if it remains stuck at USD\n7\u201310. A major risk to watch is the clarity of regulations regarding\ncarbon credit ownership; if there is overlap with environmental or\nforestry permits, projects could be hampered by bureaucracy. A crucial\nsignal will be any official statement from the Financial Services\nAuthority and the Ministry of Finance regarding tax incentives for\ncarbon trading, which would accelerate adoption and investment.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/indonesias-carbon-market-rp-200-million-investment-promises-rp-1-5-billion-but-a-price-gap-looms-1785088228", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }