Carbon Trading Expected to Shift Private Sector from Logging to Reforestation

Minister of Forestry Raja Juli Antoni is encouraging the use of carbon trading as one of the instruments to develop private financing for tree planting and forest restoration activities. According to him, this mechanism can drive a shift in the forestry business model from logging to forest recovery and expanded forest cover.

“This is truly our opportunity to plant, and for them (the private sector) to change their business from logging in the past to planting. From extractive to restorative,” said Raja Juli in a written statement in Jakarta on Thursday (16 July).

He said the development of Nature-based Solutions forestry financing needs to be supported by information on location potential, types of activities, and clear governance. To this end, the Ministry of Forestry is preparing spatial data that can be used to identify potential areas and connect them with various forest management schemes.

He said this data can then be overlaid with areas under Forest Utilisation Business Permits (PBPH) and social forestry. This mapping is expected to help identify suitable locations for planting, restoration, and carbon-based projects in accordance with applicable regulations.

“We are truly mapping the data and providing guidance on planting methods and everything else. So if anyone wants to plant, there is a clear location, clear activities, and a clear process,” said Raja Juli.

According to Raja Juli, this approach is expected to provide information certainty for private parties wishing to invest in forestry activities. The government is also continuing to encourage carbon project development to be carried out with attention to quality, credibility, and applicable standards and governance.

Raja Juli said the approach aligns with the government’s policy direction in developing carbon economic value. He cited Presidential Regulation (Perpres) No. 110 of 2025 as one of the foundations for promoting the development of the carbon economic value mechanism as part of efforts to control greenhouse gas emissions and achieve Indonesia’s climate targets. “This is roughly what the President is doing with Perpres 110,” said Raja Juli.

The government has begun implementing carbon trading in the forestry sector after the Ministry of Forestry issued permits to four PBPH holders to conduct carbon transactions. This gives forest management community groups the opportunity to be directly involved in the carbon trading mechanism.

The government is continuing to strengthen the foundations of the national carbon market ecosystem through the development of a more transparent, integrated system with international standards.