Executive Summary

Indonesia has a developing framework for nature-based carbon credit projects in the Voluntary Carbon Market (VCM), with six registered mangrove projects and over 20 other nature-based initiatives under the Plan Vivo and Verra standards. The government strictly regulates carbon trading to ensure it aligns with Indonesia’s Nationally Determined Contribution (NDC) targets. All international transactions require the approval of the Ministry of Environment and Forestry (MoEF).
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Project developers must navigate a structured but complex regulatory process. Regulation No. 21 of 2022 outlines key requirements, including sectoral NDC plans, verification of NDC achievement, and MoEF authorization before engaging in international carbon trading. Regulation No. 7 of 2023 adds specific requirements for forestry projects, including mangrove and peatland initiatives. Developers need a Forest Utilization Business License (PBPH) for commercial projects or Social Forestry Management Approval for community led initiatives. Additionally, all projects must register in the National Registry System for Climate Change Control (SRN PPI) to ensure transparency and alignment with national policies.
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Indonesia mandates benefit-sharing agreements under Regulation 70 of 2017, ensuring that Indigenous Peoples and Local Communities (IPLCs) receive fair compensation. All forestry based carbon projects require Free, Prior, and Informed Consent (FPIC). A rigorous measuring, reporting, and verification (MRV) system—established under Presidential Regulation No. 98 of 2021—governs all climate mitigation and adaptation activities. Without an MRV report, the government will not issue Greenhouse Gas (GHG) Emission Reduction Certification or authorize carbon trading. Regulation No. 7 of 2023 further strengthens these requirements, mandating continuous monitoring and evaluation of forestry-sector carbon projects.
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Mangrove forests fall under state and local government and customary ownership but overlapping land tenure and conflicts pose governance challenges. The government classifies mangroves as protection forests, managed jointly by the MoEF and the Ministry of Marine Affairs and Fisheries. Private entities can develop carbon projects through concessions and business licenses, while communities must obtain permits under the Social Forestry Program. The government retains carbon rights and transfers them as part of concession approvals.
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Overall, Indonesia has favorable conditions for the development of blue carbon projects. The country offers a strong foundation for blue carbon projects, backed by experience in implementation, clear authorization pathways, and defined carbon rights ownership. However, land tenure security remains a key area for improvement.

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