Ecobiz.asia — Global carbon market players have welcomed Indonesia’s latest forestry carbon trading regulation, while highlighting several critical challenges that must be addressed to ensure effective implementation and attract international investment.
Speaking during a virtual panel discussion on Minister of Forestry Regulation No. 6/2026, Björn Fondén, International Policy Manager and APAC Lead at the International Emissions Trading Association (IETA), said the regulation marks a major milestone in opening Indonesia’s carbon market.
“We can now finally say that the market is open,” Fondén said, referring to the combined impact of Presidential Regulation No. 110/2025 and Minister of Forestry Regulation No. 6/2026.
The discussion was organized by The Landscape Group and the Indonesia Ocean Justice Initiative on Tuesday (May 5, 2026), bringing together policymakers, industry players, and international stakeholders to assess the implications of Indonesia’s latest carbon market regulation.
According to Fondén, the two regulations provide the long-awaited clarity and framework needed for Indonesia to engage with international carbon markets, including both voluntary markets and mechanisms under Article 6 of the Paris Agreement.
Fondén said the international investor community is “very excited” about Indonesia’s direction, particularly with the inclusion of international independent carbon crediting standards such as Verra and Gold Standard.
However, he stressed that several key areas still require further clarification to ensure market confidence and scalability.
One of the main gaps lies in procedures for authorization and corresponding adjustments under Article 6, which are essential for cross-border carbon transactions. Fondén noted that clearer guidance is needed on long-term emissions targets, sectoral roadmaps, and cost structures to support these mechanisms.
“Authorizations are not short-term project discussions. They are about long-term low-emission development strategies,” he said.
He also cautioned against viewing carbon credits as an easy source of revenue, emphasizing that not all activities can be converted into viable carbon projects. Strong data systems and robust monitoring, reporting, and verification (MRV) frameworks remain critical, alongside sustained government efforts to curb deforestation and support energy and industrial transitions.
Indonesia’s dual-track system, which allows both domestic standards (SPE) and international standards (Non-SPE), was also seen as a positive step aligned with global trends. Fondén pointed out that similar approaches are being adopted in other countries, including Thailand, which has advanced its national carbon standard to access international demand.
The recent regulatory update, which allows international crediting programs without requiring mutual recognition agreements, is expected to broaden market participation and attract more investors.
Despite this progress, Fondén highlighted the need for greater clarity around Indonesia’s national carbon registry system, currently under development by the Financial Services Authority of Indonesia and the Ministry of Environment.
He emphasized that transparency, simplicity, and efficiency in registry operations, including project registration, credit tracking, and transfer, will be critical to building investor confidence.
Indonesia’s move to adopt the G20 common carbon credit data model was welcomed as a major step toward data harmonization and international alignment. However, Fondén acknowledged that integrating systems and ensuring bureaucratic efficiency will be a complex and ongoing challenge.
“The level of clarity and efficiency from the government will be critical for market stakeholders,” he said. ***
