Ecobiz.asia – Indonesia’s Financial Services Authority (OJK) is developing carbon insurance and other sustainable finance instruments to strengthen the country’s carbon market ecosystem and improve access to financing for carbon projects.
The initiative is aimed at reducing investment risks for carbon projects, making them more bankable for financial institutions while expanding funding sources beyond grants and international climate finance.
Yuki Yasarani, Deputy Director for Sustainable Finance at OJK, said Indonesia has made significant progress in establishing the regulatory framework for carbon trading following the issuance of OJK Regulation (POJK) No. 10 of 2026, which aligns financial sector rules with Presidential Regulation No. 110 of 2025 on carbon economic value instruments.
“The regulatory foundation is now much stronger. The next challenge is to strengthen the market by connecting the financial sector with carbon project developers so that more projects become eligible for financing,” Yuki said during the National Webinar on Forest Utilization Transformation on Thursday (August 06, 2026).
According to Yuki, Indonesia’s financial sector already has sufficient liquidity to support sustainable investment. The remaining challenge is increasing the number of high-quality carbon projects that meet the governance and risk standards required by lenders.
“The funding is available. What we need is to better connect the forestry sector and carbon project developers with existing financing facilities. Our role is to bridge these two sectors,” she said.
To diversify financing sources, OJK is encouraging greater use of sustainability-linked bonds and sukuk to finance carbon projects.
As of June 2026, outstanding sustainable debt securities and sukuk issuance had reached approximately Rp85 trillion (US$5.2 billion), with growing interest from carbon project developers.
OJK is also preparing a carbon insurance framework as a risk mitigation instrument designed to reduce investment uncertainty in carbon projects.
The regulator expects that insurance coverage will increase lenders’ confidence, potentially allowing financial institutions to offer more favorable financing terms, including lower borrowing costs.
In parallel, OJK is developing technical guidance to help banks and other financial institutions assess the credibility and bankability of carbon projects.
“The financial sector needs to understand what constitutes a credible and financeable carbon project, while project developers also need to understand what financial institutions are looking for. We need a common language,” Yuki said.
As part of broader efforts to expand sustainable finance, OJK is also developing the Satu Karsa initiative, a pilot financing program for reforestation and agroforestry projects.
The program aims to gradually support restoration of up to one million hectares through community participation while utilizing blended finance mechanisms that combine public, private and development financing.
According to OJK, Indonesia’s sustainable finance portfolio reached approximately Rp2,100 trillion in 2025, with sustainable land management and biodiversity among the fastest-growing financing sectors.
Meanwhile, trading on the Indonesia Carbon Exchange (IDXCarbon) had reached nearly 2 million tonnes of CO₂ equivalent, valued at approximately Rp93.8 billion, by mid-June 2026.
Ten carbon projects are currently listed on the exchange. OJK expects that expanding financing instruments and increasing the supply of credible carbon projects will help deepen Indonesia’s carbon market and strengthen its position in the global carbon economy. ***
