Why Indonesia Matters for Global Climate Stability: Biodiversity, Blue Carbon, and International Carbon Trading Leadership

Indonesia is more than just a tropical archipelago of 17,000 islands. It is one of the most ecologically important countries on Earth, a cornerstone of the world’s fight against biodiversity loss, marine degradation, and climate change. As one of only 17 megadiverse nations, Indonesia hosts an unmatched wealth of terrestrial and marine biodiversity—while simultaneously becoming a pioneer in international carbon trading strategies aligned with Article 6 of the Paris Agreement.

As global carbon markets grow and nature-based solutions become central to international decarbonization pathways, Indonesia is emerging as a crucial player. Its leadership in carbon trading negotiations and bilateral agreements with countries like Japan, Norway, and South Korea shows its commitment to climate action, all while offering a model of how to merge environmental stewardship with sustainable development.

The Ecological Importance of Indonesia: A Global Biodiversity Powerhouse

Despite covering just 1.3% of Earth’s land surface, Indonesia accounts for nearly 10% of the world’s flowering plant species, 12% of mammal species, 16% of reptile and amphibian species, and 17% of bird species. Its rainforests are home to iconic and critically endangered animals like the Sumatran tiger, Javan rhinoceros, and orangutan. These lush ecosystems are carbon sinks of global importance, storing vast amounts of carbon in biomass and soil.

Indonesia’s biodiversity doesn’t stop at the shoreline. As the heart of the Coral Triangle, its marine ecosystems support more than 3,000 species of fish and 600 species of reef-building corals—an unmatched marine biodiversity hotspot. Over 60 million Indonesians depend directly on coastal and marine ecosystems for their livelihoods, particularly in fisheries, aquaculture, and ecotourism.

However, this natural heritage is under threat. Deforestation, illegal logging, mining, land-use change, and climate-driven events like coral bleaching are reducing ecosystem resilience. More than 19% of Indonesia’s tree cover has been lost since 2001. The degradation of coastal ecosystems—particularly mangroves and seagrasses—adds another layer of vulnerability, not just for Indonesia, but for the global climate.

Blue Carbon: Indonesia’s Secret Weapon Against Climate Change

Indonesia is home to over 3 million hectares of mangrove forests—the largest extent in the world. These coastal ecosystems are among the planet’s most efficient carbon sinks. Known as “blue carbon” ecosystems, mangroves, seagrasses, and tidal marshes store up to four times more carbon per hectare than tropical rainforests.

Mangroves also serve as natural storm buffers, protect against coastal erosion, filter pollutants, and provide breeding grounds for commercially important fish species. Their preservation and restoration are vital for achieving Indonesia’s emissions reduction targets under its Nationally Determined Contribution (NDC), as well as for protecting millions of Indonesians living in coastal areas from the worsening impacts of climate change.

Indonesia’s emphasis on blue carbon isn’t just environmental—it’s economic and diplomatic. By quantifying the climate benefits of restored and protected blue carbon ecosystems, the country is positioning itself to issue high-quality, verifiable carbon credits that can be traded internationally.

Carbon Trading: Indonesia’s Growing Role in Global Markets

Indonesia has taken bold steps to build a robust carbon market ecosystem. Presidential Regulation No. 98 of 2021 created the national framework for carbon pricing, carbon registries, and the operationalization of both domestic and international carbon trading schemes. In 2023, Indonesia launched its first national carbon exchange (IDXCarbon), enabling emissions trading among large emitters.

More importantly, Indonesia is embracing bilateral and plurilateral market mechanisms under Article 6.2 of the Paris Agreement, making it one of the few countries in the Global South actively pursuing mutual recognition agreements (MRAs) for international carbon credit transfers.

Countries with Active or Planned MRAs with Indonesia:

• Japan: In October 2024, Indonesia signed a groundbreaking mutual recognition agreement with Japan, the first Article 6.2 bilateral deal involving a developing country. This deal allows both countries to trade Internationally Transferred Mitigation Outcomes (ITMOs), aligning with their respective climate targets.

• Norway: Indonesia is finalizing a carbon trading agreement with Norway. Building on their longstanding partnership in forest conservation and REDD+ finance, this agreement is expected to facilitate cross-border carbon credit flows from nature-based projects.

• South Korea: Discussions are ongoing for a similar MRA, with a focus on sharing MRV (monitoring, reporting, and verification) frameworks and potentially linking registry systems for transparency and traceability.

• Denmark: Talks are underway to establish pathways for Danish firms to invest in Indonesian mitigation activities, particularly in renewable energy and land-use-based projects.

• Singapore and the UAE: Indonesia has also expressed interest in collaborating with other Southeast Asian and Middle Eastern countries for future Article 6.2 trade, with Singapore being a natural partner due to its advanced carbon services ecosystem.

  
  

These partnerships are not just legal frameworks—they represent a global trust in Indonesia’s environmental credibility. For project developers, investors, and communities, this opens up new opportunities to generate and monetize high-integrity carbon credits in line with evolving global standards.

Challenges and Key Considerations

While Indonesia’s ambition is commendable, executing these plans at scale will require addressing key challenges:

• Complex Verification Processes: Ensuring MRV systems are transparent and trusted internationally is crucial. Alignment with methodologies from Verra, Gold Standard, and ISO standards will be key.

• Benefit Sharing Mechanisms: Local communities, particularly Indigenous peoples and smallholders, must receive fair, timely, and transparent compensation for their role in maintaining carbon stocks. Delays and opacity in benefit sharing, as seen in India, undermine trust and participation.

• Capacity Building: There’s a pressing need to train local governments, developers, and monitoring institutions in carbon accounting, remote sensing, and project finance.

• Avoiding Double Counting: Article 6.2 transfers must include corresponding adjustments to ensure emissions reductions are only counted once, and registry interoperability becomes critical.

  
  

Still, the progress is real. With support from international partners, NGOs, and private sector actors like Carbon Tide, Indonesia has the potential to lead the Global South into a new era of climate finance.

Carbon Tide and the RPCM Project: Catalyzing Change from the Ground Up

At Carbon Tide, we believe that carbon finance must be rooted in ecological integrity and community benefit. That’s why we launched the RPCM (Restoration and Preservation of Coastal Mangroves) project in Riau, Indonesia—a region where carbon opportunity meets ecological urgency.

Why Mangroves?

Because mangroves deliver one of the highest carbon return-on-investment profiles of any ecosystem on the planet. But they’re not just climate tools—they’re life-support systems. They protect fisheries, shield coastal villages from typhoons, and harbor species found nowhere else on Earth.

What We’re Doing:

• Restoration: Rehabilitating degraded mangrove zones using native species, guided by ecological succession and community input.

• MRV and Carbon Quantification: Deploying satellite data, drone imagery, and ground surveys to establish a verifiable baseline and track biomass growth and soil carbon.

• Livelihood Integration: Training local residents to become mangrove stewards, integrating sustainable fisheries, eco-tourism, and non-timber forest product value chains.

• Carbon Credit Development: Aligning with the highest standards for blue carbon project certification and registering our credits under a framework that is eligible for Article 6.2 transfers.

  
  

Looking Ahead:

Carbon Tide plans to expand the RPCM model to cover additional coastal regions across Sumatra, Kalimantan, and Sulawesi. By building scalable blue carbon projects that are both environmentally and economically credible, we aim to:

• Help Indonesia meet its enhanced NDCs and net-zero targets.

• Generate verifiable carbon credits that attract global buyers.

• Deliver measurable impact to local communities.

• Demonstrate how private capital, climate science, and community wisdom can work together.

  
  

Conclusion: Why Indonesia Must Be at the Heart of the Global Climate Conversation

Indonesia is not a side story in the climate narrative—it is a keystone. Its forests store carbon that keeps the global temperature in check. Its seas house life that feeds half the planet. Its communities are on the front lines of both climate risk and climate solutions.

By embracing carbon markets, protecting biodiversity, and restoring blue carbon ecosystems, Indonesia offers a rare model of hope and leadership. And with the right partners—governments, NGOs, Indigenous groups, and companies like Carbon Tide—the country can scale that leadership into something transformational.

The eyes of the world are on Indonesia. And for good reason. If we want to protect the planet, we must protect the ecosystems that make it liveable. And there is no better place to start than here.