---
title: 'Indonesia’s Carbon Market, Ready for Takeoff'
url: 'https://thediplomaticinsight.com/indonesia-carbon-market-ready-fo-takeoff/'
author: 'Muhamad Rifki Maulana'
date: '2026-06-06T12:25:20+05:00'
categories:
  - 'OpEd'
---

# Indonesia’s Carbon Market, Ready for Takeoff

June 2026 marks a pivotal moment in Indonesia’s green economy journey. For the first time, Indonesia will operate a full-scale carbon market, with trading activity expected to flow in earnest starting July. This is a decisive step forward in Indonesia’s pursuit of climate sovereignty.

As one of the world’s largest holders of tropical forest, Indonesia has chosen to lead the green transition with concrete instruments.

The foundations laid by the government are solid. Presidential Regulation No. 110/2025 comprehensively updated the entire national carbon governance architecture. A ministerial regulation on forestry, issued in early 2026, opened corridors for carbon trading in the forestry sector to international markets which becoming a step that global green investors had awaited for years.

IDXCarbon has been connected to international buyers since early 2025, and mutual recognition agreements with Verra and Gold Standard have strengthened the standing of Indonesian carbon credits in the eyes of the world.

The road ahead, of course, remains long. IDXCarbon transaction volumes throughout 2025 were still relatively limited, with an average price of around IDR 67,000 per ton and participation still dominated by state-owned enterprises in the power sector. Yet this is to be expected: what matters far more is that Indonesia is already moving in the right direction.

## **Lessons from Early Movers**

The experience of countries that have gone down this path before us offers many reasons for optimism. Not a single major carbon market in the world ran smoothly from day one. Each passed through a learning phase, and each phase produced lessons that we can now draw upon.

The European Union, which launched the EU ETS in 2005 as the world’s first carbon market, spent its first three years in what was officially designated a trial period. Carbon prices briefly collapsed to near zero due to an excess of free allowances issued at the outset.

From that experience, Europe redesigned the system, tightened allocations, and built a price stabilization mechanism. Two decades on, the EU ETS sets prices of around €60–80 per ton and serves as the global benchmark for every carbon market that has followed.

**Read More: [Developed Countries Must Invest in Green Economy: Indonesia](https://thediplomaticinsight.com/developed-countries-must-invest-in-green-economy-indonesia/)**

Japan took an approach that is, in many ways, even more instructive for Indonesia. Rather than imposing obligations from the outset, Japan launched the GX-ETS in 2023 as a voluntary system for three years: companies set their own emissions reduction targets, practized trading on the exchange, and built internal capacity without the burden of penalties.

The results were remarkable. When the GX-ETS became mandatory in April 2026, more than 700 companies were already actively participating, together covering more than 50 per cent of Japan’s national emissions.

Japan also ensured that its carbon market did not stand in isolation, backing it with over 150 trillion yen in public–private green transition investment over a decade, making the carbon market part of a mutually reinforcing policy ecosystem, not a standalone instrument.

## **Way Forward**

From both experiences, one conclusion is clear: successful carbon markets are not built overnight, but through consistent policy commitment and a market actor ecosystem that is cultivated gradually. Indonesia already has both in their early stages. What is needed now is to continue and deepen what has already begun.

And here is where Indonesia actually sits in a stronger position than any of the countries cited above. We hold 120 million hectares of tropical forest, the world’s largest mangrove ecosystem, and peatlands of extraordinary value to the global climate.

The forestry sector alone holds estimated potential of 26.5 million tons of CO₂e per year, with transaction value that could reach trillions of rupiah if fully optimized through 2034.

**Read More: [Indonesia’s ‘Free and Active’ at the Crossroads of Power](https://thediplomaticinsight.com/indonesias-free-active-at-crossroads-of-power/)**

The average domestic carbon price, currently around USD 4 per tonne, in fact reflects enormous room to grow, given that blue carbon prices for mangroves in international markets can reach USD 15 to 35 per tonne. The gap between today’s price and future price potential is the measure of opportunity not yet fully unlocked.

Europe needed two decades. Japan needed three years of preparation before it dared to mandate participation. Nothing is instant; what exists is only the commitment to keep improving. Indonesia is already on the right track. June 2026 is not the end of a preparation, instead it is the starting point of something far larger.

And with the policy foundations already laid, Indonesia’s carbon market has every resource it needs to become one of the most important in Asia.

 

 

 

**The views presented in this article are the authors’ own and do not necessarily reflect the views of The Diplomatic Insight.*