Promoting Carbon Markets as the Backbone of a Sustainable Economy

Indonesia's carbon market has great potential to become the backbone of sustainable development. However, it requires strengthening the capabilities of all stakeholders and close collaboration between the private sector, government and civil society.

This was the common thread in the discussion on Indonesia's carbon market initiative, as presented by practitioners and experts in the Socialization of Indonesia Carbon Market Academy (ICMA), Jakarta, (24/7/2025).

William Sabandar, Chief Operating Officer (COO) of the Indonesian Business Council (IBC), highlighted Indonesia's long journey on the climate agenda, which dates back to hosting COP 13 in Bali in 2007.

However, after almost two decades, there has been no significant change. "We are still circling around here. We're not moving forward," he said.

Wiliam said this indicates a bottleneck in the progress of this agenda. He emphasized that the sustainability agenda can only be achieved if environmental concerns are integrated into the development process.

According to him, IBC was founded with the concept of sustainability as one of its pillars. He sees a gap in communication between sectors, where government initiatives often run alone without much discussion with the private sector or civil society.

In fact, the business world is already seriously involved in sustainability issues, especially with the Environmental, Social, and Governance (ESG) trend which is now a benchmark for corporate valuation. "These days, the value of a corporation will only be high if it applies the principles of sustainability," he said.

William Sabandar, Chief Operating Officer (COO) of the Indonesian Business Council (IBC), 7/24/2025. Photo: SUAR

To bridge this gap, he encourages collaboration."The private sector must be more proactive in talking. So talk together with civil society and talk together with the government, we need to sit together. Because this is a big agenda, it cannot be solved by one," he said.

IBC also began to initiate and document good initiatives by the private sector, bringing them closer to government and civil society programs.

The role of quality and inclusiveness in carbon markets

Carbon expert and practitioner Paul Butar Butar highlighted the issue of quality of carbon credits that is of global concern. He referred to a Guardian report which alleged that some projects had"overestimated" their emissions reduction claims, leading to a significant drop in demand for carbon credits, especially for older projects. Buyers are now looking for"high quality carbon credits" resulting from a very detailed process and social considerations.

One good initiative that has successfully addressed this demand is the implementation of the Gold Standard. This standard, he says, ensures that a carbon project is built with full and transparent community involvement.

"If there is a company or a carbon project that gets the gold standard, it ensures that the process to get the carbon project, it is really high quality considering the community aspects. This also has an impact on the price of carbon credits which tend to be premium," he said.

Natalia Ralucky Marsudi, Founder and Chief Executive Officer (CEO) of Fairatmos, agrees with the importance of quality and integrity. She sees great potential in Southeast Asia's forests as emission sinks, but only a small percentage have realized the economic value of carbon credits.

He explained that the goal of Fairatmos is to realize fairness and inclusiveness in atmospheric restoration, by utilizing technology to facilitate the accessibility of all parties, including village forests, social forests, and even individuals, to participate in carbon projects.

He also emphasized the importance of a change agenda in any carbon project. Projects should provide economic value to communities involved in maintaining and restoring forests or mangroves. "It is expected that there is an economic value that is integrated with the new activities," he said, referring to a clear benefit-sharing mechanism for communities, companies, investors and the project government.

Natalia Ralucky Marsudi (left), Paul Butar Butar (right) at the Indonesia Carbon Market Academy (ICMA) Socialization Event, Jakarta, (7/24/2025)

Aspirations for the future of Indonesia's carbon market

Looking ahead, the speakers had high aspirations for Indonesia's carbon market. Natalia Ralucky Marsudi hopes that the carbon market will be able to channel economic value to all levels of society.

He emphasized that achieving this requires "Collaboration, an open mind, and really accepting the aspirations of all parties that this is a very dynamic sector."

Paul Butar Butar wants Indonesia to be a major player in the global carbon market, not just a slogan.

Meanwhile, William Sabandar believes that Indonesia can escape the middle-income trap if sustainable development, including carbon markets, is fully integrated into government and state practices. "If we want to be a reachable, we need to build our own carbon market that is credible and internationally recognized," he concluded.

In essence, the future success of Indonesia's carbon market will largely depend on our ability to continue to strengthen capacity, encourage collaboration between sectors, and ensure that the initiatives undertaken are of high quality and provide inclusive benefits for the entire community.