Background

The world is seeing unprecedented risks and looming irreversible damages caused by record levels of greenhouse gas (GHG) emissions. Our planet is becoming increasingly less habitable, with record-breaking numbers and destructive scale of disasters including floods and heatwaves. The climate crisis is expected to exacerbate food security, affect the most vulnerable and can cost the global economy as much as USD 23 trillion by 2050. Indonesia is one of the high-risk countries exposed climate change, with sea level rise threatening 42 million Indonesians who live less than 10 meters above the sea level (World Bank, 2023).

Indonesia has an opportunity to be a global carbon sink hub for the world. Indonesia has one of the world’s richest biodiversity, including 94 million hectares of rainforests and 3.3 million hectares of mangroves. Indonesia's forests and marine ecosystems can store carbon up to 50 billion tons. BloombergNEF’s Long-Term Carbon Market Outlook sees demand for carbon credits reaching 1.2 billion metric tons of carbon dioxide equivalent (GtCO2e) by 2030 and 5.38GtCO2e in 2050 – almost 35x higher than today.

Indonesia and ASEAN will benefit substantially from valuable carbon stock and the growth of carbon markets – both voluntary carbon markets (VCM) and compliance market. Carbon markets have been recognised as fundamental climate financing tool to accelerate green transition. A thriving carbon removal industry in Indonesia can be a major GDP contributor with high quality capital investments and create green-collared jobs.

However, the global appetite for carbon credits took a step back last year amid growing concerns over quality /integrity. But the market is nonetheless making progress– a necessary step if it is to support future demand and being valued at over $1 trillion p.a, up from roughly $2 billion p.a today.

Target objectives

This session will provide insights on how we can unleash carbon market potential by scaling up instantaneous and transparent transactions and address the following:

• Align with integrity initiatives on quality definitions and standards, in partnership with regulators. Restoring market confidence will reset growth in demands and supply
• Foster project developers and originators to shape high quality and integrity carbon projects
• Explore standardised contracts/products (as alternatives to over-the-counter trades) to adjust market infrastructure that fit to support exponential growth

Target Audience

This session primarily aims to engage COP28 delegates from G20 countries and Middle East, especially investors, business leaders and relevant policy makers – especially those that are looking to pursue ambitious climate actions and want to support Indonesia to become a global carbon sink hub for the world.