Indonesia's Carbon Economy Potential Reaches Rp8,000 Trillion: A Detailed Breakdown

Indonesia has the potential to gain additional revenue of up to thousands of trillions of rupiah from the economic value of carbon. This carbon economic revenue is obtained from the trading of carbon from tropical forests, mangroves, and peatlands.

Coordinating Minister for Economic Affairs Airlangga Hartarto stated that Indonesia's carbon economic potential reaches US$565.9 billion or approximately Rp8,000 trillion. According to him, several sectors contribute to carbon emissions in Indonesia, namely forestry and land, agriculture, energy and transportation, waste, and industrial processes and product use.

"Various policies have been prepared to mitigate carbon emissions in these various sectors," said Airlangga, as quoted from *Bisnis Indonesia.com*, Tuesday, March 15, 2022.

In the land sector, Airlangga cited examples of prepared policies, including peat restoration, mangrove rehabilitation, and preventing deforestation for agricultural land. Then, in the waste sector, this includes waste management through a circular economy.

In the fiscal sector, government policies include the implementation of carbon tax and the complete elimination of energy subsidies by 2030. Furthermore, policies in the energy and transportation sectors involve switching to electric vehicles up to 95% of the total number of vehicles and using New and Renewable Energy close to 100% by 2060.

Where Does it Come From?

Data from the Coordinating Ministry for Maritime Affairs and Investment shows that Indonesia has the third-largest tropical rainforest in the world, covering an area of 125.9 million hectares, which can absorb carbon emissions of 25.18 billion tons.

Meanwhile, the area of mangrove forests in Indonesia currently reaches 3.31 million hectares, capable of absorbing approximately 950 tons of carbon per hectare, or equivalent to 33 billion tons of carbon for all mangrove forests in Indonesia.

Indonesia also has the largest peatland area in the world, covering 7.5 million hectares, capable of absorbing carbon emissions reaching approximately 55 billion tons.

From this data, the total carbon emissions that Indonesia can absorb are approximately 113.18 gigatons. If the Indonesian government can sell carbon credits at a price of US$5 in the carbon market, then Indonesia's potential revenue reaches US$565.9 billion.

As a result, Indonesia's carbon economic potential of Rp8,000 trillion, when detailed, comes from tropical forests (Rp1,780 trillion), mangrove forests (Rp2,333 trillion), and peatlands (Rp3,888 trillion).