Indonesia, a megabiodiverse country with vast and abundant ecosystems, holds a central role in global climate change mitigation. This position is supported by the nation’s substantial forest resources, totaling 125.89 million hectares, or about 65.8% of its total land area. These extensive forest landscapes constitute a strategic national asset.

The utilization of forests in Indonesia is increasingly directed toward delivering essential environmental services, particularly carbon sequestration and storage, facilitated through the mechanisms of Forest Utilization Business Licensing (PBPH) and Social Forestry. The Forestry and Other Land Use (FOLU) sector is designated as a key area expected to contribute significantly to achieving Indonesia's National Determined Contributions (NDC). These forests serve as crucial natural carbon sinks, and their ecological integrity must be maintained through sustainable financing schemes.

The Government of Indonesia has established a comprehensive regulatory framework through Presidential Regulation No. 98/2021 concerning Carbon Pricing, which unlocks various climate finance opportunities: Results-Based Payments (RBP) as Performance-based payments provided to an entity for each unit of emissions successfully reduced from a baseline. Emission Trading System (ETS) as a system that sets sector-specific emission limits that regulated entities must comply with through emissions permits. And Mutual Recognition Arrangement (MRA) as a key mechanism facilitating Article 6 of the Paris Agreement transactions. Indonesia has implemented an MRA with Japan's Joint Crediting Mechanism (JCM) and is in the process of completing MRAs with global voluntary market standards such as Gold Standard and VERRA. MRAs are crucial for linking the domestic carbon market to international markets, thereby boosting climate finance flows.

This presentation will be delivered by the Director-General of Climate Change Control (or equivalent) from the Ministry of Forestry (MoF), Republic of Indonesia. The objective is to share knowledge, information, and the latest developments regarding Indonesia's climate finance regulations and instruments. The core focus will be on demonstrating how the detailed domestic legal framework (e.g., Ministerial Regulation MoEF 21/2022 and MoEF 7/2023) is structured to capture the economic value of emission reductions while ensuring strong environmental integrity and governance. 

Through this presentation, we aim to achieve the following: Increased Investment: Encourage greater domestic and international climate finance and investment into the FOLU sector, particularly to support nature-based mitigation initiatives. Strengthened International Partnership: Solidify bilateral and multilateral cooperation, especially in the implementation of Article 6.2 through MRAs, to maximize the potential transfer of high-quality ITMOs. Shared Understanding: Build a common understanding among global government officials and professionals regarding Indonesia's carbon market regulatory framework, thereby enhancing trust and facilitating Indonesia's access to global climate finance.