Indonesia’s President-elect Prabowo Subianto plans to establish a $65 billion green fund by 2028 through the sale of carbon credits, aiming to support environmental projects such as rainforest preservation, Reuters reported on Monday.
According to Ferry Latuhihin, Prabowo’s climate adviser, a new regulator will oversee carbon emissions and manage this green initiative, aligning with Indonesia’s commitment to the Paris Agreement.
The regulator will form a “special mission vehicle” responsible for managing carbon offset projects, which include forest preservation, reforestation, and mangrove restoration.
These initiatives will generate carbon credits for sale, both domestically and internationally.
By 2028, the fund is expected to grow to $65 billion (1,000 trillion rupiah), taking advantage of Indonesia’s vast natural resources.
The ambitious plan is designed to help Indonesia, one of the top 10 global emitters and home to the world’s third-largest tropical rainforest, achieve net carbon neutrality by 2060.
However, the fund faces challenges, including stiff competition in global carbon markets and the need to ensure credibility in its projects.
Despite the obstacles, the fund is expected to provide significant economic benefits, including job creation.
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Prabowo, who is set to assume office in October 2024, has pledged to increase economic growth from 5% to 8% during his five-year term, partly by investing in green initiatives.
The government will provide initial capital, and the fund will expand through carbon credit sales.
According to Christina Ng of the Energy Shift Institute, raising $65 billion may be difficult, given the fluctuating price of carbon credits.
Reaching the target would require substantial volumes of carbon credits, far beyond the market’s current capacity.
“Given the competitive landscape of global carbon markets, with countries like Brazil and others in Southeast Asia also offering nature-based credits, the entity will need to demonstrate that their credits meet the highest standards,” Ng warned.
The government plans to promote the initiative globally to attract investments and sell carbon credits at competitive prices.
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