Indonesia stands at the intersection of balancing its economic development with environmental sustainability. As the world’s largest palm oil producer, the nation-state’s reliance on palm oil expansion has provided economic benefits but comes with significant environmental costs. These include peatland degradation, deforestation, and increased greenhouse gas (GHG) emissions. Under President Prabowo Subianto’s ambitious goal of achieving food sufficiency by 2027, Indonesia is at risk of sacrificing its forests and biodiversity assets, given its plans for expanding agricultural land. Nevertheless, with the recent developments from COP29 on global carbon market standards and commitments to sustainable agriculture, Indonesia has a chance to align its food security goals with its broader climate commitments.
Prabowo’s recent statement that Indonesia must expand oil palm cultivation and not fear deforestation sparked public controversy. This development was not unexpected: when announcing his cabinet line-up last October, Prabowo split the previously unified Ministry of Environment and Forestry established under former president Joko Widodo (Jokowi) into two separate entities: the ministries of Environment (Kementerian Lingkungan Hidup) and of Forestry (Kementerian Kehutanan). These two ministries’ distinct mandates are that the environment ministry focuses on environmental protection and aligning Indonesia’s climate goals with its international commitments, while the forestry ministry prioritises forest production to meet the country’s growing demand for palm oil, for food and biofuel expansion, and aligning with stricter sustainability standards imposed by Indonesia’s trade partners.
During Jokowi’s presidency, the unified ministries produced positive outcomes. For instance, the forestry ministry benefitted from the environmental ministry’s focus on adopting improved climate and sustainability practices, and deforestation rates in Indonesia reached their lowest levels. According to Global Forest Watch, Indonesia recorded a total forest loss of 533,000 hectares in 2016 (midway through Jokowi’s first term as president), which significantly declined to 157,000 hectares (2017) and 139,000 hectares (2018). This positive trend was largely attributed to Indonesia’s moratorium on forest concessions and success in convincing donor countries to aid Indonesia’s forest protection efforts through programmes such as Reducing Emissions from Deforestation and Forest Degradation in Developing Countries (REDD+).
President Prabowo’s food sufficiency programme is committed to allocating 20 million hectares of forest for conversion, to grow food and biofuel crops. While the current administration may view the expansion of oil palm cultivation as a source of immediate economic benefits, this move risks neglecting the unquantifiable potential loss of biodiversity. This would include the extinction of species that will in turn disrupt the ecological balance, the erosion of cultural and indigenous heritage in affected areas, and the degradation of ecosystem services such as water filtration and soil stabilisation, which help prevent natural disasters like landslides. Furthermore, the slash-and-burn practices farmers use to clear forests and peatlands for palm oil plantations contribute to air pollution, exacerbate respiratory illnesses among forest communities, and cause the transboundary haze that has strained relations with Singapore and Malaysia.
Given these risks, the international community must regard Indonesia’s food sufficiency goals with caution. If climate negotiations consistently emphasise that GHG emissions from one country contribute to global warming everywhere, as the atmosphere is a shared resource, the global community cannot afford to lose Indonesia’s forests. One viable and scalable, albeit controversial, pathway to protect Indonesia’s forests and biodiversity remains the mobilisation of capital through robust global carbon trading. This can ensure that Indonesia is adequately incentivised for preserving its forests and natural resources, but external partners should impose structural safeguards to ensure that there is meaningful carbon emissions reduction on the ground.
At the 2024 COP29 in Baku, the United Nations (UN) formally operationalised the global carbon trading system, generating new demand for carbon credits. Under this mechanism, carbon-generating countries like Indonesia can sell carbon credits through bilateral agreements with developed countries like Japan, Singapore, and Switzerland, which cannot offset their emissions within their own jurisdictions due to limited carbon sink assets. Estimates suggest that Indonesia could generate up to 1,283 million tonnes of carbon credits annually by 2030, valued at approximately US$7.3 billion to US$16.7 billion.
Under this new UN agreement, Indonesia could sell previously issued carbon credits to domestic and international companies, in addition to its formal bilateral partners. This introduces the risk of double counting, which could overstate the actual impact of Indonesia’s carbon reductions. For instance, one of the largest forest preservation projects, the Katingan Mentaya Project for peatland forest in Central Kalimantan, has a troubling record of inflating carbon credits by up to three times the expected absorption amount. To address this, trading partners must require Indonesia to build robust monitoring, reporting, and verification (MRV) systems to transparently attribute carbon credits.
There is also room to improve Indonesia’s farming practices to align agricultural expansion with climate commitments. The previous government pledged to promote sustainable palm oil certification, convert only low-biodiversity forest land, and identify alternative areas for development. Adopting carbon-reducing farming technologies such as sustainable harvesting, water-use efficiency, and improved transport and storage practices can help to mitigate emissions from agriculture.
Indonesia’s twin goals of food sufficiency and economic growth are admirable but should not neglect sustainable practices. Participation in the international carbon market offers Indonesia a chance to balance development with environmental protection. Realising this potential will however require a steadfast and honest commitment by the current administration and its successors to forest conservation and robust international collaboration.
Melinda Martinus is the Lead Researcher in Socio-cultural Affairs at the ASEAN Studies Centre, ISEAS – Yusof Ishak Institute.
This article was first published in Fulcrum, ISEAS – Yusof Ishak Institute’s blogsite.
