Analysis of Indonesia's Economic Potential in World Carbon Credit Trade

Indonesia has economic potential through increasingly interconnected carbon credit transactions. Through its abundant natural resources, including vast forests, Indonesia controls nearly 80 percent of the world's carbon reserves. This opportunity offers hope for the development of a sustainable carbon market. This study aims to calculate and analyze Indonesia's economic potential in carbon credit trading on the global market based on the amount of forest it owns. This study employed two methodologies: analysis of data from the Ministry of Forestry, which included land area and the carbon dioxide absorption capacity of each Indonesian forest type. Calculation of economic potential financially using simulations based on commodity trading concepts. The calculation of potential revenue was carried out in stages, using an economic model to calculate the amount of revenue from trade transactions and elaborating on the EUR currency in actual carbon trading transactions. The study concluded that Indonesia's potential to earn revenue from the Indonesian forestry carbon trade in the international market reached IDR 97-258 trillion per year by 2030 if fully optimized. Meanwhile, gross deforestation occurred in secondary forests covering 200.6 thousand hectares (92.8%), of which 69.3% occurred within forest areas and the remainder outside forest areas. Indonesia is predicted to be able to surpass the carbon trading potential of Peru, Kenya, and Brazil as fellow countries with the largest tropical forest areas in the world. The formation of carbon prices by country in Indonesia with several REDD+ pilot projects with the Result-Based Payment (RBP) scheme, such as the Green Climate Fund (GCF), Forest Carbon Partnership Facility (FCPF) and Bio Carbon Fund (BCF) with a total commitment value of around USD 273.8 million.