The climate crisis caused by global warming has pushed countries worldwide to take decisive actions to curb emissions. To do so, financing is key. One financing instrument that has recently emerged is the carbon market. The carbon market takes off on the assumption that treating carbon as a commodity would boost emissions reductions. Subsequently, initiatives are popping up to support the agenda, one of which is the Coalition to Grow Carbon Markets. In January 2026, Indonesia became the 11^th member. What does it mean for the country?

The Coalition to Grow Carbon Markets

The Coalition to Grow Carbon Markets is a government-led initiative to strengthen high-integrity carbon credit markets by mobilizing private investment for climate action, environmental protection, and green growth. Launched in June 2025 at the London Climate Action Week, the coalition initially included Canada, France, Panama, Peru, Switzerland, New Zealand, Zambia, and three Co-Chairs: Kenya, Singapore, and the UK. 

The Coalition has several main objectives. First is strengthening demand for high-quality carbon credits. This requires developing a voluntary carbon market with integrity as a supporting tool for businesses to achieve net-zero targets beyond direct emissions cuts. Second is providing “Shared Principles” as a basis for internationally aligned policies among governments for corporate carbon credit use. Third is increasing climate finance. Finally, the fourth one is reducing policy fragmentation.

The Coalition currently focuses on an action plan to achieve consistent national and regional policies. It also aims to drive demand aligned with the Shared Principles while maintaining sustainable buyer interest through engagement with buyer and investor networks. For member countries, the coalition enables expanded access to greater climate finance and enhances the reputation and integrity of domestic carbon markets. Furthermore, it provides support for nature-based solutions in resource-rich countries.

Indonesia Became the 11^th Member

On January 21, 2026, Indonesia joined the coalition as its 11^th member state. As part of the Coalition’s forestry sector, Indonesia will work to increase demand for high-integrity carbon credits from the forestry sector and nature-based solutions to support green growth.

“As a country with the world’s third-largest tropical rainforest, extensive mangrove ecosystems, and large tropical peatlands, Indonesia has significant natural capital and real experience in nature-based solutions, so we can make an important contribution to global efforts to achieve climate targets,” said Forestry Minister Raja Juli Antoni, in a discussion at Standard Chartered’s headquarters in London.

Risks and Opportunities

Indonesia’s joining the Coalition opens up opportunities to position itself as a major supplier of high-integrity carbon credits, particularly from the forestry, land, and nature-based solutions sectors. It can also expand Indonesia’s access to private climate finance and enhance the credibility of the national carbon market.

However, these opportunities come with significant governance risks. The push toward the global carbon market risks unfair distribution of domestic economic, social, and ecological benefits. Furthermore, there is the risk of weakening domestic emissions reduction ambitions. For instance, the use of carbon credits may delay the nation-wide structural transformation of the energy and industrial sectors.

Another critical risk relates to the justice and sovereignty of resource management. The high integrity standards promoted by the Coalition need to be rigorously translated into national policies to safeguard the rights of Indigenous peoples and local communities on the front lines of carbon projects. Therefore, Indonesia’s success within this Coalition depends heavily on its ability to ensure that the carbon market serves as a supporting instrument for a just energy transition.

Ensuring Real Progress with Carbon Market

Ultimately, carbon markets must be positioned as a supporting instrument for a just and sustainable transition, leading to real emissions reductions. Experts have also warned of the dangers of prioritizing carbon markets over ecosystem conservation. 

Therefore, strong, transparent, and public-interest governance is essential to prevent the carbon market from becoming a mere compensatory mechanism that could slow down structural economic and energy transformation. In Indonesia’s case, this step must include the boldness to set limits, strengthen domestic regulations, and ensure the fair and equitable economic and ecological benefits.

Editor and Translator: Nazalea Kusuma

The original version of this article is published in Indonesian at Green Network Asia – Indonesia.

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