As Indonesia turns COP30 into carbon market showcase, critics warn of ‘hot air’

A coal-fired power plant at night in the nickel industrial area in Halmahera. Image by Rabul Sawal/Mongabay Indonesia.

Indonesia is using the COP30 climate summit to aggressively market its carbon credits, launching daily “Sellers Meet Buyers” sessions and seeking international commitments 6 despite unresolved integrity issues in its carbon market.

As governments debate how to mobilize trillions of dollars in climate finance, Indonesia is using the COP30 climate summit in Brazil to aggressively promote its carbon market — a system that experts say remains dogged by weak rules, questionable integrity, and uncertain climate benefits.

Inside the packed Indonesian pavilion in Belém, carbon trading dominates the agenda. On Nov. 10, Environment Minister Hanif Faisol Nurofiq opened the pavilion by instructing his delegation to push hard for Article 6, the Paris Agreement mechanism that enables countries to trade carbon credits.

“Whenever you enter negotiation rooms, don’t forget to convey our mission. We are serious in pushing for the implementation of Article 6,” he told officials. Indonesia, he added, should return home “with commitment [from other parties to buy] carbon credit that’s quite high [from that of other countries].”

Beginning Nov. 11, the government launched a daily “Sellers Meet Buyers” session, where Indonesian state-owned companies and private project developers pitch credits to international investors. Hanif invited foreign companies to join Indonesia’s bid to “lead the global carbon market.”

The commercial momentum continued on Nov. 13, when Indonesia and Norway signed a nonbinding expression of intent that could allow Norway to buy credits generated from Indonesia’s grid-connected renewable energy projects under Article 6.2. The revenue, Indonesia says, will fund floating solar installations.

The government’s ambitions are enormous. It claims 13.4 billion metric tons of carbon dioxide equivalent in potential carbon credits. If accurate, this would make Indonesia one of the biggest carbon suppliers on the planet and give it outsized influence over global markets and the environmental integrity of the credits they rely on.

The government is promoting about 90 million metric ton at COP30, which it says could generate up to 16 trillion rupiah ($957 million).

The companies participating in the campaign have welcomed the push. Agung Wicaksono, director of transformation and business sustainability at state-owned oil and gas company PT Pertamina, told Mongabay he sees COP30 as “an excellent opportunity to use this platform for global transactions,” which will encourage the firm to expand its portfolio of low-carbon projects.

But environmentalists warn that the rush to turn COP30 into a giant carbon marketplace obscures a deeper problem: many of the credits Indonesia is touting may not represent real emissions cuts.

PLN’s Evy Haryadi and GGGI’s Sang-Hyup Kim sign an MoI on Indonesia–Norway renewable energy carbon trading during the Seller Meet Buyer session at the Indonesia Pavilion, COP30 Belém, witnessed by Ministers Hanif Faisol Nurofiq and Andreas Bjelland Eriksen. Imaga courtesy of the Ministry of Environment.

A system built on ‘hot air’

Carbon offsets are meant to represent measurable, additional reductions in greenhouse gases. But most do not.

A 2024 meta-analysis of 2,300 projects found that fewer than 16% delivered the reductions they claimed.

A central problem is “hot air”: credits that appear to reduce emissions but don’t correspond to actual declines. This often happens when a country’s climate target — its nationally determined contribution (NDC) under the Paris Agreement — is so weak that it doesn’t require meaningful emissions cuts.

Any “reduction” measured against such a target becomes meaningless.

Indonesia is one example, said Juliette de Grandpré, a senior expert at Germany-based nonprofit the NewClimate Institute.

Indonesia’s NDC is rated “critically insufficient” by the Climate Action Tracker, meaning it allows room for emissions to rise.

Its latest NDC does not explicitly commit to a coal phaseout timetable nor to retiring existing coal plants. Instead, it focuses on technical fixes, such as clean-coal technologies and efficiency gains, while the latest national energy plan foresees 16.6 GW of new fossil-based generation until 2034 (10.3 GW gas, 6.3 GW coal).

Against that backdrop, de Grandpré said, reductions claimed through offset projects may not represent anything additional.

“For countries like Indonesia, this means they could potentially put ‘hot air’ into the system — emission reductions that don’t represent real reductions,” she told Mongabay. “Once this hot air enters the system, any country can buy it and count it toward their own targets, which would actually increase global emissions.”

De Grandpré stressed that Article 6 trading should only occur between countries whose own climate targets are aligned with the Paris Agreement — and where credits help the seller achieve extra reductions, not meet a weak target more easily.

But right now, most countries aren’t doing that, resulting in carbon trading that just shifts emissions around without real reductions, she said.

Farmers in the fields around a geothermal power plant in Central Java. Image by L. Darmawan/Mongabay Indonesia.

Forest carbon, high risk

Indonesia’s most marketable credits come from the forest and land-use sector, which store large amounts of carbon as the country is home to the third-largest area of tropical rainforest in the world, after Brazil and the Democratic Republic of Congo.

The government has been pushing new conservation and reforestation projects. But experts say these are among the riskiest project types.

“It’s very difficult to prove that a standing forest project is truly additional. It’s also very hard to quantify,” de Grandpré said.

Incorrect baselines can lead to overcrediting, producing far more credits than real emissions reductions. Leakage — when deforestation simply moves elsewhere — creates another layer of uncertainty.

“There are also risks related to permanence and leakage — if you protect one piece of forest in Indonesia, it’s likely that deforestation just moves elsewhere. For the atmosphere, the effect is still negative,” de Grandpré said.

A 2023 Science study found that more than 90% of credits from 26 major forest projects failed to offset emissions, and that even genuine reductions were frequently overstated.

Greenpeace Indonesia says Indonesia risks repeating these problems.

“If Indonesia fails to reduce emissions, particularly from the forest and land-use sector, the carbon value the government keeps boasting about could end up being worth zero,” said Iqbal Damanik, the group’s climate and energy campaign manager.

He also pointed to ongoing forest and peatland fires and continued deforestation — issues that undermine any claim that Indonesia can guarantee the permanence and integrity of forest-based carbon credits.

Wildfire haze over a forest in Riau, Indonesia. Image by Aulia Erlangga/CIFOR via Flickr (CC BY-NC-ND 2.0).

A distraction from real climate finance?

While seller countries face risks, experts say the root of the problem lies with wealthy nations.

Under the Paris Agreement, Article 6 was meant to allow extra reductions — not enable rich countries to avoid cutting their own emissions. But that’s increasingly how the system is being used, de Grandpré said.

“What we’re seeing instead is that buyer countries tend to use Article 6 to replace domestic action — buying cheap reductions from developing countries to meet their own targets more easily,” she said.

Demand is expected to surge. By 2030, Article 6 credit demand could equal 1.3 times South Africa’s annual emissions, and by 2040, 2.8 times, according to NewClimate Institute analysis. That demand will push developing countries to supply cheap credits — even if doing so undermines their own climate targets.

For Kjell Kühne, director of the Germany-based Leave It in the Ground Initiative (LINGO), this dynamic exposes the core flaw of carbon markets.

“If someone pollutes, there’s carbon trading, and there’s demand for it. But if we actually solved the problem, there would be no more carbon trading,” he told Mongabay. “Right now, carbon trading isn’t doing any good for the world.”

Because the system depends on pollution continuing, it risks distracting developing nations from demanding climate finance — the obligation of wealthy countries under the U.N. climate regime, said Rayhan Dudayev, political team lead for Greenpeace’s global forests solutions campaign.

He argues Indonesia is falling into that trap.

“Instead of focusing on securing fair climate finance at the COP30 negotiating tables, Indonesia is chasing short-term false solutions,” Dudayev said. “Carbon markets are not climate finance — funds that should come from developed countries alongside real efforts to cut their own emissions.”

By offering credits to major polluters, he said, Indonesia gives them “room to keep polluting,” while the country itself — highly vulnerable to climate impacts such as floods, fires and sea-level rise — ends up paying the cost of climate disasters.

De Grandpré offered a similar warning.

“Developing countries should ask themselves: why give away emission reductions that will be used by developed countries to emit more — especially when developing countries are the ones most affected by climate impacts?” she said.

Nevertheless, de Grandpré said she understands why developing countries like Indonesia are distracted.

“They haven’t received the level of climate finance they were promised. Now they’re being lured by the new carbon finance opportunities. But they shouldn’t be distracted,” she said.

If wealthy countries stop buying, de Grandpré added, the entire system collapses.

“And in carbon markets, those who create the demand hold the strongest negotiating power,” she said.

Author: Hans Nicholas Jong

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This article was originally published on Mongabay under the Creative Commons BY NC ND licence. Read the original article.