Defining High-Integrity Carbon Credits: Indonesia's Path to Climate Leadership

Jakarta — As demand for carbon credits grows in both voluntary and compliance markets, the global carbon market is under sharper scrutiny than ever. Buyers are not just looking for offsets; they want assurance of high-quality and high-integrity. A 2023 BCG–EDF survey shows buyers prioritise proof of greenhouse gas (GHG) impact, followed by co-benefits, project type, and alignment with value chains and national goals.

Recent controversies over carbon projects have tested confidence in the system. Cases in emerging markets such as Indonesia have fueled skepticism but also underscore the need for strong governance and clear standards.

Indonesia possesses extraordinary climate assets: vast nature-based carbon sinks alongside an estimated 600 gigatons of geological CO₂e storage potential means Indonesia could become a leader in both engineered and nature-based climate solutions. However, this will require answering a question: What truly defines high-integrity, high-quality carbon credits and how can Indonesia meet this standard while respecting local values, ecosystems, and development goals?

See also: Our Nature-Based Carbon Projects

Beyond Labels: Core Principles of Integrity

While definitions vary across the landscape, global standards (i.e., ICVCM Core Carbon Principles (CCP)) include additionality, permanence, robust monitoring, reporting and verification (MRV), avoidance of double counting, and safeguards for environmental and social co-benefits. These form the technical foundation of "high-integrity and high-quality" carbon credits.

From a buyer's perspective, high-integrity and high-quality carbon credits are those that can demonstrate real and durable climate impact. Ratings Company Sylvera’s latest market data show companies increasingly favour credits rated AAA to BBB, which reflect strong additionality, permanence, and verifiable emission reductions. This trend reflects growing demand for credits that are scientifically defensible. 

However, a critical gap persists: many methodologies and project types emerging from the Global South, including Indonesia, are excluded from or face long delays in gaining international recognition. More inclusive rules are needed to recognize diverse approaches and highlight innovation and leadership from the Global South.

Building Institutional Credibility

Integrity depends not only on project-level criteria but also on national governance. With Indonesia’s Corruption Perception Index (CPI) 2024 score at 37/100, transparency and independent oversight are essential. Key priorities include strengthening Indonesia’s National Registry System (SRN), advancing MRV frameworks interoperable with international standards (i.e., the Mutual Recognition Agreement (MRA) with Gold Standard), and ensuring equitable and traceable benefit-sharing.

Indonesia has made significant progress by adopting four ISO TC 265 standards for CCS focusing on the geological storage, setting foundational benchmarks to ensure projects meet global credibility and bankability criteria. This must be supported by robust MRV systems tracking the full value chain, from captured volumes to transportation to secure geological storage, overseen by independent, trusted verification bodies recognized by both domestic and international buyers.

At the same time, global standard-setting bodies should transcend one-size-fits-all approaches. Methodologies should reflect Indonesia’s ecological and social contexts, such as mangrove growth dynamics, peatland hydrology, planned activities (including forestry and agricultural concessions) and biodiversity values, as well as engineered pathways like CCS and BECCS. Institutional credibility requires more than frameworks; it demands transparent implementation and independent oversight.

Delivering Real Impact

High-integrity credits must deliver tangible benefits to local communities. This means moving beyond token consultation to genuine co-creation, where communities shape project design and share meaningfully in benefits.

Indonesia's regulatory framework recognizes this imperative, but implementation determines success. Projects gain legitimacy when communities become partners, bringing traditional knowledge and ensuring long-term sustainability.

The Government of Indonesia has taken early steps to institutionalize these principles through several mechanisms:

• The Presidential Regulation on Carbon Pricing (98/2021) and The Minister of Environment and Forestry Regulation on Carbon Trading in the Forestry Sector (7/2023) acknowledge the role of communities as one of the key actors in the carbon pricing implementation.

• The SRN provides a centralized registry, increasing traceability and avoiding double-counting.

• The establishment of a foundational MRV framework to ensure accurate measurement, transparent reporting, and independent verification of emission reductions, thereby strengthening the credibility of projects.

• MRA, particularly Indonesia's bilateral agreement with the Gold Standard Foundation, establish pathways for national credits to achieve international recognition while safeguarding local interests.

• Indonesia’s FOLU Net Sink 2030 agenda, prioritizes wetlands restoration and conservation, and sustainable forest management initiatives to meet Indonesia’s climate goals.

A Path Forward: Pragmatic Recommendations

The journey toward high-integrity and high-quality carbon markets requires coordinated action across multiple stakeholders:

For the Government of Indonesia: Strengthen the regulatory environment that creates a functioning market - SRN, MRV, and MRA frameworks will enable transparency, safeguards, and interoperability with global standards. Develop a national definition for high-integrity carbon credits that reflects Indonesia’s realities, while drawing from relevant international benchmarks. Invest in capacity building for regulators and local verifiers, advance ISO-aligned guidance for engineered solutions, and ensure FPIC and community participation. 

For standard-setting bodies: Recognise Global South appropriate methodologies and support pilots in emerging economies. A more adaptive and equitable approach will enhance market integrity while enabling countries like Indonesia to offer trusted, locally rooted solutions. 

For civil society and communities: Engage actively in co-designing projects, monitoring benefit-sharing, and ensuring accountability. Integrating traditional knowledge and grassroots perspectives will reinforce legitimacy and equity.

Toward Credible Climate Leadership

High-integrity and high-quality credits are not born from international labels alone but through alignment between strong domestic systems, field-level realities, and globally trusted mechanisms. This alignment must be actively cultivated across nature-based and engineered solutions, enabling Indonesia to not only participate in global carbon markets but to lead with credibility as a standard-setter for integrity and inclusivity.

The question is not whether Indonesia can produce high-integrity and high-quality carbon credits, but whether the global community is ready to recognize and support the diverse pathways emerging from countries serious about both climate action and development justice. 

The opportunity for climate leadership through market integrity has arrived. Indonesia should champion this transformation, proving that high-integrity and high-quality carbon credits aren't just possible; they're profitable, scalable, and essential for credible climate action.

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This article is co-authored by:

Innandya D. Kusumawardhani - Co-founder and Chief Operating Officer at CarbonEthics

Carbon Markets and Climate Finance Leader with 13+ years driving energy transition and high integrity carbon projects. Currently leading Indonesia’s high-integrity nature-based and digital Monitoring, Reporting and Verification (MRV) solutions, with experience mobilizing multi-million-dollar capital across LNG and clean energy. Recognized for bridging policy, standards, and on-the-ground realities to ensure credible climate impact. 

Belladonna Troxylon Maulianda - Executive Director of Indonesia CCS Center

Belladonna is a leading expert in energy and sustainability specializing in carbon economy, low carbon ecosystem, CCS and CCUS with over 20 years of experience. She has established strong connections with international organizations such as the United Nations, International Energy Agency, COP, Carbon Management Challenge (CMC), and governments of the United States, United Kingdom, Singapore, Canada, Japan, South Korea, Australia, and Malaysia. Domestically, she has also forged solid relationships with key stakeholders and government bodies. Belladonna’s proven leadership in shaping pivotal policies, including Indonesia's CCS regulations and the Indonesia-Singapore CCS Agreement, demonstrates her capability to navigate complex governmental and business landscapes.