Workshop summary: Unlocking the Market Potential of Indonesian Blue Carbon

August 31, 2024

Summary report from the inFUSE Accelerator Carbon Market workshop in Jakarta on 28th August, 2024

Disclaimer: Views, opinions and analysis provided by guest speakers and participants are their own. Reproducing them on our website does not imply that they are endorsed by Neyen.

What is Blue Carbon

Blue Carbon refers to carbon dioxide stored in coastal and marine ecosystems, such as mangroves, salt marshes, and seagrasses. Blue carbon plays an important role in both mitigation and adaptation measures for climate change. When utilized correctly, blue carbon has the potential to protect more than six million people from flooding and prevent losses of $24 billion in productive assets. Compared to terrestrial forests, plants in the blue ecosystem grow faster and capture larger amounts of CO2. This is due to most soils being anaerobic, thus large CO2 can store and decompose slowly for hundreds to thousands of years.

Blue Carbon in Indonesia

Neyen’s consultant, Sarfina Adani, explained that several blue carbon projects in Indonesia are beneficial to the country’s mitigation and adaptation measures. Indonesia’s mangrove project aims to support the government’s ambition to restore 600,000 ha of mangroves by 2024 to enhance coastal resilience. Moreover, the project also aims to strengthen the management of mangroves and the livelihoods of local communities in selected areas, including increasing the level of fisheries production and the involvement of women in project implementation.

Andreas Hutahean, Co-Founder of Blue Carbon Indonesia, explained that scientific and policy development has been made on blue carbon activities in Indonesia within the last decade. Mangrove restoration, for example, has been included as part of mitigation actions in regulations such as PR 98/2021 and MOEF 7/2023 about carbon economic value (NEK) or carbon markets. Based on various sources, the global price trends for blue carbon ranges between $8 – $33, sending a price signal for Indonesia to take advantage in becoming a key player for high-quality blue carbon credits generation.

Source: Conservation Collective. 2022. “Blue Carbon: Understanding & Exploring the Complexities and Opportunities

High-Quality Blue Carbon Projects

However, there are challenges in blue carbon projects that need to be addressed. Some challenges include shortage of land suitable for mangrove restoration, high cost of mangrove recovery, knowledge gaps amongst stakeholders, and project integrity and quality – which have drawn some criticism on the true impacts of the projects. In this regard, several methodologies have been approved by independent standards such as Verra and Plan Vivo, or by a national standard such as the Australian Carbon Credit Unit Scheme (ACCU). Methodologies include Verra’s VM033 (methodology for tidal wetland and seagrass restoration) and ACCU’s Tidal Restoration of Blue Carbon Ecosystems methodology. These methodologies commonly highlight the importance of social components, including the local and indigenous community as rightful beneficiaries

Robust Regulatory Framework for Blue Carbon

In the Q&A Session, participants – made up of project developers and CSOs representatives – had a conversation about the importance of a robust regulatory framework for blue carbon projects, currently still underplayed. Andreas emphasized that it is pertinent for a regulatory framework to clearly define responsibilities amongst key actors, especially relevant ministries and institutions as policymakers. Oftentimes project developers encounter difficulties in understanding who is doing what. In Indonesia, for example, three institutions are authorized over Indonesia’s coastal area management: Ministry of Marine Affairs and Fisheries, Ministry of Environment and Forestry, and the Local Government or Municipalities. Collaboration between these three institutions is key to maximize exploration of blue carbon project potential.

In addition, a regulatory framework shall guide project developers to enforce a robust benefits-sharing mechanism. Benefits sharing mechanism needs to be formally regulated to ensure that a portion of the project’s income will go to communities, whether through monetary or non-monetary contributions. In addition to being beneficiaries, the involvement of local communities may bring other benefits for blue carbon projects, especially in managing the sustainability of ecosystems and biodiversity.