How viable is carbon trading for the mangrove business? – CIFOR-ICRAF Forests News

CIFOR-ICRAF’s mangrove nursery in Sungsang IV village Banyuasin, South Sumatra. Photo by Ricky Martin / CIFOR-ICRAF

Indonesia is home to 3.39 million hectares of mangroves, storing an estimated 3.14 billion tons of carbon. This carbon stock presents an opportunity for revenue generation through carbon trading, which could help fund mangrove restoration and conservation efforts. 

But how crucial is carbon trading for the mangrove business? To answer this question, Indonesian stakeholders shared their insights during a national dialogue hosted by the Center for International Forestry Research and World Agroforestry (CIFOR-ICRAF), the National Research and Innovation Agency and the Blue Carbon Deck, on 17 December 2024 at Borobudur Hotel Jakarta.

Mangroves as carbon stores: Separating fact from hype

Daniel Murdiyarso at the national dialogue in Jakarta, Indonesia. Photo by Ricky Martin / CIFOR-ICRAF

Mangroves play a critical role in climate change mitigation and adaptation. However, Daniel Murdiyarso, principal scientist at CIFOR-ICRAF, cautioned against exaggerated claims regarding their carbon absorption.

“The carbon absorption rate of mangroves is similar to that of other trees,” Murdiyarso said. “What makes them unique is their high carbon storage capacity. The most interesting thing is that 80% of the carbon stocks in the mangrove ecosystem are in the soil.”

The state of carbon trading in Indonesia

Indonesia launched its carbon trading market on 26 September 2023 and it has quickly gained traction. According to Istiana Maftuchah, deputy director of carbon trading supervision at the Financial Services Authority, the country’s market is relatively more aggressive than those in other countries such as Japan and Malaysia.

“To date, 98 Indonesian carbon trading services users have participated, with transactions reaching 58 billion rupiahs,” said Maftuchah.

However, these figures reflect general carbon trading, not specifically blue carbon from mangroves. Purwadi Soeprihanto, secretary general at the Association of Indonesian Forest Concessionaires, questioned the viability of mangrove-based carbon credits due to the concept additionality—the idea that carbon reductions must result directly from the project’s implementation.

“Most of Indonesia’s mangroves are in protected areas, and 98% of them are dense forests,” Soeprihanto said. This means that the potential for additional carbon sequestration is limited, reducing the market value of mangrove-based credits.

Challenges for community-led blue carbon initiatives

Herry Purnomo, director of CIFOR Indonesia and senior scientist at CIFOR-ICRAF, highlighted a significant challenge: the scale required for profitable blue carbon trading.

“For carbon trading to be financially viable, projects must be large-scale,” Purnomo explained. “But local communities typically manage small-scale initiatives. Large-scale projects are often controlled by major corporations, which can marginalize local communities.”

Given these limitations, stakeholders emphasized the importance of diversifying revenue streams beyond carbon credits. Therefore, generating non-carbon benefits in developing a community-based mangrove ecosystem business model is crucial.

While some see carbon trading as an opportunity, others remain skeptical. Heru Prama Yuda, senior partnership manager at Earth Security, viewed carbon revenue as a secondary benefit, emphasizing that the primary goal should be climate adaptation and the sustainable management of mangrove ecosystems.

“The main goal is climate change adaptation: how environmental services produced by mangroves can be realized with the funding,” Prama Yuda said.

Meanwhile, Afdillah Chudiel, ocean campaign team leader at Greenpeace Indonesia, has a different opinion, outright rejecting carbon trading as a viable solution, calling it a “false fix” that enables corporations to continue polluting.

“Carbon trading is a false solution to the threat of climate crisis,” Chudiel said. He believes there is potential for greenwashing from the companies that produce the most carbon in the world to use this carbon trading to wash away their sins.

“I have yet to find a compelling ethical justification for allowing companies to pollute one region while claiming carbon offsets from projects in another,” Chudiel said. “A company operating in India, for example, could damage the environment there but claim to be ‘carbon neutral’ by purchasing credits from a mangrove restoration project in Indonesia.”

Guest speakers and stakeholders gathered at the national dialogue. Photo by Ricky Martin / CIFOR-ICRAF

With international and domestic companies eyeing Indonesia’s blue carbon potential, there is growing interest in mangrove restoration projects. However, as Purnomo summarized, carbon trading alone cannot be the primary driver of mangrove conservation.

“Carbon trading revenue should be seen as a bonus, not the core business model,” Purnomo said. “The true value of the mangrove economy lies in its ability to provide multiple benefits—not just carbon sequestration, but also economic opportunities for local communities.”