The government has spent the last year preparing an emissions trading system for the future domestic carbon market, Environment and Forestry Minister Siti Nurbaya Bakar said.

"The process has been going on for a long time. It has been discussed in the Cabinet Secretariat and the State Secretariat. Soon it will be passed on to the Law and Human Rights Ministry to be discussed at the ministerial level," she said after a limited Cabinet meeting with President Joko "Jokowi" Widodo on Monday.

Siti said the regulations would address three main issues: guidelines for carbon trading, carbon offsets and the commodity market, which will be based in Jakarta.

Indonesia has approximately 94.1 million hectares of forested land, which store about 200 tons of carbon per hectare, according to ministry data. Indonesia’s approximately 22.5 million ha of peatland can store more than 1,000 tons of carbon per ha, Siti said.

Mangrove forests, which cover approximately 3.31 million ha of the country, can potentially store 227 tons of carbon per ha.

While Siti did not offer further details on the regulation as it was still under deliberation, she said that amid the many instruments of the carbon market, Indonesia's green bonds and green sukuk (Islamic bonds) had gained the attention of international markets.

Since 2018, Indonesia has been introducing green sukuk to the world market as a means to collect US$1.25 billion in funds to finance environmentally friendly projects.

"The most tangible thing we should do is restore our environment. For example, we are discussing a plan for vast mangrove reforestation in Tarakan [in North Kalimantan] or Balikpapan [in East Kalimantan] with the President," she said.

Siti said the regulation started to move after the government confirmed the receipt of a $56 million grant from Norway as the first payment for the country’s success in reducing carbon emissions under the Reducing Emissions from Deforestation and Forest Degradation (REDD+) cooperation scheme.

Siti’s deputy minister and the deputy foreign minister had represented the government at the joint conservation meeting between the two countries on July 2, she said, adding that both countries had vowed to strengthen their commitment to reducing global emissions.

In October, the government launched a public service agency responsible for managing and disbursing funds related to environmental protection and conservation, named the Indonesian Environmental Estate Fund (BPDLH).

Siti said the agency would support climate change mitigation and adaptation efforts, which included carbon trading.

President Jokowi has instructed his Cabinet to remain consistent in implementing environmental recovery programs to reduce greenhouse gas emissions.

Indonesia aims to independently reduce emissions by 29 percent by 2030, or 40 percent in the same year with international support.

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