Indonesia is taking a bold step to strengthen its climate finance architecture through the launch of the Multi-Scheme Carbon Economic Value (CVA) framework. This policy is designed to promote inclusive and integrated climate financing in support of the country’s Nationally Determined Contribution (NDC) goals under the Paris Agreement.
In 2024, Indonesia submitted its first Biennial Transparency Report (BTR), outlining the nation’s funding, technology, and capacity needs to meet its emission-reduction targets. This article explores the background, mechanism, and implications of the Multi-Scheme CVA—plus how Mutu Institute and its NGO arm, Carbon Nature, are empowering organizations and individuals to engage effectively in this growing carbon ecosystem.
1. Background: Indonesia’s Climate Finance Challenge
1.1 The pressure to meet NDC targets
Under its Enhanced NDC, Indonesia has pledged to cut greenhouse gas emissions by 31.89 % through domestic efforts and 43.20 % with international support.
According to Annex 1 of the BTR 2024, the country’s total climate finance needs reach US $282 billion—with US $281.18 billion allocated for mitigation and US $816.52 million for adaptation.
Sector-wise, the energy sector dominates with about US $245.996 billion, followed by forestry and land use (FOLU) at US $21.62 billion, then waste management (US $13 billion), agriculture (US $504 million), and industrial processes and product use (US $65 million).
The challenge is clear: how to mobilize large-scale, sustainable, and inclusive financing to meet these ambitious goals.
1.2 Carbon regulation and market evolution
Indonesia has established a strong regulatory base through Presidential Regulation No. 98/2021 on carbon pricing, followed by implementing decrees and registry mechanisms under the National Registry System (SRN-PPI).
However, international financing for carbon projects remained limited due to concerns about regulatory complexity and market integrity. This changed as Indonesia recently signed Mutual Recognition Agreements (MRAs) with major global crediting programs—such as Verra and the Global Carbon Council (GCC)—allowing verified projects in Indonesia to access international carbon markets while maintaining national oversight.
This development positions Indonesia’s CVA framework not just as a domestic tool but as a bridge to global carbon finance.
2. What Is the Multi-Scheme Carbon Economic Value (CVA)?
2.1 Concept and definition
The Multi-Scheme CVA is an integrated policy framework that unites multiple crediting schemes—both technology-based and nature-based—under one coherent system for carbon valuation and trading.
In essence, it expands the traditional single-scheme model into a multi-layered ecosystem that allows diverse project types and methodologies to coexist under a shared governance and accounting framework.
2.2 Objectives
- Inclusivity: enabling community-based, SME, and technological projects to access carbon finance.
- Optimization: combining technology solutions (renewables, CCUS) with nature-based approaches (REDD+, restoration).
- Consolidation: integrating fragmented mechanisms into a unified carbon finance architecture.
- Global alignment: ensuring compatibility with Article 6 of the Paris Agreement and other international carbon market mechanisms.
2.3 Multi-scheme integration
Through the latest MRA, Indonesia’s system now recognizes 54 technology-based methodologies and 58 nature-based methodologies, greatly expanding the scope of eligible carbon activities.
3. How the CVA System Works
3.1 Registration and verification
Projects must be registered under the SRN-PPI to ensure national transparency and consistency.
If verified under international schemes (e.g., Verra or GCC), data must still be mirrored in the SRN registry to prevent double counting and maintain compliance with national NDC accounting.
3.2 Corresponding adjustment
For international transactions, the system enforces corresponding adjustments to national GHG inventories—ensuring that emission reductions sold abroad are properly deducted from Indonesia’s domestic NDC tally.
3.3 Fair benefit-sharing
For nature-based projects, the framework promotes equitable benefit-sharing mechanisms so that local communities and indigenous peoples directly benefit from carbon finance.
3.4 Trading and monetization
The CVA facilitates carbon credit trading within Indonesia and across borders.
Through MRAs, Indonesia’s carbon credits can now be recognized in international voluntary and compliance markets, unlocking new investment streams for both public and private sectors.
4. Opportunities and Risks
4.1 Key opportunities
- Attraction of global capital for domestic climate projects.
- Integration of Indonesia into the international carbon market.
- Promotion of low-carbon technologies and innovation.
- Strengthening of local community participation in sustainable projects.
- Acceleration of NDC achievement through blended financing models.
4.2 Major risks
- Technical and administrative complexity due to multiple methodologies.
- Risks of greenwashing or inconsistent verification.
- Market volatility and uncertain demand for carbon credits.
- Land-tenure and benefit-distribution conflicts.
- Need for consistent, long-term regulatory enforcement.
5. Strategies for Successful Implementation
- Standardization: adopt international best practices and align methodologies with globally recognized standards (Verra, GCC, Gold Standard).
- Transparency: strengthen digital integration between domestic and global registries.
- Capacity building: expand training and institutional understanding of CVA, carbon pricing, and Article 6 mechanisms.
- Multi-stakeholder collaboration: promote partnerships among government, private sector, and local communities.
- Fiscal incentives: implement carbon-pricing mechanisms, tax incentives, or green bonds to encourage investment.
- Continuous monitoring: establish adaptive review processes for ongoing improvement.
6. Early Implementation and International Partnerships
- Indonesia–Verra MRA: Enables Verified Carbon Units (VCUs) issued under Verra projects to be reflected in Indonesia’s national registry.
- Indonesia–GCC MRA: Allows projects to apply GCC, CDM, or Article 6.4 methodologies with official approval from the Ministry of Environment and Forestry.
These agreements signify Indonesia’s commitment to harmonizing domestic policy with international carbon market systems.
7. How Organizations and Practitioners Can Engage
- Understand CVA mechanics, from registration to verification and reporting.
- Identify potential carbon projects in energy, forestry, waste, or agriculture sectors.
- Conduct feasibility assessments and start small-scale pilot projects.
- Build partnerships with accredited organizations familiar with global carbon standards.
- Ensure inclusive participation from local communities.
- Join professional training programs to master the operational and legal aspects of carbon trading.
8. Why the Multi-Scheme CVA Matters
- A single-scheme system cannot accommodate Indonesia’s vast diversity of projects and geographies.
- The multi-scheme model ensures flexibility and inclusiveness.
- It aligns domestic policy with the evolving global carbon market.
- It enhances transparency, investor confidence, and policy credibility.
- It accelerates the mobilization of large-scale climate finance for Indonesia’s NDC targets.
Mutu Institute provides specialized training and technical assistance in carbon management, climate finance, and carbon market operations—including CVA implementation and Article 6 mechanisms.
The institute also operates Carbon Nature, an NGO focused on community-based and nature-based carbon projects, bridging environmental integrity with social impact.
If you or your organization aim to develop credible carbon initiatives or learn how to access global carbon markets, join Mutu Institute’s carbon training programs and connect with Carbon Nature for field collaboration and project support.
Indonesia’s Multi-Scheme Carbon Economic Value marks a transformative phase in its climate finance journey. It bridges national ambition with global opportunity, uniting innovation, regulation, and inclusivity.
Take part in this transformation.
Enroll in Mutu Institute’s carbon and CVA training programs, and collaborate with Carbon Nature to bring real climate impact to life. Together, these initiatives can turn Indonesia’s carbon vision into measurable progress.
