Indonesia’s Blue Carbon Opportunity: Unlocking Coastal Ecosystems for Climate, Community Impact

BANGKOK, July 2025 – As blue carbon gains traction on the global climate agenda, Indonesia is positioning itself as a critical player — both in potential and policy. With over 23% of the world’s mangrove area and 17% of global blue carbon potential, the country is home to ecosystems that can absorb up to ten times more carbon than terrestrial forests. Yet, despite this promise, blue carbon remains an underutilised solution in the race against climate change.

Speaking to CarbonWire on the sidelines of the Asia Climate Summit in Bangkok, Bimo Soewadji, CEO of Indonesia-based climate NGO CarbonEthics, outlined the challenges, opportunities and urgent priorities for advancing blue carbon initiatives — especially those that centre community development and ecological sustainability.

The Promise and Complexity of Mangrove-Based Carbon Solutions

“Mangroves are a powerful carbon sink, but restoring them is not straightforward,” Soewadji explained. “We’ve achieved survival rates of 75–98% in our planting programmes, but success depends heavily on local conditions and land tenure clarity.”

One of the major obstacles is the fragmented ownership of coastal zones. While Indonesia has made strides in defining land tenure through social forestry licences and private concessions, ambiguity remains— especially in non-forest areas where regulations are less clear.

“Mangrove ecosystems are often caught in the crosshairs of coastal development and land reclamation,” he noted. “The cost of cutting down these forests is not just ecological—it’s carbon that’s released back into the atmosphere after years of absorption.”

Scaling with Science, Community and Finance

CarbonEthics has taken a multi-pronged approach to ensure that restoration efforts are not only ecologically sound but also economically viable. “You cannot talk to local communities solely about climate,” said Soewadji. “Their priority is income, and we respect that.”

In CarbonEthics’ projects, communities are supported to develop livelihoods alongside ecosystem restoration. These include sustainable aquaculture, mangrove-derived products such as natural soap and fashion, and even the return of fish populations that enable mud crab farming. “It’s about creating both short-term and long-term revenue streams — carbon finance alone is not enough.”

To scale up, the organisation is leveraging blended finance models that combine philanthropic funding, CSR grants, and emerging carbon market investments. “Early-stage financing remains a bottleneck,” Soewadji admitted. “Restoration work is capital-intensive, and many projects fail at the feasibility stage due to lack of funds.”

The need for robust monitoring and verification has also prompted CarbonEthics to adopt a blend of satellite technology, ground sampling, and automation. “Technology enables us to move from hectares to hundreds of thousands of hectares while maintaining data integrity.”

Regulatory Headwinds — and Tailwinds

Indonesia’s regulatory framework around carbon markets has seen notable developments in recent months, with the government signalling its support through national mangrove mapping and revisions to allow voluntary carbon markets. “The vibe is different now,” said Soewadji. “The government is more engaged and listening to project developers like us.”

However, the sector still awaits mutual recognition agreements with international carbon standards and the finalisation of presidential decrees to provide investors with the confidence they need. “Regulatory clarity is the number one challenge, followed closely by early-stage finance and unresolved land tenure issues in non-forest areas,” he added.

Measuring Co-Benefits: More Than Just Carbon

CarbonEthics places a strong emphasis on measuring the broader impact of its projects. Each initiative begins with a baseline assessment and theory of change, followed by ongoing monitoring and evaluation. This includes metrics around income generation, hours of training, and gender participation.

“Currently, 35% of our mangrove farmers are women, and we are working to increase that,” said Soewadji. “Women and youth bring unique skills to the table — particularly when it comes to digital tools for monitoring ecosystems.”

To assess impact beyond carbon, the organisation uses a social return on investment (SROI) framework. “Every dollar that comes in is measured for its social value. That’s critical in attracting philanthropic and CSR funding.”

Looking Ahead: A Blueprint for the Region?

For the near term, CarbonEthics is focused on deepening its expertise in blue carbon and peatland ecosystems, aiming to ready more projects for credit issuance by next year. Beyond Indonesia, Soewadji envisions regional expansion — but with caution.

“We want to win in one area before we spread too thin. Prioritisation is key,” he said. “Nature-based solutions are not just about trees — they’re about people, governance, and finance. If we get this right in Indonesia, it could serve as a model for coastal climate action globally.”