Indonesia is moving to strengthen one of the most critical — and technically complex — pieces of the emerging forest carbon economy: how project-level carbon activities fit within national climate accounting systems.

Known as “nesting,” the issue has increasingly become central to discussions around the future credibility and scalability of jurisdictional REDD+ and forest carbon markets globally. For Indonesia, home to some of the world’s largest tropical forests, peatlands, and mangrove ecosystems, the stakes are significant.

At its core, nesting is about ensuring that carbon projects developed by provinces, communities, or the private sector are properly integrated within national or sub-national REDD+ systems. The aim is to avoid double counting, improve transparency, and ensure that emission reductions claimed by different actors remain credible and environmentally sound.

But beyond technical definitions, policymakers and market actors increasingly see nesting as a prerequisite for unlocking long-term private investment into forests.

“We are committed to unlocking the full potential of our forests, not only to advance our climate ambitions, but also to create predictable financial pathways that support communities and forest stewards,” said Laksmi Wijayanti, Director General of Sustainable Forest Management at Indonesia’s Ministry of Forestry.

“As a global leader in forest carbon, Indonesia can play an important role in delivering a cohesive solution that brings all stakeholders together through clear and credible nesting arrangements,” she added.

The push comes as carbon markets globally enter what many observers describe as a more selective and integrity-focused phase. After years of rapid growth followed by scrutiny over quality and credibility, buyers are increasingly prioritizing credits backed by stronger safeguards, transparent accounting systems, and alignment with national climate commitments.

For Indonesia, the conversation around nesting intersects with a broader strategic objective: translating its vast forest and land-use potential into measurable climate outcomes and sustained financial flows.

Indonesia aims to reach net-zero emissions by 2060 or sooner, supported by its Forestry and Other Land Use (FOLU) Net Sink 2030 plan. The country’s climate pathway depends heavily on reducing deforestation, conserving existing forests, restoring degraded landscapes, and improving peatland and mangrove management.

Sub-national jurisdictions are becoming increasingly important in that effort. Provinces such as Riau — home to around 3.5 million hectares of peatland — are emerging as testing grounds for how jurisdictional REDD+ can work in practice.

Through the GREEN for Riau Initiative, supported by the UN-REDD Programme and funded by the United Kingdom, provincial stakeholders are exploring how project-level activities can align with larger jurisdictional systems while maintaining environmental integrity and creating conditions for investment.

As an ART-TREES sub-national pilot, Riau is also contributing to broader efforts to clarify how jurisdictional accounting systems and private-sector participation can coexist within high-integrity carbon markets.

“Through a robust nesting approach, Indonesia can ensure that project-level carbon market activities are fully aligned with national climate commitments, reinforcing transparency, environmental integrity, and our pathway toward achieving national emission reduction targets,” said Ilham, Director of Forestry Business Development at the Ministry of Forestry.

The issue has also drawn strong interest from development partners supporting Indonesia’s forest and climate agenda.

Norwegian Ambassador to Indonesia Rut Krüger Giverin described nesting as an important next step in strengthening confidence in carbon markets.

“Norway is a long-standing partner to Indonesia’s efforts to reduce deforestation. Through collaboration with UN-REDD and other partners, we have supported the development of national forest monitoring systems, safeguards, and frameworks that underpin credible results,” she said.

“Strengthening clarity on nesting will help ensure that emission reductions are transparent and credible, while building long-term confidence in carbon markets and enabling high-integrity carbon transactions.”

Private sector participants say that clarity is increasingly becoming essential. Project developers and buyers alike point to uncertainty around accounting rules and benefit-sharing arrangements as major barriers to scaling investment.

Without clearer and more predictable frameworks, long-term investment decisions remain difficult — particularly in markets where integrity concerns continue to shape buyer behavior.

United Nations Resident Coordinator in Indonesia Gita Sabharwal said Indonesia’s progress is likely to carry implications well beyond its borders.

“Indonesia’s progress will be closely watched by neighboring countries, by buyers seeking high-integrity forest credits, and by a global community looking for climate leadership that delivers tangible results,” she said.

“Indonesia now has the opportunity to help define the global standard for jurisdictional forest action, grounded in integrity, equity, and national ownership.”

For many participants, the broader message is that the challenge facing Indonesia is no longer whether forest carbon markets will emerge, but whether countries can build the systems needed to make them credible, scalable, and investment ready.

As Ilham S.T., M.T., Director of Forestry Utilization Business Management, put it:

“Indonesia has a strong foundation, from its ambitious climate commitments and progressive regulatory framework to its growing carbon market ecosystem. The challenge ahead is not ambition, but operationalization.”

John Narayan Parajuli
Communications Specialist, Asia Pacific
UNEP/UN-REDD Programme
Source: un-redd.org