Jakarta – Indonesia is committed to reducing greenhouse gas emissions by 2030 with its efforts by 31.89 percent and by 43.2 percent through international support. One of the efforts to reduce emissions is through carbon exchanges. Inaugurated on October 26 2023 by President Joko Widodo, the Indonesian carbon exchange is an important moment in Indonesia’s efforts to reduce greenhouse gas emissions by ratifying the Paris Agreement. As of November 30, 2023, the Financial Services Authority (OJK) revealed that the trading value on the Indonesian carbon exchange reached IDR 30.7 billion with a trading volume of 490,716 tons of carbon dioxide equivalent. This transaction is still limited to the energy sector and has not yet penetrated other sectors.
In March 2024, the author representing the Indonesian Waqf Board was a resource person in a discussion held by the Environmental and Natural Resources Development Institute of the Indonesian Ulema Council with Dr. Khalifah M. Ali (Chairman of the Bogor Waqf Forest Waqf) and Prof. Dr. Waryono Abdul Ghafur (Director of Zakat and Waqf Empowerment, Ministry of Religion). The author briefly explains the potential of forests to bind carbon in the air and reduce greenhouse gas emissions. It is also home to more than 80 percent of the species that live on land, including animals and plants closely related to the 15th principle of the Sustainable Development Goals, Life on land.
One of the carbon trading schemes on the IDX is the Offset Market which trades carbon credits resulting from reducing or eliminating greenhouse gases or climate change mitigation actions. Indonesia has the opportunity to increase income from carbon exchange by optimizing the potential of forests as premium carbon credits, namely carbon credits that absorb more emissions rather than reducing them. As the largest archipelagic country in the world, Indonesia is home to 125 million hectares of forest area, or 63 percent of Indonesia’s total land area. Indonesia’s tropical rainforest, which is the third largest in the world after Brazil and Congo, is capable of absorbing 25.18 billion tons of carbon emissions. From data published by the Coordinating Ministry for Economic Affairs, Indonesia is projected to be able to gain profits from tropical forests of IDR 1,780 trillion with an assumed carbon unit price of 5 US dollars.
Apart from providing economic benefits in the form of carbon credits, forests also have important ecological contributions to the surrounding environment. Tropical rainforests are the home of Indonesia’s biodiversity. It also as a green fortress against the threat of disasters due to the climate crisis such as landslides, floods, and drought due to erosion, absorbing rain overflows, and protecting springs. Losing every inch of forest cover means cutting off the life and source of livelihood of living creatures.
However, the large potential for premium carbon overcomes the obstacles of forest and land conversion. Palm oil plantations, the logging industry, land expansion, and mining pose serious threats to the preservation of Indonesia’s tropical rainforests. This conversion and deforestation caused Indonesia to lose 230 thousand hectares of tropical forest or the equivalent of 177 million tonnes of CO₂ emissions according to data obtained by Global Forest Watch. Even though Indonesia has succeeded in reducing deforestation rates in 2021-2022 by 104 thousand hectares, deforestation continues to be a global challenge.
The Waqf forest scheme can be a solution for providing forest land for conservation purposes. Waqf forests can sustainably maintain forest conditions while still providing economic benefits for the lives of local communities. This concept is in line with the vision of the government’s social forestry program. Law Number 41 of 2004 concerning Waqf provides a firm legal basis for protecting waqf areas from the possibility of land use change. Plants and other materials related to land as immovable objects that become waqf property may not be pledged, confiscated, gifted, sold, inherited, exchanged, or transferred in other forms of transfer of rights. This means that after an area has met the requirements as waqf property, the area will remain a forest area that cannot be transferred for other functions.
Apart from providing certainty of land protection status, waqf forest can also be a solution for providing financing to meet emission reduction targets. Indonesia still needs funds amounting to 281 billion US dollars or around IDR 4,299 trillion to achieve the Nationally Prepared Contribution (NDC) target in 2030. The waqf forest mechanism can be alternative financing based on Islamic philanthropy considering its enormous potential in Indonesia as a country with the majority of Muslims. According to the Indonesian Waqf Board, the potential for waqf reaches IDR 180 trillion annually. As of October 2023, IDR 2.3 trillion has been collected through cash waqf. However, most of it is still channelled to education and poverty alleviation activities. So far, waqf distribution for environmental conservation is still very small, still under IDR 5 billion.
Waqf Forest can be an alternative model for climate funding that comes from collaboration and provides benefits to the community. In Aceh Besar, one hectare of land donated by four waqifs (the ones who give waqf) or endowments in 2014 has now developed into a waqf forest covering an area of 3.8 hectares and 9,000 square meters supported by funds from around 400 waqifs. This forest is an effort to protect residents from the threat of environmental damage in the Krueng Jalin River watershed which includes areas of oil palm land. Meanwhile in Pamijahan, Bogor, waqf forests are an initiative to prevent landslides in disaster-prone areas. This forest also provides benefits to residents in the form of natural products such as forest honey, fruit, and income from ecotourism activities. This community-driven collaboration has proven to be a sustainable conservation initiative not only for the environment but also for the surrounding community.
Indonesia must be able to utilize the potential of its green carbon and blue carbon sources as a key player in realizing green economic growth. For this reason, waqf forests need to continue to be promoted as an effort to restore the role of forests as an important asset for environmentally friendly development. In addition, a mechanism is needed that makes it easier to calculate and sell carbon credits from waqf forests managed directly by the community to large corporations so that the economic benefits of waqf forests can be felt directly by the perpetrators.
Hendri Tanjung (Member of the Indonesian Waqf Board) and Achmad Syalaby Ikhsan (MOSAIC)
Source: Detik.com (English version)