In the face of the escalating climate crisis, Indonesia’s rich natural resources have become both a battleground and an opportunity. On one hand, resource exploitation through forest , but also present opportunities for biodiversity conservation and preservation
CarbonX, an end-to-end carbon project developer in the carbon market, is strategically addressing these challenges by implementing robust frameworks for selecting and managing carbon projects.
Their approach balances environmental, social, and commercial imperatives, ensuring that their initiatives are not just impactful but also sustainable for the long term.
Berdaya Talk is an initiative that explores the stories of change makers and the initiatives they have developed to support sustainable development in Indonesia. This time, we are joined by Dessi Yuliana – CEO at CarbonX
How did you get started in the world of sustainability?
My career in investment began in private equity, where I spent six years evaluating oil and gas assets. My work required an in-depth understanding of Indonesia’s energy sector, which was undergoing a critical transition from being a net energy exporter to an importer.
I realized how much our energy security depended on volatile market conditions. When oil prices spiked, our economy would feel the shockwaves. That’s when I started exploring renewable energy as a way to stabilize our energy future.
This exploration became a turning point, introducing me to renewable energy and eventually leading me to a role at Global Green Growth Institute (GGGI).
Based in Seoul, GGGI is an intergovernmental organization committed to helping developing nations transition to green economies.
I joined as an investment specialist, focusing on originating renewable energy projects. My first project took me to Nusa Tenggara Timur (NTT), where diesel power plants dominated the energy landscape. We worked on a hybrid solution, combining solar panels with diesel to overcome the intermittency of solar power
Another standout project involved converting Palm Oil Mill Effluent (POME) into biogas. POME emits harmful methane when left untreated. By capturing this gas, palm oil factories could use it as an energy source, reducing emissions and creating a sustainable solution.
The Rapid Evolution of Green Energy
When Dessi started in renewable energy, the landscape was vastly different. Compared to when she started there were noticeable improvements, particularly in:
- Falling Technology Costs: Solar panels and other technologies have become more affordable.
- Improved Financing: Soft loans and better incentives now make projects more feasible.
- Skilled Workforce: An emerging pool of experts ensures the maintenance and growth of renewable energy systems.
Building CarbonX: A Holistic Approach to Carbon Projects
Started in 2021, CarbonX is a company focused on end-to-end carbon project development. CarbonX addresses a critical issue in the carbon market: the lack of integrity in fragmented value chains, where landowners, developers, and implementers often operate independently.
This can lead to the issuance of phantom credits, carbon credits that do not actually represent meaningful offsets.
To ensure accountability and quality, CarbonX manages the entire process, from securing forest management concessions to project implementation. Their two flagship projects are currently in development in:
- West Kalimantan: A 20,600-hectare concession focused on agroforestry to restore degraded land while supporting local livelihoods.
- Buru Island, Maluku: A 45,000-hectare concession in its preparation stage, addressing deforestation and promoting sustainable land use.
Nature-Based Solution is not Just About The Environment
Deforestation happens driven by many factors, some of them either being the community or the local business people who are looking to expand, sacrificing the forest in the process.
When tackling problems like deforestation, the key is to create solutions that genuinely address the community’s needs. That’s why understanding the root cause is so important.
For instance, is deforestation driven by logging activities? Or is it the local community trying to make a living? Are small businesses or chukongs involved? Or is it linked to illegal mining or logging activities?
Surprisingly, the answer isn’t always tied to economic survival motives. In one case, CarbonX discovered that illegal poaching wasn’t motivated by financial need but by day-to-day habits tied to hunting. This realization would mean that simply offering economic benefits wouldn’t solve the issue.
CarbonX recognizes that every community is unique. By understanding and addressing the specific socio-economic factors and cultural contexts of each area, their approach is deeply tailored to local needs. By also involving communities in forest management and restoration efforts, CarbonX fosters a sense of ownership and ensures long-term success.
For instance, CarbonX is implementing an agroforestry program in its project in West Kalimantan. This enables the local community to plant products like peanuts or durian trees that can coexist in harmony with the forest, and can potentially be used to support their livelihoods or sold for additional economic benefits.
Such solutions like agroforestry are the embodiment of nature-based solutions, allowing local communities to maintain their livelihoods while enabling the restoration of degraded forests.
The key is ensuring market demand for the product grown. It’s not enough to plant something if it won’t sell or doesn’t fetch a fair price.
“At CarbonX, we want to support them and ensure that they can connect with the right demand, creating incentive for them to also participate in this restoration program.”
Choosing The Right Projects
CarbonX has explored various sectors for carbon projects, from biochar to plastic credits. However, they ultimately chose the FOLU sector (Forestry and Other Land Use), keeping in mind the alignment with their expertise, allowing them to focus on meaningful solutions such as reforestation and conservation, where their work can directly impact deforested areas and restore ecosystems.
The selection of project locations is also no coincidence. CarbonX deliberately targets areas with significant environmental challenges while ensuring proximity to critical conservation zones.
CarbonX also employs a balanced portfolio approach, combining reforestation projects, which convert barren lands into thriving forests, with conservation projects that protect existing ecosystems.
This strategy addresses the market’s demand for high-integrity carbon credits and visible impact found while mitigating the risk of phantom credits – carbon offsets that fail to represent genuine reductions in emissions.
Their projects emphasize tangible, measurable impacts, utilizing international recognized standards and methodologies in designing and monitoring to ensure accuracy and transparency.
The Role of Certifications and Reporting
To enhance project credibility, CarbonX pursues certifications like the Climate, Community, and Biodiversity Standards (CCB). Such certifications would ensure that the project not only delivers environmental benefits but also generates co-benefits, including improved livelihoods, cultural, and gender equity.
Additionally, they will boost stakeholders confidence and validate the long-term impact of CarbonX’s initiatives.
Moreover, the implementation and Monitoring, Reporting, and Verification (MRV) system employs a hybrid approach:
- Technology: Spatial imagery and analysis define margins of accuracy, verified through on-ground sampling.
- Community Involvement: Local communities play an active role in monitoring and protecting the forests.
For instance, in West Kalimantan, the community participates in the “Masyarakat Peduli Api” initiative, raising awareness about sustainable forest management practices and reducing harmful activities like forest burning.
Navigating Trends in Carbon Trading
As the carbon market evolves, CarbonX is navigating both opportunities and challenges in the sector. While global awareness of climate change has surged, financing green projects remains a hurdle.
One key challenge is the absence of “greenium”, the premium that investors or customers are willing to pay for sustainable projects or products. This is largely due to the perception that green projects are high-risk, leading to higher interest rates and difficulty in accessing capital.
Soft loans from international organizations and development banks are helping to bridge this gap, but a broader shift in market sentiment is needed to unlock more significant capital pools.
What do you envision for the future of the carbon market?
I’m advocating for a stronger domestic Voluntary Carbon Market (VCM) in Indonesia. Currently, demand is predominately international, with limited engagement with domestic buyers. To change this, we need:
- Government Support: Policies that incentivize funding for carbon projects and enable international trading, fostering greater liquidity by promoting active participation both international and national buyers in Indonesia’s carbon trading market.
- Market Stimulus: Encouraging domestic businesses to engage in carbon trading, driven by consumer awareness and regulatory pressures.
Green is the new gold – hopefully with continued collaboration among businesses, communities, and government entities, the flywheel of positive impact can gain momentum – transforming Indonesia’s landscapes and contributing to the global fight against climate change.
