Indonesia and Norway signed a Mitigation Outcome Purchase Agreement on Wednesday at the 31st United Nations Climate Change Conference in Antalya, Turkey, marking the country’s first deal to operationalize Article 6.2 of the Paris Agreement.
Under the legally binding commercial contract, Norway will purchase up to 12 million tonnes of carbon dioxide equivalent in emissions reductions. State-owned utility firm PLN signed the agreement with the Global Green Growth Institute, supported by the Norwegian Article 6 Climate Action Fund.
The carbon units are valued at between US$20 and $40 per tonne of carbon dioxide equivalent, according to The Jakarta Post. Officials said that the transaction represents the largest carbon trade recorded under the United Nations Framework Convention on Climate Change Secretariat to date.
The agreement follows a mutual expression of intent signed at the previous climate summit in Belém, Brazil. Financing from the arrangement targets solar power projects developed by PLN by 2038, supporting Indonesia’s broader energy transition.
Contract supports Indonesia's renewable electricity generation investment
The newly signed commercial contract supports Indonesia’s Generation-Based Incentive programme, a results-based crediting mechanism designed to accelerate investment in new grid-connected renewable electricity generation. The framework addresses financial, regulatory, and grid-related constraints that have slowed renewable energy deployment.
Projects that combine renewable generation with battery energy storage systems receive priority under the initiative. This setup is intended to supply electricity during peak demand and evening hours when grid emissions are highest, while reducing grid intermittency.
“Article 6 is moving from readiness to implementation, and this agreement is a clear example of what that transition requires: strong national drive and dedicated partners,” said Sang-hyup Kim, Executive Director of the Global Green Growth Institute, as reported by the Global Green Growth Institute.
Norway provides US$100 million for Indonesia's forestry emission reductions
Separately, Indonesia and Norway announced the fifth phase of their Results-Based Contribution, providing US$100 million in recognition of Indonesia’s verified emission reductions from the forestry and land-use sector between 2020 and 2023. This latest funding complements previous support totaling US$216 million from four earlier phases.
The Ministry of Environment said that carbon trading transactions reflect the progress of Indonesia’s efforts to curb greenhouse gas emissions. Ary Sudijanto, the ministry’s Deputy for Climate Change Control and Carbon Economic Value Management, explained the broader purpose of the mechanism during a media briefing in Antalya.
“Carbon trading is not primarily about creating a new economy, but about funding climate action,” said Ary Sudijanto, Deputy for Climate Change Control and Carbon Economic Value Management, told reporters on Saturday (November 14).
Environmental Integrity and Community Benefits
Officials emphasized that carbon trading requires strict validation by independent institutions and thorough verification to ensure real emission reductions. “Climate action is like a test. We cannot simply claim that we have done well. Others must also recognize our achievements, and carbon buyers provide that recognition,” Ary Sudijanto, Deputy for Climate Change Control and Carbon Economic Value Management, said.
When climate initiatives generate wider benefits, such as mangrove restoration, the economic advantages also reach surrounding communities who grow, plant, and maintain the seedlings. Improved ecosystems support fish populations and other aquatic species, according to ministry officials.
“The success of Indonesia–Norway cooperation is measured not only by emission-reduction achievements or results-based payments, but also by the maintenance of environmental integrity, ecosystem protection, and tangible benefits for communities,” Moh Jumhur Hidayat, Indonesian Environment Minister and Head of the Environmental Protection Agency, said at the Indonesia Pavilion, as reported by Forest Insights Indonesia.
Did You Know? The Global Green Growth Institute was established as an intergovernmental organization in 2012 and hosts the Carbon Transaction Facility, which includes dedicated Article 6 funds from Sweden, Norway, and Singapore.
Operationalizing Article 6.2 through a Mitigation Outcome Purchase Agreement helps move international carbon markets into implementation, linking carbon market cooperation with national energy priorities and mobilizing climate finance for renewable investments.
What is a Mitigation Outcome Purchase Agreement
What is a Mitigation Outcome Purchase Agreement?
A Mitigation Outcome Purchase Agreement is a legally binding commercial contract for the sale of carbon credits under Article 6 of the Paris Agreement. It details the volume, price, and delivery schedule of carbon credits transferred between nations.
Which organization facilitated the Indonesia-Norway agreement?
The agreement was facilitated by the Global Green Growth Institute, operating through its Carbon Transaction Facility and supported by the Norwegian Article 6 Climate Action Fund.
What are the priority uses for the forestry results-based contributions?
The Ministry of Forestry highlighted four priorities for the funds: forest and land fire prevention, ecosystem restoration, biodiversity conservation, and improving the welfare of communities dependent on forests.
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