After years of progress, Indonesia risks ‘tragedy’ of a deforestation spike

After years of uneven progress, deforestation in Indonesia is poised to accelerate, owing to widespread logging, expanding plantations and mining.

In December, Indonesia’s forestry minister, Raja Juli Antoni, indicated the Southeast Asian nation had lost more forest during the first nine months of 2025 than the annual totals for any of the first three years of this decade.

Gross deforestation in Indonesia in 2025 was on track to at least match 2024’s tally, which reflected the most extensive losses since 2019, Antoni told a parliamentary committee in December.

As Indonesia pushes ahead with its Merauke Food Estate project, which involves clearing at least 2 million hectares (4.9 million acres) of forest in South Papua province, worries are mounting that Indonesia’s commodity exports may suffer if big markets like the EU force importers, including food-processing companies, to prove they are not buying palm oil and other products that have resulted from clearing rainforest.

“The tragedy of this project [Merauke Food Estate] is that it is undermining Indonesia’s recent success in the battle to halt global deforestation,” Amanda Hurowitz, forest commodities lead at nonprofit Mighty Earth, told Mongabay.

Deforestation accelerates

Indonesia’s deforestation slowed substantially during former President Joko Widodo’s second five-year term in office in part because of a moratorium on clearing forest for oil palm plantations following widespread fires a decade ago. Prior to that, for years, Indonesia was one of the world’s biggest deforestation hotspots as corporate-run plantations proliferated in Sumatra and Borneo.

Gross deforestation, not including replanted trees, covered an area of 166,500 hectares (411,000 acres) during the first nine months of 2025, Antoni told a parliamentary committee in December.

New area impacted by deforestation shrank to 119,100 hectares (294,000 acres) in 2020, roughly a quarter the level from the previous year when the Widodo administration issued a moratorium on new permits to clear primary forest. During the four years before 2024, annual increase in gross deforestation didn’t exceed 146,000 hectares (360,000 acres).

But last year’s official tally jumped by more than half to 216,000 (534,000 acres) — an understatement, according to NGO Auriga Nusantara, which puts the total at more than 260,000 hectares (642,000 acres).

Carbon credits fizzle

A reacceleration in the rate of Indonesia’s deforestation risks drawing attention to the country’s spotty climate record. At No. 6, Indonesia ranks among the top greenhouse gas emitters after China, the U.S., India, the EU and Russia, according to the EU’s 2025 Emissions Database for Global Atmospheric Research.

At a planned $1 billion auction of carbon credits at the COP30 Summit in Brazil, Indonesia managed to sell fewer than 2.8 million carbon credits out of 90 million on offer. Carbon credits based on fewer than half of its 40 energy and conservation projects found takers, the country’s climate envoy Hashim Djojohadikusumo said.

The government has yet to say how much it raised from the sale or the identities of the buyers, though some media reports indicate some of the takers included Indonesian state-owned companies such as oil and gas company Pertamina and lender Bank Mandiri.

“It means Indonesia doesn’t have a strong commitment to protect its forest or peatlands,” Bhima Yudhistira Adhinegara, executive director of the Center of Economic and Law Studies (CELIOS), told Mongabay.

“The Indonesian government has tried to sell into the carbon market, but investors are thinking twice because saving the rainforest contradicts its goal of building food estates.”

Deforestation risk

Even so, Indonesian officials are pushing ahead with plans to develop a domestic biofuel industry that it hopes can eventually replace energy imports.

In mid-October, state-owned construction company PT Hutama Karya won a contract worth 4.8 trillion rupiah ($284 million), the biggest public construction tender in 2025, to build an 80-kilometer (50-mile) stretch of highway linking the coast of South Papua to an emerging 2-million-hectare (5-million-acre) food estate in the interior.

The food estate project, including the bioethanol factory and a 120-megawatt power station, will cost at least $8 billion to produce and store about 2 billion liters (528 million gallons) of bioethanol a year by the end of the decade, the government has said. Yearly production capacity of fuel-grade bioethanol is about 40 million liters (10.5 million gallons).

Indonesia and the EU inked the Comprehensive Economic Partnership Agreement (IEU-CEPA) earlier this year, assuring Indonesian palm oil enjoys tariff-free access to the world’s third-largest market.

Indonesia’s palm oil industry has called the IEU-CEPA a “golden ticket” for the country’s palm oil exports because the commodity will be free to compete on equal footing with domestic oils such as those derived from rapeseed.

Even so, a surge in deforestation may invite more scrutiny of Indonesian exports of seven commodities including soy, timber, cocoa, coffee, cattle, rubber as well as palm oil.

Under the EU’s 2023 deforestation regulation, known as the EUDR, food-processing companies and other big European customers of Indonesian commodities must check at least 3% of the country’s exports to ensure cargoes didn’t benefit from deforestation, the same proportion as those from Malaysia.

But if benchmarks including satellite and FAO data show a spike in the deforestation relative to Dec. 31, 2020, levels, the risk assessment may ratchet up one notch to “high,” triggering an audit of 9% of all listed commodities, representing a huge increase in costs for importers.

By comparison, commodity importers from low-risk countries must do background checks on 1% of the goods.

So far, the EU has not commented on Indonesia’s accelerating rate of deforestation. Last March, nearly two dozen civil society groups petitioned the EU Commission to consider the loss of forest cover owing to the Merauke Food Estate, the impact on Indigenous communities and the use of military personnel to protect the project a violation of the EUDR, the groups said.

Companies found to have imported palm oil derived from deforestation practices face a risk of losing 4% of revenues, a daunting prospect CELIOS’s Adhinegara said.

“If Indonesia opens up more forest land to produce palm oil, it can still be very dangerous for its exports.”

Banner image: A man inspects logs near several wood pellet production companies in Indonesia’s Gorontalo province on the island of Sulawesi in 2024. Image by AP Photo/Yegar Sahaduta Mangiri.

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Philip Jacobson Editor

This story first appeared on Mongabay

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