Indonesia's Forest Loss Surge Puts Climate Targets and EU Trade at Risk

166,500 Hectares Lost in Nine Months

Indonesia lost 166,500 hectares of forest, about 411,000 acres, in the first nine months of 2025, according to Forestry Minister Raja Juli Antoni. That was more than the country lost in any complete year from 2020 through 2023, reversing gains that had made Indonesia a global leader in reducing deforestation under President Joko Widodo.

The pace put Indonesia on course to match or exceed the government's 2024 total of 216,000 hectares, about 534,000 acres. That figure was the highest since 2019. Environmental organisation Auriga Nusantara offered a bleaker assessment, estimating total deforestation last year at more than 260,000 hectares, or roughly 642,000 acres.

Gross deforestation measures forest cleared before allowing for gains from restoration or new forest growth. The mounting losses matter because Indonesia's forests store carbon, support wildlife and sustain communities. Clearing them also creates risks for climate commitments and exports to markets that require evidence that goods come from land without recent deforestation.

The Merauke Food Estate in South Papua is central to the government's agricultural expansion. The project involves clearing at least 2 million hectares of forest to develop industrial agriculture, alongside facilities for producing fuel from crops. It brings Indonesia's pursuit of food and energy security into direct conflict with its recent forest protection record.

Amanda Hurowitz, forest commodities lead at nonprofit Mighty Earth, described the project as a threat to those earlier gains:

"The tragedy of this project is that it is undermining Indonesia's recent success in the battle to halt global deforestation," said Amanda Hurowitz.

What Is Planned in Merauke?

The Merauke Food Estate involves at least 2 million hectares, approximately 4.9 million acres, of forest conversion in South Papua. Its planned infrastructure includes a bioethanol factory, a power station with a capacity of 120 megawatts, and a highway stretching 80 kilometres, or 50 miles, from the coast to the development zone inland.

Investment could exceed $8 billion. By the end of the decade, the project aims to produce and store approximately 2 billion litres of bioethanol each year, equivalent to 528 million gallons. Bioethanol is an alcohol made from agricultural material that can be used as fuel.

The government presents food estates as part of a broader effort to strengthen food security and build a domestic biofuel industry that could eventually replace energy imports. More agricultural production could help supply food, while fuel made within Indonesia could reduce its dependence on energy bought abroad.

Forest conversion creates a competing cost. Trees hold carbon, and the food estate initiative particularly concerns climate advocates because it targets peatland areas. Peat is accumulated plant material that stores large amounts of carbon. Draining or burning it releases greenhouse gases that would otherwise remain stored in the ground.

Merauke is the most prominent project in the current development push, but agricultural estates are not the only pressure on forests. Other drivers include:

• Continued expansion of palm oil plantations.
• Mining operations.
• Infrastructure development.
• Agriculture on smaller plots and community encroachment into forest areas.

These activities spread the challenge beyond a single development zone. Protecting forests requires decisions about where farms, mines and roads can expand, as well as whether national restrictions are enforced locally.

How Earlier Forest Gains Were Achieved

Indonesia previously reduced deforestation through forest protection, restoration and stronger fire suppression. During Widodo's second term, those priorities combined with company commitments to reduce forest clearance associated with commodities such as palm oil.

A moratorium on clearing forest for new oil palm plantations followed devastating fires a decade ago. That policy helped bring deforestation down from a peak of 440,000 hectares in 2019 to 119,100 hectares in 2020. The difference was 320,900 hectares, a reduction of about 73% using those figures.

Indonesia's longer history shows how economic and political changes have repeatedly increased pressure on forests. Commercial logging, agricultural development and changes in government authority each played a part:

• Mid-1960s: Commercial forest exploitation increased sharply. Shifting cultivation, transmigration programmes, agricultural expansion and palm oil plantation activity added to widespread deforestation.
• 1997-1998: The Asian financial crisis weakened the currency, making agricultural and mining exports more attractive. Oil palm and cocoa plantations expanded, contributing to substantial forest cover loss.
• After the crisis: Decentralisation transferred forest management authority to districts and provinces. In many places, this intensified exploitation and conversion, helping establish Indonesia's reputation as one of the world's largest deforestation hotspots.
• Widodo's second term: Forest protection, restoration, fire suppression and corporate commitments helped reduce forest loss.
• 2024 and the first nine months of 2025: Forest clearance accelerated again, placing the earlier gains under renewed pressure.

The current development drive shows how fragile those reductions can be when economic priorities change. Food production, fuel supply and infrastructure remain government goals, while forest protection depends on keeping those ambitions within environmental limits.

Why the Climate Targets Are at Risk

Indonesia ranks as the world's sixth largest greenhouse gas emitter, following China, the United States, India, the European Union and Russia. Its forests contain vast stores of carbon, giving forest policy a major role in both national emissions and global efforts to limit warming.

Indonesia's enhanced Nationally Determined Contributions, its national climate commitments under the Paris Agreement, set emissions reduction targets of 31.89% unconditionally and 43.20% conditionally by 2030. The unconditional target is the commitment Indonesia makes without depending on outside support; the conditional target represents a larger reduction linked to support.

The Forest and Other Land Use Net Sink target, known as FOLU-NS 2030, requires the forestry and land use sector to absorb more carbon than it releases. A net carbon sink works like a balance: carbon taken out of the atmosphere must exceed emissions from activities such as clearing and burning land.

Accelerating deforestation makes that balance harder to achieve. Forest removal reduces the area available to absorb carbon, while clearing trees and disturbing peat can release carbon already stored. Large agricultural developments therefore affect both sides of Indonesia's forestry climate target.

A Carbon Credit Sale Meets Limited Demand

Indonesia's carbon credit auction at the COP30 Summit in Brazil exposed another pressure on its climate strategy. The country offered 90 million credits but sold fewer than 2.8 million, less than 3.2% of the amount offered.

Carbon credits are units used in transactions involving claimed reductions or removals of greenhouse gas emissions. Indonesia's effort to earn money from forest conservation sits alongside government approval for extensive forest conversion, a combination that has raised investor concerns about the country's environmental commitments.

The government did not disclose revenue from the sales or the identities of buyers. Indonesian companies owned by the state were reportedly among the purchasers.

Bhima Yudhistira Adhinegara, executive director of the Center of Economic and Law Studies, known as CELIOS, criticised Indonesia's commitment to conserving the landscapes underlying its climate ambitions:

"It means Indonesia doesn't have a strong commitment to protect its forest or peatlands," said Bhima Yudhistira Adhinegara.

The weak auction demand highlights the difficulty of attracting conservation finance while approving developments that remove forests. Peatland conversion adds to those concerns because drainage and burning can release especially large quantities of greenhouse gases.

EU Market Access Comes With Forest Conditions

Indonesia recently concluded the Indonesia-EU Comprehensive Economic Partnership Agreement, or IEU-CEPA, which assures tariff free access to the European market for Indonesian palm oil. The industry has described the agreement as a "golden ticket" allowing palm oil to compete on equal terms with European oils such as rapeseed.

European market access also depends on the European Union's Deforestation Regulation, known as the EUDR. It requires companies to show that covered commodities come from land that was not deforested after December 31, 2020.

The regulation covers palm oil, soy, timber, cocoa, coffee, cattle and rubber. For buyers, the practical task is tracing goods back to their production areas and checking whether forest was cleared after the cutoff date. A trade agreement can lower tariffs, while forest requirements still determine whether goods qualify for the market.

Indonesia's current risk assessment carries a checking requirement of at least 3% of exports covered by the regulation. Food processing businesses and other European customers must ensure that their purchases meet the forest requirements.

Satellite data and other benchmarks showing a rise in deforestation relative to 2020 could lead to Indonesia being placed in the high risk category. That would trigger audits covering 9% of listed commodities, three times the 3% level, increasing the cost of checks for importers and potentially making Indonesian products less competitive.

Companies importing products linked to deforestation face penalties involving 4% of their revenues, a prospect Adhinegara described as "daunting". He warned that additional forest conversion for palm oil could threaten exports:

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

The commercial stakes extend beyond tariffs. Importers need traceable supplies, and rising compliance costs can affect which producers they buy from. Indonesia's forest decisions therefore have consequences for businesses seeking to benefit from improved trade access.

Land Redistribution Meets Environmental Limits

Indonesia's forest land redistribution programmes seek to address economic inequality, support community development and increase food production. They include Social Forestry, or SF; the Agrarian Reform Object Land programme, known as TORA; the Food Estate programme, or FE; and Forest Areas with Special Management, known as KHDPK.

These programmes aim to empower communities and support economic recovery, but allocating forest land for uses outside forestry can conflict with the country's emissions commitments. Indonesia must pursue growth, jobs and food security for a growing population while also making its forestry sector a net carbon sink by 2030.

Research on forest land redistribution recommends three principles for reconciling those goals:

• Develop regional strategies that keep land use environmentally sustainable.
• Apply a mitigation hierarchy to prevent damage to biodiversity.
• Maintain green space and areas that are biodiversity hotspots.

A mitigation hierarchy means considering how to avoid damage before turning to measures that reduce or address damage after it occurs. Biodiversity hotspots are places where protecting habitats matters especially for the variety of plants and animals they contain.

The practical challenge is finding ways to increase production without relying on further forest conversion. Programmes intended to improve livelihoods need to account for the environmental value of the land they redistribute, including its carbon stores and wildlife.

Global Forest Loss Provides a Warning

The University of Maryland's GLAD lab and Global Forest Watch recorded a record 6.7 million hectares of tropical primary rainforest loss in 2024. That is an area nearly the size of Panama and the highest annual loss in at least two decades. Primary forests are forests that have experienced little human disturbance and often contain rich wildlife populations and large carbon stores.

Indonesia's primary forest loss fell by 11% from 2023 to 2024, even as its broader deforestation picture worsened. The primary forest measure focuses on a particular category of forest, while gross deforestation tracks forest clearance more broadly. The acceleration reported in 2025 now threatens the progress shown by that earlier primary forest figure.

Bolivia recorded a 200% increase in primary forest loss, while Brazil experienced a major surge driven largely by fires. Those developments put Indonesia's choices within a wider pattern of mounting pressure on tropical forests.

More than 140 countries signed the Glasgow Leaders Declaration in 2021, promising to halt and reverse forest loss by 2030. Current trends suggest that the world is far off course to meet that commitment.

Brazil also offers a warning about the durability of conservation agreements. The Amazon Soy Moratorium helped protect rainforest for two decades, but global grain traders abandoned the pact after local lawmakers threatened tax incentives. Political pressure weakened a voluntary arrangement that had supported forest protection.

Indonesia faces a similar need for policy consistency. Conservation gains achieved under Widodo can be reversed when administrations change or economic priorities shift. Forest protection depends on measures lasting beyond the political period in which they were introduced.

Communities and Wildlife Face Local Costs

The Merauke Food Estate has drawn criticism from human rights groups over its potential effects on Indigenous communities and the deployment of military personnel to protect the project. Forest loss can affect the land and resources on which local populations depend, bringing questions of land rights into the development debate.

In March 2025, nearly two dozen civil society groups petitioned the European Commission to consider forest cover loss from the Merauke project, its effects on Indigenous communities and military protection as violations of the EUDR.

Concerns also extend to other parts of Indonesia. Illegal clearing for palm oil plantations has continued in the Rawa Singkil Wildlife Reserve within the Leuser Ecosystem, despite periods when national forest loss was declining.

Rawa Singkil contains areas with the highest density of Sumatran orangutans on the planet. Destruction there threatens biodiversity and Indigenous livelihoods, showing how local damage can continue even during improvements in national figures.

These conflicts place community land tenure, the rights through which people hold and use land, alongside national conservation rules. Meaningful participation in decisions and respect for Indigenous land rights are part of effective forest protection, particularly where government development projects overlap with community territories.

What Measures Could Reduce the Pressure?

Indonesia's response must address the different activities driving forest loss while meeting development needs. The strategies identified include:

• Strengthening forest protection policies and enforcing them across political cycles.
• Increasing agricultural production on existing farmland rather than expanding into forests.
• Improving fire prevention and response.
• Combating illegal logging and land grabbing.
• Supporting forest economies led by communities that provide livelihoods while keeping forests standing.
• Securing international climate finance for conservation.

Increasing production on existing agricultural land offers a way to pursue food security without clearing additional forest. Community forest economies similarly seek to connect livelihoods with the continued presence of trees, rather than treating clearance as the main route to income.

International buyers and regulators face their own practical tasks. Implementing the EUDR requires reliable systems for tracing commodities and support that allows smallholder farmers to meet the rules. Protecting forests also requires attention to ecosystems outside forests that could become new targets for conversion.

Indonesia's choice is between development that continues to depend on forest clearance and approaches that protect forests while pursuing growth. Further conversion risks climate targets, trade relationships and ecosystems. Protecting forests could strengthen its position in the green economy while supporting the lasting welfare of its citizens.

Under the leadership that followed Widodo's term, forest policy will affect more than domestic land use. It will influence Indonesia's ability to meet its climate promises, maintain access to international markets and protect the communities and wildlife that depend on its forests.

The Essentials

• Forestry Minister Raja Juli Antoni reported 166,500 hectares of gross deforestation in the first nine months of 2025, more than any full year from 2020 through 2023.
• The government's 2024 total was 216,000 hectares, the highest since 2019. Auriga Nusantara estimated more than 260,000 hectares of deforestation last year.
• The Merauke Food Estate involves clearing at least 2 million hectares in South Papua, with investment that could exceed $8 billion.
• Forest loss threatens Indonesia's emissions commitments and its goal for forestry and land use to become a net carbon sink by 2030.
• Indonesia sold fewer than 2.8 million of the 90 million carbon credits offered at COP30 in Brazil.
• A higher EU deforestation risk rating could increase checking requirements from 3% to 9% for covered commodities.
• Indigenous communities face land rights concerns, while illegal palm oil expansion threatens wildlife in Rawa Singkil.
• Tropical primary rainforest loss reached a record 6.7 million hectares globally in 2024.