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Indonesia’s cattle biodigester system is a highly effective ‘green’ technology, radically improving smallholders’ quality of life both in the household and via the farm enterprise: the main product, biogas, is a smokeless cooking fuel and the by-product, bioslurry, is a high-value fertiliser. The biodigesters also qualify for carbon offsets from the avoided use of fuelwood and non-renewable fuel.

Carbon income is currently low, however, and the potential of bioslurry – both to earn carbon offsets, and as a market commodity for the farmer – has yet to be realised. And while there has been a rapid uptake of biogas technology, with 14,500 digesters installed across nine provinces, this trend is slowing down. One-hundred-per-cent subsidies have distorted the market, and poorer farmers who lack capital or cooperative membership are yet to be reached.

This report, the second of two biogas partner studies by the Hivos-IIED Learning Trajectory Programme on payments for ecosystem services, looks at the Indonesia Domestic Biogas Programme to understand the potential of carbon-offset funding in relation to smallholder agriculture.