The release of carbon into the atmosphere from forest conversion and exploitation is estimated to be 18% of global carbon dioxide emissions, and thus a significant contributor to the increase of atmospheric CO 2 (and other greenhouse gas) concentrations that is linked to global climate change (IPCC, 2007); • If the recent estimates of total emissions of 3 Giga ton per year for Indonesia are true, per capita emissions are twice that in France and 30% above those in the UK or Germany; • The Clean Development Mechanism (CDM) of the Kyoto Protocol supports some forms of affores- tation and reforestation, but no projects have been approved for Indonesia; it excludes activities that protect existing carbon stocks and forms of ‘avoided deforestation’; • There probably is a large potential in Indonesia to reduce emissions from agriculture, forestry and other land uses (AFOLU) and to generate both local and global benefits; the scope for Reducing Emissions from Deforestation and Degradation (REDD) will depend on the definitions used; • Indonesia has an institutional and a vegetation concept of forest, and therefore includes “forests without trees” and “non-forests with trees”; mixed and multristrata agroforestry (intermediate land uses) can store significant quantities of carbon, maintain flows of ecosystem services, generate good economic returns and reduce pressure on remaining forest resources; • Mechanisms for reducing carbon emissions through avoi ded deforestat ion will have to maintain national sovereignty, and to balance between fairness (incentives for long term protection) and effectiveness (demonstrated reductions of emissions on the short term); • Before the institutional challenges of REDD mechanisms are tackled, we need to know the potential cost effectiveness; if current emissions would lead to large economic benefits, emission reduction would be difficult, if not, incentive systems will be feasible.