Indonesia officially launched international carbon trading through the Indonesia Carbon Exchange's platform IDX Carbon on Jan. 20, according to a statement from the Ministry of Environment.
Minister of Environment Hanif Faisol Nurofiq said the government is working to achieve its Nationally Determined Contribution (NDC) targets, one of which is the implementation of the so-called Economic Value of Carbon or Nilai Ekonomi Karbon, including carbon trading.
Indonesia is now ready to conduct international carbon trading with 1,780,000 tons of CO2e from five power plants owned by state-owned utility PT Perusahaan Listrik Negara or PLN.
They include the PLTGU Priok Block 4 new LNG-fueled power plant, a heat recovery steam generator project developed by Indonesia Power, the Gunung Wugul Mini-Hydro Power Plant, a 516 MW Gas-Fueled Power Plant in North Jakarta, and the Pembangkitan Jawa Bali Unit Muara Tawar Project.
"The Indonesian government guarantees that every certificate issued for international carbon trading has been verified/authorized as an effort to safeguard against double accounting, double payment, and double claims," said Nurofiq.
In its 2022 NDC document, Indonesia set targets to reduce greenhouse gas emissions by 31.89% by 2030 through domestic measures or by 43.2% with international support. The government also plans to reduce dependence on fossil fuels by shifting to renewable energy, with a long-term goal of achieving net zero by 2060, with carbon capture.
President Prabowo Subianto's administration has outlined a large-scale investment program over the next 15 years until 2040, totaling $235 billion to build more than 100 GW of additional power.
Nurofiq said that Indonesia Emission Reduction Certificates, known as Sertifikat Pengurangan Emisi (SPE), have high integrity because the government has strengthened key elements in the carbon ecosystem, including strengthening the National Registry System, Measurement, Reporting, and Verification; Greenhouse Gas Emission Reduction Certificates; and Authorization and Corresponding Adjustment in international carbon trading.
The international carbon trading platform represents Indonesia's commitment at COP29 and proof that Article 6 of the Paris Agreement can be implemented, the statement said. It also strengthens efforts to push and accelerate the second NDC to be submitted no later than Feb. 10, 2025, according to the statement.
IDX Carbon was launched on Sep 26, 2023, for domestic carbon trading. By the end of 2024, the number of participants registered as Carbon Exchange Service Users reached 100, up from only 16 users at launch, the statement said.
The success of international carbon trading depends on collaboration between governments, private sectors/industries, financial institutions, philanthropies, banking, and other parties, Iman Rachman, CEO of Indonesia Stock Exchange, which operates IDX Carbon, said.
"Essentially, carbon trading is a collective action that cannot be separated from the role of each stakeholder," he added.
Indonesia has been home to some of the largest nature-based projects in Southeast Asia, recognized under international voluntary market standards.
