(TheIndoDaily.com) – Indonesia marks an important milestone on Jan. 20, 2025, with the official commencement of carbon trading, which is operated by IDXCarbon, a unit of the Indonesian Stock Exchange.
The launching ceremony was attended by Minister of Environment Hanif Faisol Nurofiq, the Head of Financial Services Authority (OJK) Mahendra Siregar and President Director of IDX Iman Rahman.
The carbon trading involves carbon units with guaranteed credibility and authorization by the Minister of Environment on behalf of the Government of Indonesia.
Environment Minister Hanif Faisol Nurofiq said the launching of international carbon trading aims to achieve Indonesia’s climate targets, as outlined in the Nationally Determined Contribution (NDC) document.
He said Indonesia’s international carbon trading conforms to Presidential Regulation No. 98 of 2021 concerning the implementation of carbon economic value for NDC targets and the control of greenhouse gas emissions in national development.
He added to support Indonesia’s participation in international carbon trading, the government had optimized various instruments, including the National Registry System (SRN).
In the initial phase, the carbon units come from power plant projects owned by the state electricity company PLN. These include the operation of the Gunung Wugul Mini-Hydro Power Plant in Central Java, which is projected to reduce five thousand tons of carbon dioxide equivalent (CO2 eq).
The carbon units also come from the operation of the Priok Block 4 Gas and Steam Power Plant (PLTGU) and the construction of PLTGU Block 3 PJB Muara Karang in North Jakarta.
These power plants are expected to cut emissions by 500 thousand and 750 thousand tons of CO2 equivalent (eq), respectively.
The carbon units also come from the conversion of the single-cycle power plants to combined cycles at the Grati Block 2 PLTGU in East Java. The project is expected to cut 495 thousand tons of CO2 eq and 30 thousand tons of CO2 eq at Block 2 power plant units in Muara Tawar in West Java.
Indonesia has authorized the trade of 1,780,000 tons of CO2e carbon credits from energy sector projects. The initiative also serves as a call to action for international stakeholders, as Indonesia opens its carbon market to global participants to attract investments and promote collaborative solutions for emission reductions.
Since its inception in 2023, IDXCarbon has become a vital platform for carbon credit transactions within Indonesia. As of Jan. 10, 2025, IDXCarbon has traded over 1,040,053 tons of CO2 equivalent (tCO2eq), with a total trade value reaching Rp55.237 billion. These figures reflect growing confidence in Indonesia’s carbon market and its alignment with global climate goals.
The inauguration aligns with Indonesia’s ambition to achieve its climate objectives, including the submission of its second Nationally Determined Contribution (NDC) by February 10, 2025. The updated NDC outlines enhanced commitments to reduce greenhouse gas emissions, a critical step toward achieving the nation’s net-zero target by 2060 or sooner.
The Indonesian government has strengthened several key components to create a carbon ecosystem that values transparency, integrity, inclusion, and fairness. These include a strong National Registry System (SRN), a system for Measurement, Reporting, and Verification (MRV), Greenhouse Gas Emission Reduction Certificates (SPE-GRK), and mechanisms for Authorization and Corresponding Adjustment (CA) in international carbon trading.
Minister Hanif Faisol Nurofiq stated that these methods maintain the credibility of Indonesia’s SPE-GRK certificates. “With these foundations in place, the certificates issued by Indonesia are guaranteed to meet high integrity standards,” he said.
President Director of IDX Iman Rahman highlighted Indonesia’s pivotal role in global climate action. “This launch signifies Indonesia’s readiness to be a major player in the international carbon market,” he said. “The world’s attention is on Indonesia as a crucial partner in this shared mission to combat climate change.” (RK)