Press Release
Public and Private Collaboration in Navigating Indonesia's Carbon Market
Public and Private Collaboration in Navigating Indonesia's Carbon Market
Wednesday, 01 December 2021

President Joko Widodo has ratified a Presidential Regulation (Perpres) on the Economic Value of Carbon (NEK). This indicates Indonesia's seriousness in dealing with climate change. At the Indonesia Carbon Forum organized by the ICDX Group (1/12), Co-Founder & Executive Director of the Indonesia Research Institute for Decarbonization (IRID), Kuki Soejachmoen said, “Indonesia has a lot of opportunities. Previously, under the Kyoto Protocol, there was a carbon trading mechanism, but in the past, Indonesia's position was only as a seller. However, under the Paris Agreement, all countries have the opportunity to be both sellers and buyers. This is something Indonesia needs to explore.”

On the same occasion, the President Commissioner of ICDX, K.H. Said Aqil Siroj said, "Earth as a place to live for various types of life that Allah has bestowed upon His servants, it is very important for us to think about how to care for the earth by considering economic, social and environmental harmony. As one of the countries with the largest forests in the world, Indonesia is called a climate superpower country, where the policies taken by Indonesia to combat climate change will have a major impact throughout the world.”

Great potential to build domestic and global carbon markets, will provide Indonesia with economic and environmental benefits. Explained by an expert from the Ministry of Trade, Barry Beagen, "Regarding the potential, there are two things that need to be seen, one from the trade side and one from the co-benefit side, and also in the long term macro, namely how Indonesia can use the carbon market to spur investment in the energy transition. . Broadly speaking, if Indonesia's natural potential is developed and managed properly, we can contribute to the largest liquidity carbon credit in the world from the Forest and Other Land Uses (FOLU) sector. Several studies say that if Indonesia takes advantage of all of this, Indonesia can achieve 10-15 billion returns on investment per year."

Hearing this, ICDX CEO Lamon Rutten added, “It would be better if there was a carbon market in Indonesia, where Indonesian companies could buy carbon credits from Indonesian producers with Indonesian values ​​and brands. In addition, Indonesian companies also need to understand that there will be risks for those who do not have a net-zero carbon strategy. ICDX is ready to facilitate all of this because we already have a good infrastructure and ecosystem for the Indonesian carbon market.”

The government itself through the Ministry of Energy and Mineral Resources (ESDM) has conducted carbon trading trials in the electricity sub-sector to cut greenhouse gas emissions released by steam power plants (PLTU).

Based on the information provided by the Director-General of Electricity, Ministry of Energy and Mineral Resources, Rida Mulyana, “The energy sector has a target to reduce 314 million tons of C02 by 2030 with its efforts. The application of the upper limit or cap, especially at the Coal PLTU which has been tested from March to August, can increase emission reductions. In this trial, the Ministry of Energy and Mineral Resources divided the upper limit or cap into three groups by considering technology, in which PLTU with a capacity of over 400 MW with a cap of 0.918 tons CO2/MWh, PLTU with a capacity of 100-400 MW with a cap of 1,013 tons CO2/MWh. , and Mine Mouth PLTU with a capacity of 100-400 MW with a cap of 1.94 tons CO2/MWh.”

Currently, the international community is waiting for Indonesia's steps regarding transformation and short and long-term efforts to deal with climate change. The implementation of carbon trading can be one of Indonesia's instruments to realize its commitment to carbon neutrality or net-zero emission by 2060.

Rewatch the discussion here: Navigating The Carbon Markets In Indonesia.

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