President Joko Widodo unveiled the Indonesian Carbon Exchange, operated by the Indonesia Stock Exchange (BEI) with Financial Services Authority approval.
Carbon Exchange, Indonesia’s Climate Change Commitment Historical Moment
BEI received Carbon Exchange Operator permission from the Financial Services Authority (OJK) on September 18, 2023, by Decree Number KEP-77/D.04/2023.
During the ceremony, Indonesian President Jokowi emphasized the role that Indonesia’s carbon exchange plays in the fight against climate change. Carbon trading will provide funding for environmental conservation efforts, notably those aimed at reducing carbon emissions.
President Jokowi has stated that Indonesia has the potential to become a worldwide hub for carbon if the country continues to establish and maintain its carbon environment.
Indonesia’s Historical Moment
The Chairman of OJK’s Board of Commissioners said Indonesia’s carbon exchange is a historic milestone for the country’s support of the government’s Paris Agreement greenhouse gas (GHG) emissions reduction targets.
One of the world’s largest and most consequential carbon exchanges will soon be located in Indonesia. It’s as a result of the volume and diversity of carbon units that are exchanged there as well as the contributions it makes to the reduction of carbon emissions on both a national and global scale. On Wednesday, September 27, Mahendra wrote, “We are starting a new age.
Indonesia’s High Emission Reduction Goals with Carbon Exchange
With or without outside assistance, Indonesia wants to cut greenhouse gas emissions by 31.89%, or 43.2% (with international cooperation) from Business As Usual by 2030. According to Law No. 4 of 2023 on the Development and Strengthening of the Financial Sector (P2SK), OJK regulates and oversees Indonesia’s carbon exchange.
Carbon trading in Indonesia aims to economically value carbon units and minimize carbon emissions. This intends to assist Indonesia meet its NDC commitments and optimize its carbon unit production capacity for carbon exchange trading.
Success through OJK’s Collaboration
In July and September, OJK launched public awareness campaigns with relevant ministries and institutions and international organizations. These activities included Indonesian National Seminars on Greenhouse Gas Emission Reduction and Carbon Trading Opportunities. These lectures ended in Jambi after five cities: Surabaya, Balikpapan, Makassar, and Medan.
The Ministry of Energy and Mineral Resources and PT PLN report that 99 coal-fired Steam Power Plants (PLTU) can trade carbon this year. This involvement is crucial for the Carbon Exchange’s inaugural carbon unit trading to succeed. Approximately 86% of Indonesia’s coal-fired PLTUs are operating. Carbon trading in Indonesia will expand beyond power generation to cover other NDC priority industries. Forestry, agriculture, waste management, oil and gas, general industries, and marine are important sectors.
Starting with electricity generation (ETS) and forestry emissions, carbon trading will be phased in. This guarantees high-quality carbon units.