The Indonesian government, led by Menko Marves Luhut Binsar Pandjaitan, aims to implement the carbon trading mechanism in the country by September 2023. This effort is part of the government's strategy to promote the use of clean energy and achieve net zero emissions by 2060. The implementation of carbon trading is seen as crucial in curbing carbon emissions and supporting the growth of renewable energy usage. The government has already laid the groundwork for carbon pricing through the Presidential Regulation on the Economic Value of Carbon.
To oversee the carbon trading, the Financial Services Authority (OJK) will play a role in monitoring the activities and limiting the involvement of entities that can participate in carbon trading. Only entities operating within Indonesia will be allowed to trade on the carbon exchange, similar to stock trading, with OJK overseeing the activities. The initiative is expected to accelerate the development of carbon pricing roadmap in sectors such as agriculture, industry, and transportation, following international standards. Indonesia's potential for carbon storage in oil and gas reservoirs offers opportunities for Carbon Capture Storage (CCS) to be an important short-term strategy in reducing emissions in this sector.
In the previous internal meeting, the government decided to regulate carbon trading through a carbon exchange supervised by OJK. Indonesia's carbon trading will be open, but registered entities must go through the carbon trading mechanism within Indonesia, overseen by OJK. The carbon price determined in the Indonesian exchange cannot be sold to exchanges outside the country. The government also emphasized the need for certification of carbon-producing concessions before participating in carbon trading, and the registration will be conducted by the Ministry of Environment and Forestry (LHK).
