Indonesian Environment Ministry to Launch International Carbon Trading Tomorrow

TEMPO.CO, Jakarta - Indonesia's Ministry of Environment (KLH) will launch international tomorrow, Monday, January 20, 2025. Minister of Environment Hanif Faisol Nurofiq said that the implementation of this foreign carbon trading is a manifestation of Indonesia's commitment after the implementation of the Conference of the Parties (COP) 29 in Baku, Azerbaijan, last November 2024.

According to Hanif, the implementation of carbon trading in Indonesia, both domestic and foreign carbon trading, is the implementation of the mandate of Article 28H and Article 33 of the 1945 Constitution, Presidential Regulation No. 98 of 2021, and Regulation of the Minister of Environment and Forestry Number 21 of 2022, along with derivative regulations related to the Economic Value of Carbon (NEK).

"The launching moment of foreign carbon trading which was held on January 20, 2025, is one of the biggest milestones in the implementation of foreign carbon trading in Indonesia," Hanif told Tempo, Sunday, January 19, 2025.

This launch, said Hanif, is also a form of strengthening to encourage and accelerate the second NDC (Nationally Determined Contribution) which will be submitted by Indonesia in mid-February 2025 to the secretariat of the United Nations Framework Convention on Climate Change (UNFCCC).

Hanif explained that foreign carbon trading, both through emission trading and emission offsets, can be operated because it has been regulated in Presidential Regulation 98/2021 and Ministerial Regulation of the Environment and Forestry No. 21/2022. The carbon trading system that was launched has received authorization from the minister, in accordance with the provisions that require authorization for foreign carbon trading involving the transfer of carbon units.

"And as we know, the SPE (Emission Reduction Certificate) that we are currently launching has received authorization from the minister, in accordance with the regulation that in the event of foreign carbon trading that results in the transfer of carbon units, authorization from the minister must be obtained," said Hanif.

After the first carbon transfer is carried out, said Hanif, a corresponding adjustment in accordance with Article 19 of Permen LHK 21/2022 must be implemented to avoid problems such as double counting, double claims, and double payments, by ensuring that the principles of Transparency, Accuracy, Completeness, Comparability, Consistency (TACCC) are implemented to guarantee the quality of the carbon units issued.

The operator of this is the Indonesia Stock Exchange (IDX) which developed IDXCarbon. Ahead of its launch, Hanif estimated that the price of carbon that will be sold freely would be in the range of US$ 8 per ton, although the exact price could only be confirmed on the launch day. "Buyer interest seems to be in that range or slightly less," said Hanif when contacted on Saturday, January 18, 2025.

Dian Rahma and Irsyan Hasyim contributed to this article.

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