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January 18, 2025 | 10:53 pm
TEMPO.CO, Jakarta - The Indonesian Ministry of Environment (KLH) will officially launch its international carbon trading platform on Monday, January 20, 2025. Minister of Environment Hanif Faisol Nurofiq stated that the initiative is part of Indonesia's commitment to the Paris Agreement, established during the 2015 Conference of the Parties (COP) 21.
The Indonesia Stock Exchange (IDX) will operate the platform, known as IDXCarbon. Ahead of its launch, Hanif shared preliminary estimates for carbon pricing, suggesting a minimum price of USD 8 per ton. “The buyer interest seems to be around that range or slightly lower,” Hanif told Tempo on Saturday, January 18, 2025.
Pricing and Carbon Volume
Hanif admitted that the exact price per ton will only be confirmed on the launch day. Similarly, Erna Susilawati Ningsih, Director of Carbon Economic Value Governance at KLH, noted that the precise pricing details are managed by IDXCarbon.
Although the pricing remains uncertain, Erna disclosed that 1.735 million tons of carbon dioxide equivalent are ready for trading. This figure represents accumulated emissions reductions from several strategic energy projects across Indonesia.
Key contributors include:
- Priok Block 4 Gas-Fired Power Plant (PLTGU): 500,000 tons of carbon credits.
- Grati Block 2 Combined Cycle Conversion Project: 450,000 tons.
- PJB Muara Karang Block 3 Gas-Fired Power Plant: 750,000 tons.
- Muara Tawar Block 2: 30,000 tons.
- Gunung Wugul Mini Hydro Power Plant: 5,000 tons.
KLH hopes to maximize carbon sales on the first day of trading, Erna added.
Commitment to Climate Action
Minister Hanif emphasized that Indonesia’s international carbon trading launch reflects the government’s commitment to combating climate change. “Carbon trading is more than just a market mechanism; it bridges economic growth and environmental management,” he stated at the Preparatory Event for Indonesia's International Carbon Trading at Pullman Hotel, Jakarta, on Thursday, January 16, 2025.
During COP 29 last year, Indonesia invited global stakeholders, including businesses, to participate in carbon trading. Hanif highlighted that assigning value to carbon emissions and incentivizing greenhouse gas reduction could turn climate challenges into opportunities.
The carbon trading system aims to reward innovation, promote sustainable development, and create a platform for international collaboration toward a low-carbon future.
Energy Transition and NDC Targets
The COP framework underscores limiting global warming to 1.5°C above pre-industrial levels. Hanif stressed that achieving this requires a significant energy transition. Indonesia is working toward its Nationally Determined Contribution (NDC) targets by promoting mitigation and adaptation strategies for climate change.
According to Hanif, this includes implementing the Carbon Economic Value (NEK) mechanism, which encompasses carbon trading (both emissions trading and offsets), performance-based payments, carbon levies or taxes, and other mechanisms aligned with scientific and technological advancements.
DIAN RAHMA FIKA
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