The Indonesian Ministry of Energy and Mineral Resources (ESDM) has officially launched carbon trading for coal-fired power plants, covering 99 units connected to the grid with a total capacity of 33.6 owned and operated by the country’s state-owned electricity company PT Perusahaan Listrik Negara (PLN). Under the scheme, units that exceeded their emission quota can purchase credits from renewable energy sources or from coal-fired power plants with emissions below the threshold. More than 20 MtCO2 of quotas were distributed to power plants. Around 0.5 MtCO2 are expected to be traded in the first of Indonesia’s carbon market with a price ranging between US$2/tCO2 and US$18/tCO2.
In September 2022, Indonesia unveiled its new updated nationally determined contribution (NDC) under the Paris Agreement, which increases the country’s 2030 emission reduction target from 29% to 31.89% (unconditionally) and from 41% to 43.2% (conditionally), compared to a business-as-usual (BAU) scenario. In the energy sector, Indonesia’s updated NDC plans a reduction of emissions of 358 MtCO2eq (12.5%, unconditional) and 446 MtCO2eq (15.5%, conditional). Indonesia presented this enhanced NDC as a transition towards the country’s second NDC, which will be aligned with Indonesia’s Long-Term Low Carbon and Climate Resilience Strategy to 2050, with a target to achieve net-zero emission by 2060 or sooner.
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