Indonesia launches its first carbon emission credit trading market

Indonesia has launched its first carbon emission credit trading (IDXCarbon), aiming to develop a market that will allow the reduction of greenhouse gas (GHG) emissions in the country. There are four IDXCarbon trading mechanisms, namely Auction Market, Regular Market, Negotiated Market, and Marketplace, and trading is voluntary. Thirteen carbon credits nearing 460 ktCO₂eq from Indonesia’s PT Pertamina Geothermal Energy’s projects in North Sulawesi were traded at the opening, priced at IDR69,600/t (US$4.51/t). Buyers included Bank Central Asia and Bank Mandiri, other units of state energy firm Pertamina and companies in the mining sector.

In February 2023, the Indonesian Ministry of Energy and Mineral Resources (ESDM) had launched carbon trading for coal-fired power plants, covering 99 units connected to the grid with a total capacity of 33.6 GW owned and operated by the country’s state-owned electricity company PT Perusahaan Listrik Negara (PLN).

In 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.