Indonesian president launches carbon exchange

shutterstock 2136320427 Large

Indonesia’s president inaugurated a new carbon trading exchange on Tuesday, as part of its efforts to address the environmental impact of its coal-dominated power sector and achieve its net-zero carbon goal by 2060 or earlier. President Joko Widodo stated at an event in Jakarta that trading in carbon credits and other emission reduction initiatives could potentially yield an economic benefit of up to 3,000 trillion rupiah ($194 billion).

As the largest emitter in Southeast Asia, Indonesia is strongly committed to securing the necessary funding to transform its power sector. It is also in the process of finalizing a climate finance package, agreed upon last November between President Jokowi and US President Joe Biden.

The initial trading on this carbon credit exchange, operated by the Indonesia Stock Exchange (IDX), involved 459,953 tonnes of carbon dioxide equivalent. Prices opened at 69,600 rupiah per unit ($4.51 equivalent) and closed at 77,000 rupiah, significantly lower than comparable products in established emissions markets like the European Union.

Initially, the market aimed to encourage polluters to reduce their environmental impact by setting emission caps and allowing the trading of unused credits. Trials initially focused on coal-fired plants, with emission caps assigned to nearly a hundred power facilities connected to the state utility company Perusahaan Listrik Negara’s grid, accounting for approximately 86% of Indonesia’s coal capacity.

However, the credits traded on Tuesday were generated from carbon offsets produced by PT Pertamina Geothermal Energy’s Lahendong power plant in Sulawesi island. Buyers included PT Bank Central Asia, PT Bank Mandiri, oil and gas firm PT Pertamina Hulu Energi, and a mining services unit of PT United Tractors, according to IDX.

The Financial Services Authority, which oversees the stock market, anticipates that coal power plants will commence trading on the platform later this year.

Governments across Asia are implementing emissions pricing measures, although the effectiveness of the region’s carbon markets has been limited so far. Prices in South Korea and China are still considered insufficient to compel large corporate emitters to reduce their pollution.

More from Qonversations

News

Rachel Reeves UK Chancellor

Meet Rachel Reeves, Britain’s first female Chancellor

News

President Arce Bolivia

Bolivia’s failed coup: What we know so far

News

Kenyan protestors parliament

#TrendsArena: Kenyan police and protestors clash after sections of parliament set on fire

News

South Korea Factory fire

Tragic lithium battery factory fire in South Korea: What we know

Front of mind