Financial Services Authority (OJK) talking about large international trading opportunities in the Indonesian carbon exchange

Several media wrote about the Financial Services Authority (OJK) talking about large international trading opportunities in the Indonesian carbon exchange. Chief Executive of Capital Market Supervision, Financial Derivatives and the OJK Carbon Exchange, Inarno Djajadi, said that currently his party is encouraging trading in the domestic arena. However, in the future the possibility of implementing international trading on the carbon exchange cannot be ruled out. Carbon exchanges play an important role in accelerating the decarbonization process. The enormous potential of Indonesia's natural resources in producing carbon credits is one of the drivers for developing the Indonesian carbon market so that it can accelerate the achievement of emission reduction commitments as stated in Indonesia's NDC.

 

SWA.co.id wrote about things that need to be considered in the carbon trading exchange. Rapid progress in carbon pricing in Indonesia has reached an important milestone. Presidential Regulation (Perpres) 98 of 2021 concerning the Economic Value of Carbon (NEK) is the basis for infrastructure development and the framework for its implementation. Fabby Tumiwa as Executive Director of IESR explained that the formation of the NEK regulation was a response to Article 6 of the Paris Agreement which allows parties to trade carbon to reduce emissions. Some of the instruments offered in this regulation, consisting of carbon trading, results-based payments, and a carbon tax, have been twice delayed and are expected to be launched in 2025. In the first phase of carbon trading, 99 CFPPs covering 86% of coal-fired power plants in Indonesia participate in the cap-and-trade scheme. Each CFPP has a maximum quota or emission quota that is determined based on performance criteria and previous units. For those who emit less than the threshold, they can exchange the remaining quota to another company that exceeds the maximum limit. When a CFPP's emissions exceed the quota given, they must reduce these emissions by purchasing quotas from other CFPPs or buying carbon credits. The carbon market opens up opportunities to widely inform the principles of the green taxonomy, especially to financial institutions, investors and project owners. This can enable identification of whether a project can be traded on carbon markets and falls within a green taxonomy classification.