Indonesia Announces New Rule For Its First Carbon Market

Indonesia Announces New Rule For Its First Carbon Market - Carbon Herald
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The Financial Services Authority (OJK) of Indonesia has issued a set of rules on how its first carbon market will be set up and will seek to launch onshore carbon trading by the end of this year, Reuters reported, citing an announcement by the financial regulator.

The initiative is part of efforts by Indonesia, one of the world’s biggest carbon emitters, to achieve a 30% emission reduction by 2030 and become carbon neutral by 2060.

The rule, which was made public on Wednesday but took effect on August 2, will allow for cross-border trade to be facilitated on the market.

According to the policy, which was first announced in November 2021, Indonesia’s carbon exchange will use a cap-and-trade system where the government sets a limit on pollution levels and business entities can trade their allowances and parts thereof.

Relevant: Indonesia Passes New Legislation To Boost Carbon Capture Efforts

The new rule specifies that a certificate showing the amount of greenhouse gas (GHG) emission reduction, quantified in one ton of carbon dioxide (CO2), will be used.

It further states that the exchange must be operated by an entity based in Indonesia, although 20% of its voting shares could be owned by an overseas company, directly or indirectly.

Last week, OJK said that several companies have shown interest in taking the role of operator, but it has not yet made a decision.

The regulator had previously shared plans to launch carbon trading on the new market in September.

Indonesia had initially wanted to introduce a carbon tax for emissions that had not been offset using carbon credits, but implementation has been delayed as the authorities are waiting for the right “economic situation”, Reuters said.

Read more: Indonesia Introduces Carbon Trading For Its Coal Power Plants

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