Indonesia’s President Joko Widodo, known as Jokowi, inaugurated Tuesday the country’s first carbon emissions credit trading system, aiming to establish a market that funds reductions in greenhouse gas (GHG) emissions and positions Indonesia as a key player in the global carbon market, Reuters reported.
As one of the world’s top greenhouse gas emitters, Indonesia has pledged to achieve carbon neutrality by 2060.
The inaugural trading session saw the exchange of 13 carbon credits, equivalent to nearly 460,000 metric tons of carbon dioxide (CO2), from projects by PT Pertamina Geothermal Energy (IDX: PGEO) in the province of North Sulawesi.
These credits were initially priced at 69,600 Indonesian rupiah (approx. $4.48) per ton and were traded on the Indonesia Stock Exchange’s dedicated carbon trading platform.
Prominent participants included major Indonesian banks like Bank Central Asia, or BCA (IDX: BBCA) and Bank Mandiri (IDX: BMRI), subsidiaries of state-owned energy giant Pertamina, as well as some mining companies.
President Jokowi expressed optimism about Indonesia’s potential for carbon reduction, envisioning the market’s value growing to 3,000 trillion rupiah (approx. $193 billion), Reuters said.
Initially voluntary, the trading system will likely evolve into a more regulated framework, possibly including a carbon tax.
Some of Indonesia’s largest coal power plants have already begun trading emission allowances since February.
The government intends to set emissions caps for four additional sectors: forestry, industrial processes and product use, agriculture, and waste management.
To expand its global influence, Indonesia will align with international standards and seek mutual recognition from foreign markets to sell its carbon credits abroad, all while ensuring these activities support the nation’s climate goals under the Paris Agreement.
A noteworthy feature of Indonesia’s trading system is its use of blockchain technology to record transactions, ensuring transparency and accountability.