Indonesia has initiated a carbon credit trading market as a crucial component of its strategy to curtail carbon emissions and attain net-zero status by 2060.
In a significant move, the largest emitter in Southeast Asia has chosen the Indonesia Stock Exchange (IDX) as the designated platform for carbon credit trading. This carbon exchange will play a pivotal role in advancing the country’s energy transition efforts while mitigating the climate consequences associated with its predominantly coal-driven power sector.
Of utmost importance, Indonesia, the world’s third-largest rainforest nation, is steadfast in its commitment to accelerate its contribution towards the overarching global objective of achieving Net Zero emissions.
Carbon Market Vital for Indonesia’s Net Zero Ambitions President Joko Widodo expresses strong confidence in Indonesia’s substantial potential for advancing nature-based carbon reduction efforts. He stated, ‘I am highly optimistic that Indonesia can become the global hub for carbon markets, provided that all stakeholders consistently and collaboratively take concrete actions.’
The president also highlighted the anticipated value of their carbon credit market, projecting it to exceed $194 billion. Indonesia’s leader has consistently emphasized his belief in the importance of carbon markets and carbon pricing as integral components of the nation’s climate change mitigation efforts, a stance he articulated at COP26 in 2021.
Fast forward two years, the carbon market has been officially launched under the oversight of the Financial Services Authority (OJK). Mahendra Siregar, the Head of OJK, expressed hopes that coal power plants would swiftly join the carbon trading exchange during the current year.
More than 99 coal-fired power plants are set to participate in trading carbon credits, collectively representing 86% of Indonesia’s active coal plants. The country has been diligently pursuing financing opportunities to decarbonize its power sector, particularly as it experienced record-high growth in coal emissions last year.
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