Indonesia’s financial regulatory body has introduced a comprehensive set of guidelines outlining the establishment of a carbon exchange platform. The primary objective behind this initiative is to inaugurate domestic carbon trading by the culmination of the present year.
This move is a pivotal part of Indonesia’s broader strategy, as the nation, being a significant contributor to global carbon emissions, strives to curtail its emission levels by over 30% before the year 2030 and ultimately attain carbon neutrality by 2060.
Intriguingly, the carbon exchange will possess the capability to facilitate international trade, as indicated in the recently unveiled regulations on Wednesday.
The trading mechanism will operate on a cap-and-trade framework, whereby emission levels are capped, and businesses can exchange allowances. This approach has been anticipated earlier, according to reports by Reuters.
The novel guideline specifies the utilization of certificates representing the quantity of greenhouse gas emissions reduced, measured in metric tons of carbon dioxide.
The directive, implemented by the Financial Services Authority (OJK), became active on August 2.
While the carbon exchange operator must be rooted in Indonesia, the regulation allows up to 20% of its voting shares to be directly or indirectly owned by foreign enterprises.
Notably, OJK has disclosed that multiple firms have expressed interest in undertaking the role of the exchange operator. However, a conclusive decision on this matter is yet to be reached.
OJK had previously communicated its intent to initiate carbon trading in September.
Indonesia’s initial plan encompassed the imposition of a carbon tax on emissions lacking carbon credit offset. This plan was postponed by authorities to await a more favorable “economic situation.”
