Indonesia is set to launch its inaugural carbon trading market on September 26. The initiative aims to provide companies and financial institutions with a mechanism to offset their emissions while simultaneously channeling funds towards carbon reduction projects. Indonesia, ranking among the world's top ten greenhouse-gas emitters, has committed to achieving net carbon neutrality by 2060 and views the carbon market as a pivotal instrument to finance climate solutions.
Mahendra Siregar, the head of Indonesia's Financial Services Authority, made the announcement during a seminar, setting the stage for the forthcoming carbon exchange. Under this market, carbon credit certificates will be traded, which are issued for activities or projects that actively remove carbon from the atmosphere or for companies that manage to keep their emissions below a government-imposed limit.
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To ensure the integrity of these carbon reduction activities, the Indonesian environment ministry has assigned four auditors. Their role will be to verify these activities, thus paving the way for carbon trading to commence next week. While the specific exchange to host this trading has yet to be officially disclosed, the Indonesia Stock Exchange (IDX) submitted an application earlier this month to become an operator.
This development follows Jakarta's earlier move in February to initiate mandatory carbon trading for coal power plants. Initially, the government had planned to set pollution quotas for carbon-intensive industries and impose taxes on companies exceeding their emission limits without carbon offset measures. However, concerns about the potential impact on economic growth led to the shelving of the tax proposal.
