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IDX, MVGX sign partnership to establish carbon trading platform
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The IDX logo is seen in front of a giant screen displaying information on the movement of stock prices at the Indonesia Stock Exchange (IDX) in Jakarta on March 13, 2020. (JP/Seto Wardhana)
T
he Indonesia Stock Exchange (IDX) is set to work with MetaVerse Green Exchange (MVGX) to prepare for its first carbon credit trading platform in a bid to incentivize domestic high-emitting industries to reduce their emissions.
MVGX, a Singapore-based fintech firm that offers end-to-end carbon-as-a-service solutions backed by a digital asset exchange platform and patent-pending technologies, would provide opportunities for Indonesia’s only stock exchange to explore MVGX’s industry-grade software.
Jeffrey Hendrik, IDX director of business development, said the IDX was currently preparing for the possibility of becoming a carbon exchange in Indonesia, noting that the government had recognized the financial services industry’s critical role in strengthening the country’s sustainability commitments.
“We believe that this strategic partnership with MVGX can support us in a building robust carbon exchange infrastructure and ecosystem that will underpin the country’s plan to develop a sustainable finance ecosystem,” he said in a statement issued on Tuesday.
Read also: Govt asks IDX to handle domestic carbon trading
The government has asked the IDX to handle the implementation of the domestic carbon trading system as the country seeks to put a price on carbon emissions, following countries worldwide that have already done so.
Carbon trading is part of Indonesia’s wider carbon pricing policies, which also include a carbon tax and grants for entities lowering their carbon emissions, among other non-trade instruments.
Bo Bai, MVGX executive chairman and cofounder, said that carbon markets continued to face challenges, including a lack of transparency, standardization and liquidity.
“We are thrilled to be supporting IDX as they work toward meeting this critical milestone as part of Indonesia’s climate policy and as they raise the bar for green finance in the region,” he said.
MVGX leverages blockchain technology, which offers a transparent, tamper-proof performance record of all green projects tied to the credits listed on its exchange infrastructure.
This technology is expected to assure buyers and issuers of the integrity of the carbon credits listed on the IDX’s registry.
MVGX president Michael Sheren said that US$2 trillion in sustainable financing would be critical over the next decade in Southeast Asia as the region was predicted to be among the hardest hit by the climate crisis.
“Indonesia has made meaningful strides in its deforestation mitigation efforts, and in working with IDX, we’re excited for this opportunity to support the country on its next climate-related milestone as it looks to develop and launch its own carbon trading registry,” he said in the same statement.
Read also: How voluntary carbon markets can help Indonesia meet its climate goals
Indonesia is one of the world’s largest carbon credit producers, according to Mukhamad Zulfal Faradis, head of the Carbon Market division at Indonesia Commodity and Derivatives Exchange (ICDX), making it essential for the country to have a proper carbon market to provide a better price for its offsets and credits, particularly when the country would begin trading with other countries.
