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Govt allows foreign entities to buy carbon credits from Indonesia
Foreign buyers can purchase carbon credits in Indonesia carbon markets, but they must transact and be registered in Indonesia.
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This photo taken on June 20, 2020 shows the Leuser rainforest in Subulussalam, Aceh. (AFP/Chaideer Mahyuddin)
T
he government has decided to allow foreign entities to purchase credits in the Indonesian carbon market, paving the way for multinational companies and institutions to tap into the country’s large carbon trading potential.
Businesses involved in carbon-trading schemes lauded the decision, adding that it was aligned with the 2016 Paris Agreement on climate change. However, environmental analysts fear that the trade will not result in any real environmental improvement.
The announcement came after Investment Minister Bahlil Lahadalia said on Wednesday that the Indonesian carbon market would be “open”, following a meeting with President Joko “Jokowi” Widodo in the State Palace prior to the press conference.
Edo Mahendra, an expert staffer on the green economy at the Office of Coordinating Minister for Maritime and Investment Affairs told The Jakarta Post on Thursday that by being an open market the Indonesian carbon market would allow foreign buyers to purchase credits to offset their emissions.
The alternative “closed” concept would mean Indonesia would only use its carbon market to pursue its own emission-reduction plan in its nationally determined contribution (NDC).
“Indonesia has great potential in the carbon market. That’s why we need to lead [with an open market],” Edo said.
Investment Minister Bahlil stressed that all entities participating in carbon-trading activities in the country should be registered with the national registry system (SRN) and the transaction process ought to be done in Indonesia through the country’s carbon exchange.
