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Industry players demand clarity for carbon trade to deliver cuts
Set to officially launch in 2027, the cap-and-trade scheme will be separate from the voluntary carbon market as well as from the limited mandatory one for coal-fired power plants, both introduced in 2023.
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People watch carbon trading activity on a digital screen at the Indonesia Stock Exchange (IDX) building in Jakarta on Jan. 20, 2025. (AFP/Bay Ismoyo)
E
xperts and industry players say the government must establish transparent targets and clear consequences for its upcoming general carbon trading scheme to ensure it delivers on the country’s emissions reduction targets.
The Industry Ministry will kick-start the scheme with four of the highest-emitting sectors – cement, fertilizer, steel as well as pulp and paper – citing the massive carbon footprint and energy use involved in these business activities.
Set to officially launch in 2027, the scheme will be separate from the voluntary carbon market on Indonesia Stock Exchange (IDX) Carbon as well as from a limited mandatory scheme for coal-fired power plants, both introduced in 2023.
“The policy [details] will be announced this year, possibly before August, but the implementation will be gradual,” Apit Pria Nugraha, head of the Industry Ministry’s Green Industry Center, told The Jakarta Post on Thursday.
Read also: Prabowo plans $65b green fund from selling carbon credits
The system will follow a cap-and-trade model, which sets an emissions ceiling for companies while allowing them to buy or sell allowances based on their actual output.
Companies that exceed their quota will be penalized 5 percent of the excess and must purchase the remaining 95 percent from others. Meanwhile, those emitting less than their quota can sell their surplus in the market, Apit explained.
