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View all search resultsStricter caps, trusted supply key for RI to hit $40 carbon price
The Energy and Mineral Resources Ministry is targeting a carbon price of $40 per tonne, up sharply from the current level of $4-5 per tonne.
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People watch carbon trading activity on a digital screen on Jan. 20, 2025, at the Indonesian stock exchange building in Jakarta. (AFP/Bay Ismoyo)
I
ndonesia’s ambition to raise its carbon selling price to US$40 per tonne of CO2 will face challenges unless the country establishes a credible market with strong demand and high-integrity supply.
Imaduddin Abdullah, director of international collaboration at the Institute for Development of Economics and Finance (INDEF), said the target price must be understood as the outcome of market formation rather than a figure set by decree.
“The most crucial factor is the creation of strong, consistent and mandatory demand,” he told The Jakarta Post on Friday.
“This requires increasingly stringent emission caps, an expansion of entities required to meet those caps and credible levies or consequences for non-compliance.”
The Energy and Mineral Resources Ministry is targeting a carbon price of $40 per tonne, up sharply from the current level of $4-5 per tonne. By comparison, carbon prices in Europe have reached $100 per tonne under the EU Emissions Trading System, which is driven by strict emission caps and controlled allowance supplies.
Imaduddin cautioned against direct comparisons with the European market, noting that Indonesia is still in the early stages of building demand and liquidity.
“A price of $40 might be reached sooner for high-integrity international credits or those with specific authorizations, but it will not necessarily serve as a uniform price for all domestic carbon units,” he said.
