The government is speeding up efforts to issue a regulation on carbon trading as part of Indonesia’s commitment to reducing global greenhouse gas emissions.
The government has spent the last year preparing the emission-trading system for the future domestic carbon market, the Environment and Forestry Minister Siti Nurbaya Bakar said.
"The process has been long ongoing. It has been discussed within the Cabinet Secretariat and the State Secretariat. Soon it will be passed onto the Law and Human Rights Ministry to be discussed at the ministerial level," she said after a limited Cabinet meeting with President Joko "Jokowi" Widodo on Monday.
Siti mentioned that the set of regulations would stipulate at least three main issues including guidelines and plans on carbon trading, carbon offsets and the commodity market, which will be based in Jakarta.
Indonesia's total forested land covers approximately 94.1 million hectares, which stores about 200 tons of carbon per ha, according to the official ministry data. Meanwhile, about 22.5 million ha of peatland in Indonesia can store more than 1,000 tons of carbons per ha, Siti said.
Mangrove land in Indonesia, which covers about 3.31 million ha, potentially stores about 227 tons of carbon per ha.
While Siti did not give further details on the regulation as it was still in a deliberation process, she said that among many other forms of the carbon market, Indonesia's green bonds and green sukuk (Islamic bonds) had gained the attention of the international markets.
Ever since 2018, Indonesia has been actively introducing green sukuk to the worldwide market as an instrument to collect US$1.25 billion in funds to finance environmentally friendly projects.
"The most tangible thing we should do is to restore our environment. For example, we are still discussing the plan of vast mangrove reforestation in Tarakan [North Kalimantan] or Balikpapan [East Kalimantan] with the President," she said.
Siti revealed that movement on the regulation was made after the government confirmed receipt of a US$56 million grant from Norway as the first payment for Indonesia's success in reducing carbon emissions under the Reducing Emissions from Deforestation and Forest Degradation (REDD+) cooperation scheme.
Her deputy minister and the deputy foreign minister had represented the government on the joint conservation group meeting on July 2 between Indonesia and Norway, she said, adding that both countries vowed to strengthen the commitment to reducing global emissions.
The government launched in October a public service agency tasked with managing and disbursing funds related to environmental protection and conservation, named the Indonesian Environmental Estate Fund (BPDLH).
Siti said the agency would support climate change mitigation and adaptation efforts, which included carbon trading.
President Jokowi has also instructed his Cabinet to remain consistent in implementing environmental-recovery programs in order to reduce greenhouse emissions.
Indonesia aims to independently reduce emissions by 29 percent by 2030, or 40 percent in the same year with international support.