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Indonesia missing out in carbon trading
While authorities are mulling over the details of the country’s emissions trading system, companies are taking matters into their own hands by trading carbon credits overseas, specifically in Singapore.
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Carbon dioxide is more efficient than water for hydraulic fracturing, or fracking, to extract oil and natural gas, according to a study led by scientists in China. (Shutterstock/FerrizFrames)
W
hile Indonesian authorities work out the kinks of the country’s budding emissions trading system, companies are taking matters into their own hands by trading carbon credits overseas. Indonesia is losing out in the carbon trading business.
Indonesia is among several countries that have been slow out of the blocks in preparing the legal framework for selling and buying credits to offset carbon emissions – along with the penalties for failure to comply.
While Indonesian companies are not obliged to offset excessive emissions until a full-fledged cap and trade system is implemented, some are nevertheless active on foreign marketplaces, notably in Singapore, where they trade on a voluntary basis.
Indonesia Commodity and Derivatives Exchange (ICDX) CEO Lamon Rutten told The Jakarta Post on Friday that the voluntary market had attracted several Indonesian companies, with many flocking to Singapore’s carbon exchange launched earlier this year.
Singapore has since been working on a more efficient exchange slated to launch by year-end, with Indonesia seen as a major source of demand for carbon trading in the future.
“There are some companies in Indonesia that implement emission reduction projects, such as reforestation projects or clean energy projects. These projects are registered to internationally accepted carbon registries. These registries will have the achievements of such projects verified and issue carbon units, commonly known as carbon credits, on behalf of these companies,” Rutten explained to the Post in a message on Tuesday.
“The companies with carbon reduction projects can then sell the carbon credits. But how? Since Indonesia does not yet have any carbon exchange available, these companies can sell through exchanges overseas, including the exchange in Singapore,” he added.
