Written by: Jonathan PHILLIP
Verified by: George KIONGSON
On Monday, January 20, 2025, Indonesai officially launched its first international carbon trading platform, IDXCarbon (Indonesia Carbon Exchange), operated by the Indonesia Stock Exchange (IDX). This historic event saw nine international buyers participate in transactions involving carbon credits sourced from five energy generation projects owned by PT Perusahaan Listrik Negara (PLN). This groundbreaking initiative reflects Indonesia’s commitment to addressing climate change while fostering sustainable economic growth.
A Step Toward Global Climate Leadership
The launch of IDXCarbon is a key milestone in Indonesia’s climate journey. It underscores the country’s determination to fulfill the commitments of Article 6 of the Paris Agreement, as emphasized during COP29. Additionally, the platform supports Indonesia’s efforts to accelerate the submission of its second Nationally Determined Contribution (NDC), expected by February 10, 2025.
With ambitions to reduce emissions by 31.89% through domestic efforts and 43.20% with international support by 2030, IDXCarbon reinforces Indonesia’s role as a leader in global climate action. Minister of Environment Hanif Faisol Nurofiq emphasized the broader purpose of the platform, describing it as "more than a market mechanism—a bridge connecting economic development and environmental responsibility."
To ensure transparency, integrity, inclusivity, and fairness, the Indonesian government has strengthened its carbon ecosystem by implementing key measures:
The National Registry System (SRN)
Measurement, Reporting, and Verification (MRV)
Greenhouse Gas Emission Reduction Certificates (SPE-GRK)
Authorization and Corresponding Adjustment (CA)
Minister of Environment, Nurofiq stated, “These essential elements ensure that Indonesia’s Greenhouse Gas Emission Reduction Certificates (SPE-GRK) maintain high integrity.”
Carbon Credits and Projects Available
For its inaugural trade, IDXCarbon listed 1.7 million tons of carbon dioxide equivalent (tCO₂e) credits for purchase. Prices ranged from $5.90 USD (96,000 rupiah) per ton for gas projects to $7.01 USD (114,000 rupiah) per ton for hydropower facilities. These credits were sourced from five major energy projects owned by PLN, including:
Operation of New Power Plant of Natural Gas of Combined Cycle Power Plant (PLTGU) Prio Block 4
Conversion from Single Cycle to Combined Cycle on Power Plant of PLTGU Grati Block 2
Construction of New Power Plant of Natural Gas of PLTGU PJB Muara Karang Block 3
Conversion of Single Cycle to Combined Cycle on Power Plant of PLN NP UP Muara Tawar Block 2
Operation of Gunung Wugul Mini-Hydropower Plant
In 2024, IDXCarbon traded 413,764 tons of carbon credits at an average price of $2.90 USD (47,682 rupiah) per ton. Looking ahead, the platform aims to trade 500,000 to 750,000 tons of credits in 2025, expanding its reach to both domestic and international buyers
A Platform for Global Participation
IDXCarbon provides an accessible and transparent environment for trading carbon credits, welcoming both foreign and domestic participants. Companies can register as members or partners with existing users to trade. Retired credits can be claimed as contributions toward the buyer’s home country NDC, aligning with global climate goals.
Indonesia has made significant efforts to ensure the credibility of the platform. Key components like the SRN, MRV systems, SPE-GRK, and CA mechanisms collectively build trust and promote high-integrity transactions, fostering a fair and inclusive carbon market.
Challenges
Despite its promise, Indonesia’s carbon market faces challenges. Early trading activity in 2025 has been limited, with only 1 million tons traded and around 100 participating buyers. This is notably lower than activity in more established markets like Singapore and Malaysia.
However, IDXCarbon’s future is promising. The government plans to include forestry and land-use credits, such as those from peatland conservation and reforestation, by March 2025. This expansion will enhance the platform’s appeal to a broader range of stakeholders.
With over 130 million hectares of forest, Indonesia has immense potential to serve as both a carbon sink and a source of high-quality carbon credits. By implementing robust regulatory frameworks and addressing deforestation, Indonesia can strengthen its position as a regional leader in carbon trading.
Conclusion
The launch of IDXCarbon is a pivotal moment for Indonesia, signaling its readiness to lead in the global carbon market. By offering a transparent platform for emissions trading, Indonesia is fostering international collaboration and aligning economic growth with environmental responsibility As Indonesia continues to strengthen its carbon market ecosystem, aligning its methodologies with international standards should be considered. This is a critical step toward advancing its carbon market, gaining recognition from international buyers, and ensuring high-integrity transactions that build trust and credibility on the global stage.
At Mt. Stonegate, we are proud to support these efforts. With our expertise in carbon markets, renewable energy, and tailored decarbonization strategies, we are committed to empowering stakeholders in Indonesia and across the region to achieve their sustainability goals and drive impactful climate action.
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