The expansion of mass rapid transit (MRT) and public transportation systems in Indonesia presents a crucial opportunity to reduce carbon emissions and should involve formal emissions trading system (ETS) in its implementation, an expert at the Indonesian Business Council (IBC) says.

"The moment people switch from private vehicles to public transportation, emissions decline. That reduction should be quantified, and the resulting carbon savings could be monetized through carbon trading,” IBC Chief Operating Officer, William Sabandar, spoke to Indonesia Business Post, on Thursday, July 24, 2025.

However, Indonesia currently lacks a dedicated emissions cap or trading framework for the transportation sector, a gap that could limit the country’s ability to fully leverage climate benefits from sustainable transport projects like the MRT.

“We need to establish a system where each sector, like transportation, has a defined emissions cap. If actual emissions fall below the cap, then the surplus can be claimed as carbon credits,” William cited.

“Without such a system, the country misses out on creating market incentives for greener operations.”

He proposed a structure where companies or operators emitting below their allowed cap could sell carbon credits, while higher emitters would be required to purchase them mirroring the European Union Emission Trading System (EU-ETS).

"In Europe, they’ve implemented ETS with clearly defined standards. If an entity emits above the limit, they pay a levy or purchase credits from those reducing emissions,” he noted, calling the EU a benchmark for Indonesia’s potential carbon market development.

The discussion also touched on how state-owned power company PT PLN has already benefited from selling carbon credits particularly through renewable energy initiatives listed on the national carbon exchange launched recently.

"PLN has already generated income from the carbon market, including through activities discussed at COP29," William said.

When asked about potential benchmarks from Asia, he reiterated that Europe’s carbon trading system remains the most mature and transparent, offering a practical model for Indonesia to emulate.

The conversation concluded with a call for broader multi-stakeholder involvement, including the private sector, civil society, media, the House of Representatives (DPR), and the general public, to develop a collaborative, effective carbon trading framework for transportation.

“This initiative may be driven by the private sector today, but the spirit should be collective. Only with joint efforts can we build a fair and functioning carbon market,” he concluded.