Friday, April 19, 2024

IBC offers proposal for innovative carbon market strategies

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The Indonesia Business Council (IBC) launched a White Paper titled “Preparing an Innovative and Globally Competitive Carbon Market in Indonesia: Strategic Actions Towards Impactful Carbon Market,” on March 19, 2024. 

The paper presents the concept of a carbon market in Indonesia and recommends actions to promote its development.

Chief Operating Officer of the Indonesian Business Council, William Sabandar, said the recommendations stipulated in the paper consist of two formulas: short-term and long-term. 

The short-term formula, dubbed Formula 5, focuses on accelerating the establishment of a Carbon Market Impact Center (CMIC) in Indonesia. 

This center aims to serve as a hub for inquiries related to the carbon market, facilitating industry stakeholders and those interested in understanding carbon market dynamics.

Furthermore, CMIC will serve as a platform for the government to educate the private sector on carbon market policies. Additionally, IBC plans to enhance the National Registry for Carbon (SRN PPI) as an Integrated National Registry for carbon.

In the third phase, IBC will urge the public sector to establish and calculate entity-level emission limits (PTBAE). They will also advocate for industry players to access funding opportunities and grants provided by relevant authorities. This includes advocating for existing funding structures, such as those within the Ministry of Finance.

In the long term, IBC aims to accelerate the carbon market in Indonesia by proposing the establishment of a unit or task force to coordinate efforts towards carbon market acceleration. 

They also plan to develop a comprehensive carbon trading roadmap that maps the entire supply chain and incorporate global best practices by actively engaging with industries.

Inarno Djajadi, Executive Head of Market Supervision for Capital Markets, Financial Derivatives, and Carbon Markets at the Financial Services Authority (OJK), emphasized that implementing carbon trading in Indonesia is crucial to support Indonesia’s Nationally Determined Contribution (NDC) fulfillment target by 2060. He highlighted Indonesia’s significant potential in carbon credits both in terms of demand and supply.

As of March 18, 2024, the Indonesia Carbon Exchange has registered 52 Service Users from various sectors, including energy, forestry, financial institutions (banks and securities), consultants, and others. 

The total accumulated transaction volume on the Indonesia Carbon Exchange reached 501,956 tons of CO2e, with a value of IDR 31.36 billion (about US$2 million). 

While current transactions are relatively small compared to potential, Inarno remains optimistic about the rapid growth of Indonesia’s carbon market in the future, emphasizing the importance of stakeholder support to optimize this ecosystem.

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