Indonesia Takes Historic Step Towards Carbon Neutrality with Launch of First Carbon Trade

Indonesia Takes Historic Step Towards Carbon Neutrality with Launch of First Carbon Trade

Indonesia is set to launch its first carbon trade next week, providing companies and financial institutions with a mechanism to offset their emissions and fund carbon reduction projects. The launch of the carbon exchange is scheduled for September 26th and is part of Indonesia's commitment to reach net carbon neutrality by 2060. The Southeast Asian country is one of the world's top ten greenhouse-gas emitters, and the carbon market is seen as a crucial step towards funding climate solutions. It will trade carbon credit certificates, which will be issued for activities or projects that remove carbon from the atmosphere or for companies that emit pollution below a government-set limit.

The country's Financial Services Authority announced that the Indonesia Stock Exchange (IDX) will become the carbon trading operator. This decision comes after the government assigned four auditors to verify carbon reduction activities, ensuring the trading can commence next week. Earlier this year, Jakarta initiated the first phase of mandatory carbon trading for coal power plants.

Initially, the government had planned to set a pollution quota for carbon-intensive industries and tax companies that exceeded their limit without any carbon offset. However, concerns regarding the impact on economic growth led to the shelving of the tax plan. By launching this carbon market, Indonesia aims to not only reduce its greenhouse gas emissions but also facilitate financial support for climate solutions. As the first carbon trade in the country, it represents an important milestone towards achieving its long-term climate goals.

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