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Tuesday, June 18, 2024

Launch Partners

Indonesia launches carbon exchange; holds inaugural auction

The Indonesian government launched the Indonesia Carbon Exchange (IDXCarbon) on the 26th September 2023. Concurrently, it held its inaugural carbon trading, which saw 459,953 tons of carbon units traded in 27 transactions.

The launch follows the awarding of the Carbon Exchange Operator business license to the Indonesian Stock Exchange (IDX) by the Financial Services Authority (OJK) on the 18th September this year.

“IDXCarbon is an important milestone for Indonesia’s decarbonization commitment to achieve net-zero emission in 2060 or sooner.

By providing [a] platform that prioritize[s] seamless user experience, we envisage that IDXCarbon [will] provide convenience for all entities in obtaining benefits from carbon trading,” Iman Rachman, the president director of the IDX, remarked.

The IDXCarbon project has not been smooth sailing, with the issuance of OJK’s carbon trading regulations, which were originally scheduled for June this year, delayed by a matter of months.

In contrast with Malaysia’s Bursa Carbon Exchange’s inaugural auction, which did not include any locally generated carbon credits, the IDXCarbon auction included two Indonesia-generated carbon credits with Pertamina New and Renewable Energy as the owner of the projects.

While the platform is not currently Shariah compliant, as opposed to its Malaysian counterpart, the OJK previously confirmed to ISFI that it is open to Shariah compliance for the carbon exchange in the long run.

IDXCarbon currently has four trading mechanisms, namely auction trading, regular trading, negotiated market and marketplace.

The exchange is connected to the National Registry System’s Climate Change Control under the Ministry of Environment and Forestry, which is expected to help avoid double counting.

The launch of the exchange follows a series of developments including the launch of OJK’s carbon trading regulations in August this year.

The development of the carbon trading infrastructure and the eventual implementation of a carbon tax scheme have been steadily underway, with Presidential Regulation No 98 of 2021 firing the starter pistol for the efforts.

On the carbon tax front, the government began to impose carbon tax on coal power plants in April 2022 under the Harmonization of Tax Regulation 2021. The implementation of full carbon trading and the expansion of the carbon tax scheme for all sectors are scheduled in stages for 2025 and onward.

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