The Indonesian Ministry of Environment (KLH) is preparing to unveil the country’s first international carbon trading platform, IDXCarbon, on January 20, 2025. Operated by the Indonesia Stock Exchange (IDX), this initiative demonstrates Indonesia’s commitment to addressing climate change and fulfilling the Paris Agreement established during COP 21 in 2015.

Carbon Pricing and Market Readiness

Minister of Environment Hanif Faisol Nurofiq has revealed preliminary carbon pricing estimates at USD 8 per ton. "The buyer interest seems to be around that range or slightly lower," Hanif stated, noting that the final price will be confirmed on the launch day. Supporting the initiative, Erna Susilawati Ningsih, Director of Carbon Economic Value Governance at KLH, disclosed that 1.735 million tons of carbon dioxide equivalent are ready for trading. This volume originates from significant emission reduction projects across Indonesia, including:

• Priok Block 4 Gas-Fired Power Plant: 500,000 tons
• Grati Block 2 Combined Cycle Conversion Project: 450,000 tons
• PJB Muara Karang Block 3 Gas-Fired Power Plant: 750,000 tons
• Muara Tawar Block 2: 30,000 tons
• Gunung Wugul Mini Hydro Power Plant: 5,000 tons

KLH aims to optimize carbon sales on the first day of trading, setting a strong precedent for future transactions.

Bridging Economic Growth and Environmental Management

Minister Hanif emphasized the broader significance of carbon trading, describing it as a mechanism that integrates economic growth with sustainable environmental management. “Carbon trading is more than just a market mechanism; it bridges economic growth and environmental management,” Hanif stated during a preparatory event in Jakarta on January 16, 2025.

At COP 29 in 2024, Indonesia invited international stakeholders to participate in carbon trading, demonstrating its leadership in addressing global climate challenges. By assigning a monetary value to carbon emissions, the platform incentivizes innovation and fosters collaboration toward achieving a low-carbon economy.

Commitment to NDC Targets and Climate Action

Indonesia’s carbon trading platform aligns with its Nationally Determined Contribution (NDC) targets, which prioritize both mitigation and adaptation strategies for climate change. Central to this strategy is the implementation of the Carbon Economic Value (NEK) mechanism, encompassing:

• Carbon trading (emissions trading and offsets)
• Performance-based payments
• Carbon levies or taxes
• Other mechanisms driven by advancements in science and technology

The COP framework highlights the urgency of limiting global warming to 1.5°C above pre-industrial levels, necessitating a rapid energy transition. By integrating these principles, Indonesia positions itself as a global leader in sustainable development and environmental preservation.

Looking Ahead

The launch of IDXCarbon marks a transformative moment in Indonesia’s climate action journey. With a robust framework and international collaboration, the platform is expected to drive economic growth while supporting global efforts to reduce greenhouse gas emissions. By turning climate challenges into opportunities, Indonesia paves the way for a sustainable and resilient future.