The Indonesia Stock Exchange (IDX) is set to work with MetaVerse Green Exchange (MVGX), a Singapore-based digital green exchange, to develop its first carbon credit trading platform in a bid to incentivize domestic high-emitting industries to reduce their emissions.
Jeffrey Hendrik, IDX director of business development, said the IDX was currently exploring the possibility of becoming a carbon exchange in Indonesia, noting that the government had recognized the financial services industry's critical role in strengthening the country's sustainability commitments.
"We believe that this strategic partnership with MVGX can support us in a building robust carbon exchange infrastructure and ecosystem that will underpin the country's plan to develop a sustainable finance ecosystem," he said in a statement issued on Tuesday.
The government has commissioned the IDX to implement the launch of domestic carbon trading system, as the country seeks to put a price on carbon emissions, following countries worldwide that have already done so.
Indonesia is among 61 countries with established carbon pricing regulations and has committed to reducing its greenhouse gas emissions by 43% by 2030 through either financing or new technologies.
Carbon trading is part of Indonesia's wider carbon pricing policies, which also include a carbon tax and grants for entities lowering their carbon emissions, among other non-trade instruments.
MVGX utilizes blockchain technology, which helps assure buyers and issues of the integrity of carbon credits through offering a transparent, tamper-proof performance record of all green projects tied to the credits listed on its exchange infrastructure.
As Southeast Asia was predicted to be one of the regions hardest hit by the climate crisis, MVGX president Michael Sheren said that US$2 trillion in sustainable financing would be critical over the next decade in the region.
"Indonesia has made meaningful strides in its deforestation mitigation efforts, and in working with IDX, we'Fe excited for this opportunity to support the country on its next climate-related milestone as it looks to develop and launch its own carbon trading registry," he said in the same statement.
Indonesia is one of the world's largest carbon credit producers, making it essential for the country to have a proper carbon market to provide a better price for its offsets and credits, particularly when the country would begin trading with other countries, according to Mukhamad Zulfal Faradis, head of the Carbon Market division at Indonesia Commodity and Derivatives Exchange (ICDX).