Indonesia plans to launch its first carbon trade next week, aiming to provide companies and financial institutions a mechanism to offset their emissions, while offering funding for carbon reduction projects.
The Southeast Asian country is among the world's top ten greenhouse-gas emitters but has committed to achieving carbon neutrality by 2060 and viewed the carbon market as a means to finance climate solutions.
Mahendra Siregar, the head of the Financial Services Authority, said on September 18, "The launch of the carbon exchange will take place on Sept. 26, next week."
He believes that Indonesia has significant potential to reduce carbon emissions not only nationally but also globally.
Indonesia's contribution globally can be assessed from the potential success of the carbon trading.
"We are all calculating globally, and if Indonesia does not succeed in carrying out these carbon trading, then we cannot be too optimistic that the world will succeed, because in other places, we will not find as much potential as in Indonesia in reducing carbon emissions," he said.
The government has previously said the market will trade carbon credit certificates issued for activities or projects that remove carbon from the atmosphere or companies that emit pollution below a limit set by the government.
The environment ministry has assigned four auditors to verify carbon reduction activities so that trading can start next week, according to Wahyu Marjaka, a director from the environment ministry.
Authorities announced in a statement that Indonesia Stock Exchange (IDX) will become the carbon trading operator.
Jakarta launched the first phase of mandatory carbon trading for coal power plants in February.
Apart from the potential success of the carbon trading on the Carbon Exchange, Siregar also mentioned the three other steps that Indonesia can take to become a major player in reducing carbon emissions.
The first is peat restoration that is being carried out in East Tanjung Jabung, Jambi, and can be reused as agricultural land.
Secondly, the government and stakeholders must collaborate to improve the socio-economic welfare of the community, aligning with the Sustainable Development Goals.
Lastly, there is a crucial need to call for the implementation of environmental and economic sustainability policies throughout Indonesia, without neglecting the profitability aspect.