Indonesia’s carbon market flats, even no trading


As of the end of September 2023, following the official launch of the Indonesia Carbon Credit Exchange (IDX Carbon), trading volume in the country led by the state-owned oil company, surpassed that of the Japanese and Malaysian markets at one point. However, a British media platform has discovered that in reality, over the past 2 months, carbon trading in Indonesia has not been active, with most of the time experiencing little to no trading activity.

Indonesia Stock Exchange in Jakarta(Photo: iStock)

According to the data obtained by UK's Climate Home News, the Indonesia Carbon Credit Exchange experienced 17 out of 19 trading days with no transactions at all. Additionally, daily data statistics often mysteriously disappeared from the website, and carbon prices remained unchanged, indicating a lack of activity in the trading platform.

Besides that, based on latest data from the Indonesian Financial Services Authority (OJK) in November, only 28% of the available 1.74 million tons of carbon credits were traded. The most recent trading data from the Indonesian Carbon Credit Exchange on December 1st showed 41 tradable users, but the closing price was the same as the opening price at IDR 59,200 per ton (approximately TWD 119).

Imam Rachman, the Managing Director of the Indonesia Stock Exchange, stated that only 468,124 tons of carbon credits were traded in the market in November. The low liquidity of carbon credits has led to a lack of urgency among various sectors to purchase them. He mentioned, "Our current challenge is that the liquidity of carbon credits is different from other commodities, and buyers tend to buy and hold without actively trading." The Head of Development at the Indonesia Stock Exchange, Jeffrey Hendrik also believes that the limited appeal is because carbon trading is only open to domestic Indonesian companies or commercial entities.

In addition, Inarno Djajadi, the Chief Executive of the Capital Market, Financial Derivatives, and Carbon Trading Supervision at the Financial Services Authority, also admitted that compared to stock trading, carbon credit trading volume is indeed very small. One of the reasons is the relatively low demand, which has made carbon trading largely voluntary. He stated, "In terms of demand, we need to emphasize the importance of carbon credits, and one way to do that is through the government implementing a carbon tax."

Carbon tax was included in Indonesian tax regulations in 2021, it was originally scheduled to take effect on April 1st 2022. However, due to various reasons, it has been repeatedly postponed, and as of December this year, it has not been implemented. Nevertheless, the Indonesian government expressed confidence in October of this year that they are aiming to implement the carbon tax in 2025, which is expected to stimulate carbon credit trading.

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