Step-by-step guide on how to buy carbon credits on Indonesia carbon exchange

The Indonesia Carbon Exchange opened to foreign buyers in January this year. (Photo：IDX Carbon)

Carbon credit trading is a driving force behind corporate sustainability transformation. The IDX Carbon Exchange, operated by the Indonesia Stock Exchange, was launched in September 2023 and opened to international buyers on Jan. 20, 2024.

This move has injected much-needed liquidity into the market. But how do multinational corporations participate? What qualifications and documents are required? This article provides all the details.

4 trading mechanisms at IDX Carbon Exchange

The IDX Carbon Exchange aims to attract 200 international buyers this year, with a target trading volume of 750,000 tons of CO2 equivalent. The exchange currently offers four trading mechanisms: Auction, Regular Trading, Negotiated Trading, and Marketplace.

1. Auction: Carbon credits are auctioned by government bodies or developers through the exchange. The auction includes product descriptions and a reserve price. Buyers set their purchase quantity through the exchange, and prices cannot fall below the reserve price. Ultimately, the seller determines the allocation.
    
2. Regular Trading: Buyers and sellers submit their prices and quantities simultaneously. The exchange matches orders in real-time based on price and time sequence, with the final price determined by market conditions.
    
3. Negotiated Trading: Buyers and sellers agree on terms beforehand and then finalize the carbon credit transaction through the exchange.
    
4. Marketplace: Developers submit project details, including pricing and available carbon credit quantities, to the exchange. Buyers can review all projects and purchase specified quantities of carbon credits at the prices set by the developers. Notably, prices in this trading mechanism are fixed and non-negotiable.