Background
Indonesia’s carbon market is in its early stages of development, but there is significant anticipation about its potential to advance the country’s climate goals. Building on years of experience with carbon projects in the forestry sector (and other sectors), the Indonesian government has drafted policies and regulations aimed at establishing a solid foundation for a carbon market. Notably, in August 2023, Indonesia’s Financial Services Authority (OJK) introduced regulations for carbon trading via carbon exchanges, which was closely followed by the launch of IDXCarbon. While IDXCarbon is still in its infancy with low turnover, Indonesia is determined to advance its compliance carbon market to achieve the country’s net-zero targets leading to a more liquid trade at the IDX.
This anticipated growth presents an opportunity for stakeholders from both the public and private sectors to come together to discuss and shape the future of Indonesia’s carbon market. Dialogues that include a wide range of expertise and perspectives—ranging from government ministries, project developers, sectoral experts, academia, civil society organizations, development agencies, financiers, and international experts—can generate ideas and momentum to accelerate the carbon market in Indonesia.
Recognizing this pivotal moment, Neyen sees it as an ideal time to initiate capacity building as Indonesia continues to develop its carbon market landscape. Together with our partners, the Indonesia Carbon Trade Association (IDCTA) and Dana Ilmu Pengetahuan Indonesia (DIPI), the inFUSE Accelerator was formally launched on August 12, 2024.
inFUSE Accelerator takes off
The inFUSE kick-off was inaugurated by Prof. Rahmat Witoelar, Minister of Environment of the Republic of Indonesia (2004-2009), and Robert Satrya, Head of Investment, Financing, and Investor Relations at the Indonesia Carbon Trade Association (IDCTA). Both emphasized the need to harness Indonesia’s carbon market potential to contribute effectively to global climate solutions. They also stressed the importance of human resources, noting that the inFUSE workshop is closely related to ensuring the sustainability of climate change efforts.
The participants
inFUSE Accelerator overview
Jeremy Buhain from Neyen Consulting gave an overview of the inFUSE Accelerator program and ran a short quiz to find out about the current awareness on the carbon market amongst the participants. The results showed that over half of participants are quite familiar with Indonesia’s carbon regulations, while 15 were less familiar and have significant concerns about their confidence in the carbon market. In terms of confidence in the Indonesian Carbon Market, 15 participants expressed confidence in the market, while 17 were not very confident. The most significant challenges identified were unclear participation rules (34%) and a lack of incentives (29%). Among the 21 carbon project developers present, 7 were not very familiar with the steps and requirements for generating and selling carbon credits, and 1 participant had no knowledge of the process.
inFUSE Accelerator overview
presented by Jeremy Buhain
Workshop
Shared understanding of the carbon maket
Johan Nylander, a principal consultant at Neyen Consulting, discussed the growing trend of carbon markets and emissions trading in Southeast Asia, highlighting their benefits, such as reducing emissions and generating revenue. He explained how emissions trading works, including the government’s role in setting a cap and how companies reduce emissions. Nylander also discussed the impact of government policies on carbon markets and stressed the importance of considering various policies when setting the cap. He shared lessons learned from case studies in Singapore, South Africa, and Colombia, noting that predicting future price levels is challenging. Three key considerations were identified: overlapping policies can distort expected price impacts, integration with other policies is necessary, and in Indonesia, special attention should be given to renewable energy policies and energy transition measures.
Shared understanding of the carbon market
presented by Johan Nylander
Panel Discussion
Overview and outlook for Indonesia Carbon Market from Key Stakeholders
The panel group discussion was moderated by Ayu Pratiwi, a research associate from Economic Research Institute for ASEAN and East Asia (ERIA). Pratiwi is active in providing a dialogue on carbon pricing mechanisms and market development in Indonesia.
The carbon market in Indonesia and strategies to enhance its vibrancy
Prof. Jatna Supriana from Dana Ilmu Pengetahuan Indonesia (DIPI) shared his insights on Indonesia’s efforts to develop a carbon trading market to reduce emissions, with key milestones and regulations already in place. He emphasized the need for a well-functioning platform and new methodologies, particularly in the energy sector, to support emission reduction goals. He noted that carbon market activities in Indonesia have largely focused on forestry, with limited attention to the energy sector. Supriana also highlighted the importance of strengthening technology and improving the effectiveness and efficiency of transactions to ensure success in Indonesia’s carbon trading and emission reduction efforts.
The carbon market in Indonesia and strategies to enhance its vibrancy
presented by Prof. Jatna Supriatna
IDCTA Introduction & Indonesia Carbon Market Overview
Dr. Riza Suarga, Chairman of the Indonesia Carbon Trade Association (IDCTA), shared his positive outlook on Indonesia’s carbon market. He explained that Indonesia is developing its carbon market through presidential decrees and regulations while also exploring and inventing new methodologies and standards. The country aims to reduce emissions by 26-41% by 2030 and has received 480 applications for carbon projects that could deliver 150-250 million tons of emissions reductions per year. Suarga emphasized the importance of innovation and exploration in the carbon market, although he acknowledged that it may take around 20 years to develop and refine these methods. He encouraged everyone to work together to achieve these goals.
IDCTA Introduction & Carbon Market Overview
presented by Dr. Riza Suagra
Opportunities and challengers for Carbon Projects in Indonesia
The final two panelists, Dr. Doddy Sukadri from the University of Indonesia and Yani Witjaksono from Yayasan Bina Usaha Lingkungan, reiterated the importance of carbon markets in addressing climate change, particularly in the context of Indonesia’s Nationally Determined Contributions (NDC). They stressed the urgent need to understand the climate crisis and the role of Article 6 in facilitating the involvement of the financial sector. They also emphasized the lack of private sector involvement, as discussed earlier, and called for further discussion and collaboration to address these challenges and leverage the opportunities in carbon markets. The discussion also touched upon the importance of policy support and regulation to encourage private sector participation, ensure efficient implementation and coordination among stakeholders, and guarantee that sustainable energy solutions are both environmentally friendly and socially responsible. They noted that the current challenge is the lack of progress in utilizing these resources effectively.
Opportunities and Challenges for Carbon Projects in Indonesia
presented by Bu Yani Witjaksono
Full event recording
We are delighted to be able to share this full recording of the event.
Upcoming events
To find out about upcoming events and register your interests see our inFUSE Accelerator events calendar.
