Indonesia launched its first carbon emissions trading market in a bid to curb the climate impact of its coal-dominated power sector.
(Bloomberg) — Indonesia launched its first carbon emissions trading market in a bid to curb the climate impact of its coal-dominated power sector.
An initial 13 transactions covering 459,914 tons of carbon dioxide equivalent were made on the bourse, operated by the Indonesia Stock Exchange, according to a presentation during a launch ceremony Tuesday in Jakarta.
Credits traded at a price of 69,600 rupiah ($4.51) a unit, far below the cost of similar products in established emissions markets like the European Union.
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Initial trading is open to coal plants generating at least 100 megawatts of power and that are linked to state utility Perusahaan Listrik Negara’s grid, which accounts for about 86% of the Indonesia’s coal capacity.
The IDXCarbon exchange will aim to incentivize utilities to cut pollution by setting an emissions cap for the power plants and allowing them to trade any unused credits. The Southeast Asian nation sees a potential economic gain of as much as 3,000 trillion rupiah from the sale of carbon credits, President Joko Widodo said at the launch event.
Indonesia is aiming to zero out its emissions by 2060 by pivoting away from coal power and ramping up investments in cleaner energy. The nation could hit that target five years early with adequate funding, Coordinating Investment and Maritime Affairs Minister Luhut Binsar Panjaitan said in June.
“This is just the beginning, so we’re not expecting immediate big interest from the domestic market,” said Paul Butarbutar, executive director at think tank Indonesia Center for Renewable Energy Studies. “But it is hoped that as time goes by, and with better dissemination, the domestic carbon exchange will further grow.”
Governments across Asia are putting prices on emissions, though the region’s carbon markets have so far fallen short of delivering any meaningful impact. Price in South Korea and China are regarded as still below the level needed to compel large corporate emitters to cut pollution.
–With assistance from Eko Listiyorini, Heesu Lee and David Stringer.
(Updates from first paragraph to add price, details)
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