Ilustrasi/ Freepik
With the COP28 to commence this coming November, countries are grappling to face what is now known as a “global boiling” point sitting at the heart of the climate crisis. Indonesia is no exception and pressures to realise their seriousness in combating climate change has been a defining narrative of the Jokowi Presidency. The recent launch of the Carbon Exchange hopes to curb such pressures, whilst showing that Indonesia is able to balance economic growth and climate integrity through carbon change.
According to government reports, the carbon market in Indonesia is estimated to capture 3,000 trillion rupiah ($197 billion USD) and this is not in small part due to the fact that Indonesia has the potential to absorb 139.77 million tons of carbon each year. However, fulfilling Indonesia’s capacity as the world’s lungs via the carbon exchange poses several challenges, with a common narrative being the need to maintain regulatory certainty, consolidate industry support, and develop a stronger carbon market value chain.
Baca juga: What the Economic Effects of the Coronavirus will mean for Indonesia’s Biodiesel Energy Future
Hence, preparing the Carbon Exchange requires several steps to move forward, which are:
- Strengthening the Demand Side: Indonesia represents a haven for the supply side but a supplier’s market only serves as fools’ gold without the strengthening of the demand side within the carbon market. Developing a stronger demand side requires the government to ensure up its mandates for companies to actively participate in the achievement of climate goals through reducing emissions and this has been established through regulations including the Carbon Pricing (NEK) Presidential Regulation and Carbon Pricing (NEK) Implementation Ministerial Regulation. However, creating an attractive carbon market requires feasible incentives that provide tangible rewards for industry players.
- Ease Participation: Much like the provisions of incentives, participation within the carbon market must be seamless and frictionless. The government can achieve this by modernising the National Registry System for Climate Change (SRN-PPI). The purpose of the SRN-PPI serves as a way for companies to have their climate adaptation and mitigation activities verified, counted and deemed credible to enter within the carbon exchange. Hence, the SRN-PPI needs to be user-friendly, accessible and responsive.
- Collaborate to Innovate: Although the Carbon Exchange is at the hands of the Financial Services Authority (OJK) and the SRN-PPI is mandated to the Ministry of the Environment and Forestry (KLHK), collaboration across strategic government agencies such as the Ministry of State Owned Enterprises (SOEs) and the Ministry of Energy and Resources (ESDM) is key. Furthermore, the carbon market needs to be equipped with consistent planning through an industry-involved, expert-backed and data-driven carbon trading roadmap that is inclusive.
The launch of the Indonesian Carbon Exchange is synonymous with the country’s vision for a Golden Indonesia (Indonesia Emas) but like all jewels that gleam, the Carbon Exchange needs to be consistently polished. Finally, the launch of the Carbon Exchange can and should serve as a sense of pride for Indonesians but requires monitoring, neutral analysis and advocacy from various stakeholders that can show that the Carbon Exchange intends to serve as a display of national pride but also that of environmental integrity.
Baca juga: COP28: Bersama CSO Menyambut Pesta Iklim Bergengsi di Dunia
