In a significant move aligning with Indonesia's proactive stance toward achieving ambitious emission reduction goals of 31.89 percent by 2030, the Indonesia Stock Exchange (IDX) officially launched carbon trading operations on September 26, 2023. This step follows the issuance of a carbon exchange license by the Financial Services Authority (OJK) on September 18, 2023, and is a vital component of Indonesia's broader strategy to nurture a greener economy.
The IDX has introduced a comprehensive set of regulations, including the IDX Decree No. KEP-00296/BEI/09-2023 for Carbon Units Trading and the IDX Decree No. KEP-00297/BEI/09-2023 for Carbon Exchange Users, to govern carbon unit trading on the exchange.
Key Highlights of Carbon Trading on IDX
The IDX carbon exchange encompasses two primary types of tradable carbon units:
- Undertakings Emission Ceiling Technical Approval (PTBAE-PU): These units represent approvals for technical emissions ceilings granted to business entities operating in specific sectors.
- GHG Emission Reduction Certificate (SPE-GRK): These certificates signify the reduction of greenhouse gas emissions and can be traded among various entities within the exchange.
Foreign carbon unit trading is also facilitated, provided that the carbon units are duly registered with the OJK.
Entities eligible for participation in the carbon exchange include emission trader business actors operating in specific sectors, non-emission trader business actors, project owners responsible for the initial sale of GHG Emission Reduction Certificates, and other parties approved by the OJK.
To qualify for carbon exchange participation, entities must meet specific requirements such as designated officers responsible for utilizing IDX facilities, attending carbon exchange training, maintaining a company email address, and more.
Supervision of Carbon Trading
The IDX oversees carbon exchange operations, monitoring trading activities, price and volume fluctuations, order placements, and transaction patterns. Users are prohibited from engaging in activities that manipulate the market, commit fraud, or use insider information.
Market Types on IDX Carbon Trading
The IDX carbon trading unit features four distinct market types: Auction Market, Negotiation Market, Regular Market, and Non-Regular Market, each catering to specific trading needs.
Trading occurs on weekdays from 9:00 to 15:00 Jakarta time.
Impact of Carbon Trading Launch on IDX
The launch of carbon trading on IDX signifies a pivotal step toward supporting Indonesia's sustainability objectives. It allows companies in renewable energy and decarbonization to sell carbon credits while enabling coal power plant operators to purchase credits for emissions offset. This initiative is anticipated to expedite the retirement of coal power plants, reduce reliance on coal, and promote alternative energy sources, aligning with Indonesia's pursuit of a greener and more sustainable economy.
By fostering a conducive environment for carbon trading, Indonesia positions itself as a leading advocate for sustainable economic growth and environmental stewardship, both within ASEAN and on the global stage. This move is poised to play a pivotal role in Indonesia's journey toward achieving its emission reduction targets while contributing to a greener future.