On 20th of January 2025, Indonesia opened its national carbon market to international buyers. International carbon exchange has been mentioned in Presidential Regulation Number 98/2021 on Carbon Economic Value, where carbon is regarded as a universal indicator that reflects sustainable resource management and gives economic benefits for local people.

Like the domestic carbon market, the international market also takes place through IDX Carbon (Bursa Karbon Indonesia) managed by the Indonesian Financial Services Authority (OJK). There are 2 types of carbon trade: emission allowance trade and emission offset trade.

Emission offset trade requires certificates which indicate that emission-reduction projects have successfully proven their results through measurement, reporting, and verification (MRV). They must align with international and/or national standards. Every emission reduction certificate (SPE-GRK) must be authorized by the Ministry of Environment before being handed out to international parties. Certifications other than SPE-GRK are eligible through the Ministry’s approval. Then, the certificates will be recorded on the national registry system (SRN-PPI), enabling public transparency. Corresponding adjustment (transfer of mitigation results from one country to another) is also recorded in the international registry system managed by the UNFCCC.

Emission reduction certificates are further divided into 4 categories:

• Indonesia Nature Based Solution (IDNBS): projects in agriculture, forestry, and land-use sectors which concern the conservation of the natural environment
• Indonesia Nature Based Solution International Standard (IDNBSI): like IDNBS projects, but certified by an accredited international agency
• Indonesia Technology Based Solution (IDTBS): projects in energy, waste, industrial process, and product use sectors which concern the use or development of technology
• Indonesia Technology Based Solution International Standard (IDTBSI): like IDTBS projects, but certified by an accredited international agency

So far, there are some IDTBS carbon credits traded internationally. Credits from this category are sold for Rp144,000 (USD 8.78)/ton for the renewable energy sector and Rp96,000 (USD 5.86)/ton for other sectors.

Trading can be performed through 4 mechanisms on Carbon IDX, which are:

• Auction: developers create an auction, buyers will place desirable volume and price, then developers will decide the chosen buyer(s)
• Regular trading: buyers and sellers submit order volume and price, and the exchange will match the order with price and time priority
• Negotiated trading: buyers and sellers make deal outside the exchange, then submit the arrangement to the exchange
• Marketplace: project developers input project, volume and price in the marketplace, buyers browse and buy the desired project and volume

Besides that, the Ministry may establish mutual recognition cooperation which encompasses:

• Disclosing information of MRV standard used by both parties
• Assess conformity to international and national standards
• Record certificates that are mutually acknowledged on SRN-PPI
• Capacity building on verification, publication, and cooperation promotion

To ensure the credibility of international carbon trade, the ministry will establish:

• Designated national authority: to assess the requests and results of international cooperations, as well as reporting them to the supervisory body of the Paris Agreement
• Designated operational entities: to verify reports of international cooperation results, accredited by the supervisory body of the Paris Agreement

The opening of the international carbon market and cooperation is a crucial step to reach Indonesia’s NDC, which is to reduce emissions up to 41% with international cooperation by 2030. However, some experts expressed skepticism about the additionality of carbon projects, whether there are emission avoidance or reduction that would otherwise not happen without the project.

Here at Fairatmos, we are harnessing the power of technology to ensure the additionality of projects. We hope to see increasing interest in the carbon market, both local and international, and optimal benefits from Indonesia’s carbon projects.