Heaptalk, Jakarta — As an emerging market, Indonesia’s carbon trading, despite its uncertainties, holds significant potential for high-yield investments. CarbonX Investments Director Dessi Yuliana revealed several uncertainties, including regulations and buyers’ appetite, underscoring the dynamic nature of this market.
Dessi emphasized the urgent need for the government to enhance the registry system to expedite carbon credit issuance. She explained that, like any market, the carbon market operates on the principles of supply and demand. However, the current supply of carbon credits is insufficient, with only two projects in the carbon exchange, namely from Pertamina and PLN.
“You need carbon credit issuance. There needs to be fixed on how the registry system in Indonesia can accelerate the issuance and transparency. You need to ensure that carbon credit from Indonesia is high quality and trusted,” Dessi said during a discussion with the environmental activist Poempida Hidayatulloh on the Forum Carbon Indonesia YouTube channel.
On the demand side, the country needs a regulation that governs the sales of carbon credits to foreign entities, as the big buyers are usually international communities. Dessi voiced, “Open the market for foreign entities can come in. There is a lot of demand from foreign entities since internationally they already have pressure either from the government with a carbon tax or from communities, their customers, and their investors.”
Facing different appetites of foreign buyers
Apart from the regulations, the carbon market also faces different appetites, primarily from foreign buyers. For example, for nature-based solutions (NBS), which is CarbonX’s focus, foreign buyers prefer a restoration project involving planting or replantation compared to conservation, which protects avoidance.
Dessi underscored the significance of diversifying the type of carbon projects to anticipate the diverse appetites. “Diversification is a solution. Diversification in terms of type of carbon projects. If you have those investments, you can also have a geographical diversification,” she uttered.
Aligned with Dessi’s statement, Poempida Hidayatulloh stated that investment in the carbon project development in Indonesia is indeed in a high-risk situation. “We still need to socialize and raise awareness on this issue. I hope that all the people in Indonesia and the government will listen to this and support us in actually creating a better future by improving the carbon market in Indonesia,” Poempida concluded.
