Heaptalk, Jakarta — The upstream oil and gas industry has great potential for carbon trading. Policy analyst at the Ministry of Finance Hadi Setiawan stated that its implementation depends on business actors’ ability to apply Carbon Capture Storage (CCS) technology. He is optimistic that carbon trading will run well with the industry’s financial and technological capabilities.
The government is actively working to enhance regulations. Proposals for improving regulations and implementing regulations are being discussed by the government. This is a derivative of Presidential Regulation No. 14 of 2024 on implementing carbon capture and storage activities.
According to him, the implementation of carbon pricing in the upstream oil and gas industry can only be implemented when the Carbon Capture Storage (CCS) technology is already running. Business actors can actually earn more profits if they implement CCS. The technology brings an advantage as it can be used as a new source of company income.
Hadi explained that carbon trading in the upstream oil and gas industry is not yet optimal, requiring stimulation of compelling regulatory support. Currently, the government has recognized this issue. “They (the upstream oil and gas industry) emit quite large emissions, and the way to reduce them is through CCS technology, and the government has made regulations. Derivative regulations are still in process. Hopefully, they can be issued soon,” he explained.
Moreover, the Indonesian government has stipulated Presidential Regulation No. 98 of 2021 on the Application of the Economic Value of Carbon in the Context of Achieving NDC Targets and Controlling GHG Emissions in National Development, and Regulation of the Ministry of Environment and Forestry No. 21 of 2022 on Procedures for Implementing the Economic Value of Carbon. In September last year, the Indonesian Stock Exchange established the carbon exchange to support the implementation of carbon trading. Unfortunately, no oil and gas company has taken part in trading directly thus far.
Meanwhile, Edwin Hartanto, Head of IDX Carbon’s Carbon Trading Development Unit, explained that the carbon trading ecosystem needs to be better prepared. Implementing regulations is the key. According to Edwin, upstream oil and gas has a very good opportunity to be involved in carbon trading, primarily if CCS has been implemented. In practice, if an oil and gas company has CCS technology with a capacity more remarkable than the emissions produced, that excess capacity can be offered to other parties.
“This oil and gas company has more advanced expertise in CCS technology; even though the technology is still relatively expensive, we want this to continue to be pushed forward to lower the price of this technology. Therefore, the price of carbon credit projects can rise. The conditions must be focused on companies with high emissions first, “If there is more carbon capture capacity, the rest can be sold. The opportunity is there,” explained Edwin.
Chairman of Indonesia Carbon Trade Associations (IDCTA) Riza Suarga saw that the carbon market in Indonesia is still not used to carbon trading activities, mainly in the upstream oil and gas sector. For this reason, more government roles are needed to make the carbon trading climate more friendly to business actors. “Currently, the market is still unstable, but Indonesia has taken steps forward with support from the government,” concluded Riza.
