Heaptalk, Jakarta — The launch of the Indonesian carbon trading platform in September last year left two opposing impressions: the positive impression that the country has recognized the significance of a platform to fund greenhouse gas emission reductions and the negative impression that the carbon exchange still lacks regulation, confusing the supply and demand sides.
Chairman of the Indonesia Carbon Trade Association (IDCTA) Riza Suarga said that transactions in the IDX carbon exchange only happened on launch day. Then, all the carbon projects were suspended. Riza mentioned the lack of nature-based solution supply as the project developers still wait for regulations to materialize. “There are a lot of impatient investors. My worry is they are just going to switch to another country, and this is going to be a big loss to us,” Riza said during a discussion with the environmental activist Poempida Hidayatulloh on the Forum Carbon Indonesia Youtube channel.
The need for implementing international trading regulations
According to Riza’s observations, Indonesia already has an umbrella decree governing carbon trading. However, the decree needs many implementation regulations, which will likely take more time to materialize. Both supply and demand side industry players in carbon trading are waiting for the implementation of international trading regulations.
Companies that are members of IDCTA have worked extensively on developing carbon projects and generating carbon credits to be sold to buyers, mainly overseas. However, their work has been hampered by several challenges, including domestic and overseas regulations, such as the UNFCCC framework namely the Paris Agreement. “We should regroup and consolidate. We believe that together, we can form a much stronger coalition to face many obstacles,” said Riza.
Regarding the suspended carbon projects, Riza suspected that the government has the ambition to apply its own standard, the Indonesia Certification of Emission Reductions (Icert). The government also wants the registry to be recorded within the country through the National Registry System (SRN). This initiative is good, but it should be followed by proper socialization to introduce it to all stakeholders, including project developers and buyers.
He voiced, “We need to create ease of doing business, which must be promoted even though everybody would like to learn how to buy carbon credits through SRN or the IDX carbon exchange. That’s not an issue as long as we can always treat them as a value chain of a new system and era that is also very market-friendly.”
Apart from that, Riza found the registry system to be relatively slow and not widely accepted in the market. Meanwhile, Verra, a global nonprofit organization, operates a standard that is currently widely accepted; more than 90% of buyers prefer Verra. Moreover, Verra tends to be willing to listen to countries like Indonesia, allowing any compromise or collaboration.
Therefore, he advised the government to form a coalition to harmonize SRN with Verra. In that way, he is optimistic that Indonesia will benefit significantly from the carbon trade. Otherwise, the carbon exchange in Indonesia will not have liquidity without the participation of international buyers. “This is our chance to prove ourselves that the Indonesian system is also basically adaptable and very compatible with the international market,” Riza concluded.
