Market
January 14, 2025
Indonesia carbon credits to be open for international trading. (Photo: IDXCarbon)
Indonesia will open its carbon credit market to international buyers for the first time on Jan. 20, with 1.7 million carbon credits available for trade. These credits can be purchased by countries as part of their Nationally Determined Contributions (NDCs).
However, some analysts believe Indonesia’s entry into the international market could put further downward pressure on already weak carbon prices.
Indonesia carbon credits to enter the global market
The carbon trading platform, operated by the Indonesia Stock Exchange (IDX), announced on Jan. 13 that foreign entities will be allowed to participate in carbon credit trading. The carbon credits available are primarily sourced from the national electricity company (PLN) projects, including the Priok Block 4 gas power plant in North Jakarta and the Grati Block 2 combined-cycle power plant in Java, both of which have reduced carbon emissions through advanced technological transformations.
While the exact number of credits available for trade remains uncertain, PLN’s plan is expected to generate 1.7 million carbon credits.
Jeffrey Hendrik, Development Director at IDX, stated in a written statement on January 13 that the launch of Indonesia’s carbon credits in the global market has sparked significant investor interest. However, he emphasized that the IDX will closely monitor the actual trading activity over the coming weeks as a basis for assessing its impact.
Indonesia’s carbon trading platform was launched in September 2023, with official projections of 19.7 trillion rupiahs (about 1.2 million USD) in trade volume for 2024. However, trading activity in the first week of 2025 was limited, with only 1 million tons traded and around 100 participating buyers, far less active compared to neighboring countries such as Singapore, Malaysia, and the Philippines.
Indonesia Stock Exchange in Jakarta. (Photo: iStock)
Indonesia adds 3 new projects to trading platform
The IDX platform has added 3 new PLN emission reduction projects in 2025, which will register a total of 1.2 million carbon credits. As of now, there are six carbon credit programs available for trade on the platform.
Jordan Lee, manager at the Tony Blair Institute for Global Change, noted that Indonesia has the potential to become the world’s largest carbon credit supplier, capable of generating 1 billion carbon credits. However, with more carbon credits entering the international market, this may exert downward pressure on spot prices.
A report from MSCI in early January indicated that the average spot price of carbon credits in 2024 was $4.80 per ton of CO2 equivalent, a 20% decline from the previous year and a 32% drop from 2022. Overall, the total value of carbon credits used by companies in 2024 decreased to $1.4 billion, a reduction of $300 million from the peak of $1.7 billion in 2022.
According to MSCI, by the end of 2024, over 6,200 carbon credit programs were registered under 12 major global registries, with an annual issuance of 305 million carbon credits. Since the Paris Agreement was signed in 2016, a total of 2.1 billion carbon credits have been issued.
Source: Tanahair, Business Times, Fairatmas
