Indonesia has opened its domestic carbon exchange, IDXCarbon, to foreign investors, aiming to bolster its position as a key player in the carbon offset market and attract greater investment for climate initiatives.
On Monday, nine international buyers participated in transactions involving carbon credits from five energy generation projects owned by state utility PT Perusahaan Listrik Negara (PLN).
In an interview for Bloomberg, Environment Minister Hanif Faisol Nurofiq announced plans to include forestry and land-use credits, such as those from peatland conservation and reforestation, by March.
These credits are expected to command premium prices due to their additional environmental benefits, such as biodiversity protection.
“There should be a premium for the sector for benefits like oxygen production, water conservation and biodiversity protection,” the minister was quoted as saying.
President Prabowo Subianto has committed to advancing Indonesia’s net-zero target by a decade, now set for 2050.
BloombergNEF (BNEF) estimates that achieving this goal will require investments of up to $3.8 trillion in renewable energy, grid infrastructure, and electric vehicles.
Relevant: Indonesia Days Away From Launching International Carbon Trading Market
IDXCarbon launched in September 2023 but has faced weak demand, partly due to delays in implementing a national cap-and-trade system, according to Bloomberg.
In 2024, the platform traded 413,764 tons of credits at an average price of $2.90 (47,682 rupiah) per ton.
On Monday, it listed 1.7 million credits for purchase, with prices ranging from $5.90 (96,000 rupiah) per ton for gas projects to $7.01 (114,000 rupiah) per ton for a hydropower facility.
IDXCarbon aims to trade 500,000–750,000 tons of credits in 2025, involving both domestic and international buyers.
Despite the market’s potential, challenges remain. BNEF analysts highlight concerns over the quality of Indonesia’s energy generation credits and their actual contribution to emissions reduction. Low demand and an influx of new supply could also pressure prices.
Indonesia’s move on Monday follows the COP29 climate summit agreement enabling nations to trade credits and use them to meet climate targets.
