Indonesia to open carbon credit market to foreign buyers from Jan 20
The country’s vast natural ecosystem offers scope for major carbon offset projects
[JAKARTA] Indonesia is set to open its carbon credit market to foreign buyers starting Jan 20, marking the country’s first step into the international carbon credit market.
Jeffrey Hendrik, director of development at the Indonesia Stock Exchange (IDX), shared that the Ministry of Environment and Forestry is currently working on granting authorisations for carbon credits. The carbon units available for sale in the inaugural international carbon trade on Indonesia Carbon Exchange (IDX Carbon) are authorised units that can be traded with international businesses.
Strong enthusiasm
He highlighted the strong enthusiasm surrounding Indonesia’s decision to engage international participants in its carbon market.
“This initial foray into the global market has generated significant interest from a wide range of stakeholders. However, we will need to monitor actual transactions in the coming weeks to assess its impact,” said Hendrik.
While the exact volume of carbon credits available remains uncertain, authorities said that early indications suggest contributions from projects managed by the state-owned utility PLN have already generated about 1.7 million carbon units.
In early 2025, the Indonesia Carbon Exchange (IDX Carbon) further expanded its portfolio by adding three new greenhouse gas emission reduction projects.
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These initiatives, originating from three renewable energy power plants operated by PLN, contribute a total of 1.2 million carbon units to the registry.
With the addition of these new projects, IDX Carbon now lists six carbon unit projects available for trade.
Indonesia officially launched its carbon trading mechanism on Sep 26, 2023, as part of its broader commitment to combat climate change and achieve net-zero emissions by 2060. The country’s vast natural ecosystem offers scope for major carbon offset projects.
While the government has made significant progress in developing carbon pricing mechanisms and establishing a carbon trading system, including the carbon tax and pilot emissions trading schemes, the overall market size remains limited.
In the first week of 2025, IDX Carbon recorded the trading of about one million tonnes of CO2 equivalent, with around 100 buyers participating – a figure that remains relatively small compared with its regional peers.
The move comes at a crucial time when South-east Asia is intensifying efforts to decarbonise, with many countries in the region looking for innovative ways to finance and accelerate their climate goals.
Neighbouring countries such as Singapore, Malaysia, and the Philippines have also taken significant strides in the carbon credit market.
Indonesia, the world’s fifth-largest greenhouse gas emitter, is leveraging its carbon credit market to drive ambitious climate action.
Key role
The carbon market is poised to play a key role in helping South-east Asia’s largest economy achieve its target of a 29 per cent reduction in emissions by 2030 under a business-as-usual scenario, with the potential to reach an even more impressive 41 per cent reduction with international support.
Globally, there were over 6,200 carbon projects registered across the 12 largest international crediting registries by the end of 2024, said MSCI.
These projects issued 305 million tonnes of CO2 equivalent in credits in 2024 and have now issued more than 2.1 billion credits since the Paris Agreement was signed in late 2016.
Jordan Lee, manager at the Tony Blair Institute, stated that Indonesia has the potential to become one of the world’s largest sources of carbon credits, with an estimated capacity to generate over one billion tonnes of credits.
However, he explained that opening this new, potentially vast supply of carbon credits to international buyers could have a significant impact on the carbon credit market, which has faced strain in recent years.
“Indonesia’s entry into the global carbon credit market could add downward pressure on spot carbon credit prices,” he said.
According to a report from MSCI on Jan 6, 2025, spot prices for carbon credits in 2024 averaged just US$4.80 per tonne of CO2 equivalent. This marked a 20 per cent decline from the average price in 2023, which had already dropped 32 per cent from 2022.
As a result, the carbon credit market remained stagnant. In 2024, corporations used credits worth a total of US$1.4 billion, slightly below the peak of US$1.7 billion in 2022.
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