Indonesia allows international buyers to participate in carbon credit trading. (Photo: IDXCarbon)
Indonesia's carbon market officially opened to international buyers on Jan. 20, with over 40,000 tons of carbon dioxide equivalent (CO2e) traded on the first day.
Authorities are confident that this year’s total trading volume will exceed last year’s record and plan to introduce forest and land-use-based carbon credits by March. This move aims to attract more international buyers and secure additional funding for Indonesia’s climate goals.
Highest price reached 8.82 USD per ton on first day of trading
The IDXCarbon, Indonesia’s carbon exchange, has been focusing on the international market as the domestic carbon market has remained relatively inactive.
The first batch of carbon credits offered came from five power plants under state-owned electricity company PLN, including both hydroelectric and natural gas plants. A total of 1.7 million carbon credits were available. Each credit represents one ton of CO2 emissions.
IDXCarbon reported that nine buyers participated in the first day of trading, but did not disclose their identities or transaction details. A total of 41,822 tons of CO2e were traded, with the lowest price set for credits from natural gas plants at around 96,000 Indonesian rupiah (about 5.87 USD) per ton. The highest price, for hydroelectric credits, was 144,000 rupiah (about 8.82 USD) per ton.
Although the price of international carbon credits was slightly lower than the expected 8 USD per ton, it is still much higher than Indonesia’s average price of 2.9 USD per ton in 2024, indicating that international buyers are willing to pay more.
Indonesia's carbon market officially opens to international buyers, with the lowest price on the first day for natural gas power plant carbon credits and the highest for hydroelectric carbon credits. (Photo: IDXCarbon)
Indonesia commits to net-zero emission earlier than planned
Since launching in September 2023, IDXCarbon has faced slow demand, with only 104 companies participating and a total trade volume of around 1.13 million tons of CO2e by mid-January—well behind countries like Singapore, Malaysia, and the Philippines.
The low trading volume has been partly due to delays in implementing the carbon cap mechanism, as well as concerns over inadequate certification standards for carbon credits. Environment Minister Hanif Faisol Nurofiq reassured international buyers that with improvements to the certification process, they can be confident there will be no double-counting of carbon credits.
Minister Hanif also announced that carbon credits based on forestry and land-use will be available as soon as March, which is expected to drive prices higher. He set a goal to increase total carbon credit trading to between 500,000 and 750,000 tons of CO2e by the end of the year. According to official data, Indonesia’s total carbon credit trading volume in 2024 was 413,764 tons.
Indonesia, home to one of the world’s largest rainforests, was once the biggest supplier of voluntary carbon credits in Asia. However, since 2022, the government has imposed stricter regulations on carbon credit sales to prevent uncontrolled growth of private carbon projects, which could complicate oversight.
With its commitment to reach net-zero emissions by 2050, Indonesia expects international carbon trading to accelerate and play a key role in meeting its updated climate targets.
Source: Nikkei Asia, Bloomberg, Tempo(1), (2)
