Indonesia plans to issue emission quotas for some coal-fired power plants this month as a first step toward developing a local carbon trading market, energy officials said last week.
Indonesia, one of the world's largest emitters of greenhouse gases, updated its national determined contribution (NDC) under the Paris Agreement, raising its carbon reduction target from 29% to 31.89% on its own and from 41% to 43.2% with international assistance by 2030.
"The quota will be set the latest by January 31. After obtaining the quota, business players are required to carry out carbon trading," said energy ministry official Mohamad Priharto Dwinugroho.
The first phase of carbon trade will cover coal power plants with minimum 100 MW capacity that are directly connected to power grids owned by state utility Perusahaan Listrik Negara (PLN), according to Dadan Kusdiana, a senior ministry official.
There are 99 coal plants with a combined installed capacity of 33.6 GW that may join the carbon trade this year, ministry data showed.
Power plants that emitted carbon smaller than their quota can trade their remaining allotment with plants whose emissions exceed their quota. Companies not participating in the carbon trading scheme will be granted lower emission allocations for the next year.
Indonesia enables direct carbon trading among emitters and authorities intends to launch a carbon exchange this year.
Indonesia was expected to collect taxes on above-quota carbon emissions by power plants in April 2022, according to a 2021 law. However, that has been delayed due to concerns regarding purchasing power. Authorities are researching carbon trading but have yet to establish organizations to monitor and validate emissions.