印度尼西亞碳市場(chǎng)（英文版）

Indonesia

CarbonMarketWhitePaper

December2024

PWC

/id

Foreword

TheParisAgreement,endorsedby196nationsin2016,aims

tokeepglobaltemperaturerisewellbelow2°C,ideallylimiting

itto1.5°C.Despiteglobalefforts,wearelaggingbehindasour

currentactionscouldleadtoapotentialtemperatureriseof

2.7°Cbytheendofthecentury.Inaworst-casescenario,where

greenhousegasemissionscontinuetoincreasewithoutsignificantmitigation,thetemperaturecouldrisebyasmuchas4°Cormore,accordingtotheIntergovernmentalPanelonClimateChange

SixthAssessmentReport(IPCCAR6).Astheworldincreasingly

recognizestheurgentneedtoaddressclimatechange,therole

ofcarbonmarketsinmitigatinggreenhousegasemissionshas

gainedsignificantattention.Indonesia,withitsvasttropicalforestsandrichbiodiversity,standsatapivotaljunctureincontributing

toglobalclimatesolutions.ThedevelopmentofarobustcarbonmarketinIndonesianotonlypromisestoenhancethecountry’s

environmentalstewardshipbutalsoofferssubstantialeconomicYulianaSudjonno

opportunitiesandsocialco-benefits.Partner

Thiswhitepaperexploreshowthecarbonmarketcanhelpaddress

isoii,aIlni’.cIibiiiaole,laiid.esPwCIndonesia

carbontaxesandcarbonoffsetcredits,isacriticalstepforward.

Currently,carbonpricingistoolowtogeneratesufficientdemandforcredits,necessitatingadjustments.However,Indonesia’svast

rainforestsandextensivelandareapresentsignificantopportunitiesforforestryprojects,withanestimatedannualemissionreduction

potentialof247milliontonnesofCO2-equivalent.By2030,

Indonesiacouldgenerateupto1,283milliontonnesofcarboncreditseachyear.

Toharnessthispotential,Indonesianeedstodevelopan

internationallyrecognisedMonitoring,ReportingandVerification

(MRV)framework,clarifyregulationsforinternationaltrading,adjustcarbontaxpricing,enhancetransparencywithintheSRN-PPI,

andprovideclearguidanceonaccountingandtaxtreatmentsforcarboncredits.Leveragingtechnologytoimprovegovernance

isalsoessential.Thiswhitepaperofferskeyinsightsand

recommendationscrucialforadvancingandsustainingIndonesia’scarbonmarket.

PwC,inpartnershipwiththeIndonesiaCarbonTradeAssociation

(IDCTA),iscommittedtoexploringandmaximisingthepotentialofIndonesia’scarbonmarket,supportingthecountry’sNDC

commitmentsandeconomicgrowththroughstakeholderengagementandinfrastructuredevelopment.

Wehopeyoufindourfindingsbothenlighteningandthought-provoking,andwewishyouapleasantread.

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Foreword

QuotingIndonesia’sPresidentialSpecialEnvoyforClimate

andEnergy,HashimDjojohadikusumo(B,October

29,2024),Indonesiaisprogressivelyadvancingitscarbon

creditstotheglobalmarket.In2018–2020alone,thecountry’scarbonmarketpotentialwasanimpressive577milliontonnesofCO2e,andfrom2021to2023,itreached600milliontonnesCO2e—anupwardtrendthatreflectsthenewadministration’scommitmenttoexpandingitscarbonmarketbothdomesticallyandinternationally.

Forprojectowners,developers,andinvestorsalike,navigating

Indonesia’scarbonmarketregulationshasbeenajourney

markedbyhighsandlows,especiallyoverthepastthreeyears.Thisperiodwitnessedasurprisingmoratoriumoninternational

trading,therevocationofseveralhigh-integritynature-based

projects,andanongoinguncertaintysurroundingthefutureof

Dr.RizaSuarga

Chairman

IndonesiaCarbonTradeAssociation(IDTCA)

internationalcarbonoffsetmechanisms.Tounderstandthewholeconceptholistically,IlearnedtoappreciatethattheGovernmentisveryseriousaboutensuringthedeliveryofhighqualityprojectsfromIndonesiansoils.

However,aninternationalanalystremarkedthatIndonesiamay

havemisseda“goldenmoment”toemergeasaleaderinthe

globalcarboneconomy,with2021–2022recognizedasahigh

pointfortheinternationalcarbonmarket.Yetsoonafter,aseriesofglobalchallenges—theCOVID-19pandemic,TheGuardian’s

investigativereporting,theRussia-Ukraineconflict,andthe

ongoingIsrael-Gaza-Lebanoncrisis—havecollectivelyledto

amarketdownturn.Carboncreditsarenowfirmlyinabuyer’s

market,nolongerfavourabletosellers.Meanwhile,neighbouringcountries,includingMalaysia,Thailand,Vietnam,andPapuaNewGuinea,havebeenactivelypreparingtoenterthecarbonsupplychain,supportedbyrobustregulationsalignedwithinternationalstandardsandregistries.ForIndonesiatoregainitsposition,

acomprehensiveCarbonEconomyEcosystemRoadmapis

essential—notjustregulatoryreformbutaclearassurancethatcarboninvestmentisasustainable,long-termendeavour.

IDCTArecognizesthecriticalimportanceofaddressingtherealchallengesfrommarketplayers’perspectiveswithinIndonesia’scarboneconomytoday.Wearecommittedtoexploringways

tomaximiseourpotentialandsupportPresidentPrabowoandhiscabinettosecureIndonesia’splaceinfutureclimateaction.Inclosing,IwouldliketoextendoursinceregratitudetoPwCIndonesiafortheirinvaluablepartnershipinbringingthisWhitePapertolife.

IndonesiaCarbonMarketWhitePaper|Page3

ExecutiveSummary

TheParisAgreement,signedby196

countriesin2016,aimstolimitglobal

temperaturerisetobelow2°C,witheffortstocapitat1.5°C.Despitetheseglobal

commitments,currentprojectionsindicateapotentialtemperatureriseof2.7°Cby

thecentury’sendifemissionratespersist.

Indonesia,forinstance,hassetambitious

NationallyDeterminedContributions(NDCs)toreduceemissionsby915milliontonnesofCO2equivalent(MTCO2-e)annuallyby2030,butactualreductionsin2022wereonly429MTCO2-e.AchievingthesetargetsrequiresanestimatedinvestmentofUS$281.23billion,asumthatcannotbemetsolelybythe

statebudget.Thiswhitepaperhighlightsthepotentialofthecarbonmarkettobridgethisfinancialgap.

ThedomesticcarbonmarketbeganwiththeenactmentofPresidentialRegulationNo.98of2021,whichlaysouttheframeworkfor

nationalcarboneconomicvaluation(Nilai

EkonomiKarbon,orNEK).Throughthis

framework,carbonisvaluedthroughtwo

mechanisms:carbontaxandcarbonoffset

credits.However,thecurrentcarbonpricingissettoolowtoeffectivelycreatedemandforcarboncredits,ultimatelyhinderingoptimalemissionreductionsfromthecarbonmarket.Therefore,Indonesiawillneedtoadjustthesecarbonpricingmechanisms.

Indonesiaoperatestwotypesofcarbonmarkets:thecompliancemarketand

thevoluntarymarket.AmajorregulatoryuncertaintyinvolvesthemechanismsofCorrespondingAdjustment(CA)andNon-CorrespondingAdjustment(NCA).UndertheCAmechanism,emissionreductionsfrominternationalcarbontradingcannotbeclaimedtowardsIndonesia’sNDCs,

whereasemissionstradedwithoutCAstillcounttowardsIndonesia’sNDCs.Thesemechanismsarestillunderdevelopment,creatinguncertaintyandlimitingforeigninvestment.

Despitethesechallenges,Indonesiaholds

significantpotentialtobeamajorplayerintheglobalcarbonmarket.ItsItslargeterritoryandvastcoverageofrainforestprovidesubstantialopportunitiesforforestryprojects,withan

estimatedemissionreductionpotentialof

247MTCO2-eperyear.Accordingtothe

CoordinatingMinistryforMaritimeAffairs

andInvestmentoftheRepublicofIndonesia,asmuchas1,283milliontonnesofcarbon

creditscanbegeneratedannuallyfromall

sectorsby2030,whichwouldgeneratean

economicvalueofapproximatelyUS$7.3billiontoUS$16.7billion,afteraccountingforthe

amountrequiredtofulfiltheNDCtargets.

InordertodrivetheIndonesiancarbonmarketforward,thesekeypointswillhavetobe

considered.

1.Developaninternationallyrecognised

MRVframeworktoenablehigh-quality

carboncreditsandprovidepolicy

supporttoenableseamlessinternationalexportsofcarboncredits.Indonesia

shoulddevelopaninternationallyrecognisedMRVframeworkandalignitscarbonprojectmethodologieswithglobalstandards.

EnhancingtransparencyandcollaboratingwithexperiencedverifierswillimprovethecredibilityofIndonesiancarboncreditsandsupportseamlessinternationalexports.

2.Clarifytheregulationssurrounding

internationalcarbontradingtosupportthefeasibilityofcarbonprojectsfor

investors.Clarifyingregulationsfor

internationalcarbontradingisessentialtoattractinvestmentsinIndonesia’s

carbonmarket,asthecurrentlackof

detailedguidelinescreatesuncertaintyandcomplicatesfinancialplanningforinvestors.Establishingclearpositionsoninternationaltradingwillincreasecarbonpricingand

makeprojectsmorefeasibleforinvestors.

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3.ClarifythemechanismsofCorrespondingAdjustment(CA)andNon-CorrespondingAdjustment(NCA).Clarifyingthe

mechanismsofCorrespondingAdjustment(CA)andNon-CorrespondingAdjustment

(NCA)isessentialforachievingIndonesia’sNDCsandpreventingdouble-counting

ofcarboncredits.Addressingthese

uncertaintiesandimplementingregular

monitoringwillenhanceinvestorconfidenceandbalancenationalandmarketneeds,

potentiallywithincentivesforNCAprojects.

4.Revisitthecurrentcarbontaxbase

pricingandtherelatedsectoral

thresholds.ThestagnationinIndonesia’s

carbonmarketispartlyduetoalackof

domesticdemandandclearmechanisms.

Toaddressthis,thegovernmentshould

implementamoreambitiouscap-and-tradesystemacrossvarioussectorsandadjust

thecarbontaxbasepricetoalignwithglobalstandards,therebyencouragingcompaniestopurchasecarboncreditsandinvestin

emissionreductionmeasures.

5.Enhanceprojectinformation

transparencywithinSRN-PPI.EnhancingthetransparencyoftheSRN-PPIby

providingcomprehensiveprojectdetails,similartointernationalregistries,willbuildgreaterstakeholderconfidence,attract

internationalinvestors,andpromotethelong-termsustainabilityofIndonesia’scarbon

market.Thiscanbeachievedbyoffering

accesstoProjectDesignDocuments(PDDs),MonitoringReports,andFeasibilityStudies,amongotherrelevantdocuments.

6.Communicateguidanceonaccountingandtaxtreatmentsovercarbon

credittransactions.Clearguidance

onaccountingandtaxtreatmentsfor

carboncredittransactionsisessentialforprojectdevelopers,buyers,andsellers

tounderstandthefinancialimplications.Relevantstandardsorframeworks

canpromoteconsistentandaccurate

measurementandreporting,thereby

improvingmarketparticipants’ability

tonavigaterelatedinstrumentsand

understandtheimpactontheirfinancialstatements.

7.Leveragetechnologytosupport

thegovernanceandefficiency

surroundingIndonesia’scarbonmarket.

Implementingadvancedtechnologieslikeblockchainfortransparentdatarecordingandreal-timeanalyticscanimprovethe

SRN-PPIregistrysystem.Thiswillallowforaccuratetrackingandverificationofcarboncreditswhichwouldenhancethesystem’sreliabilityandefficiency.

Thiswhitepaper,incollaborationwiththe

IndonesiaCarbonTradeAssociation(IDCTA),aimstoexploreandmaximisetheIndonesianCarbonMarket’spotentialinsupporting

Indonesia’sNDCcommitmentandeconomicgrowththroughstakeholderinvolvementandinfrastructureenhancement.

IndonesiaCarbonMarketWhitePaper|Page5

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Contents

Foreword02

ExecutiveSummary

04

Glossary

08

Introduction

1.1Backgroundoncarboncreditsandtheirimportanceinmitigatingclimatechange

1.2Purposeandobjectivesofthewhitepaper

10

UnderstandingtheIndonesiancarboncreditmarket

2.1OverviewofIndonesia’scommitmenttoreducinggreenhousegasemissions

2.2Keystakeholdersandtheirroles

2.3RegulatoryframeworkandpoliciesgoverningcarboncreditsinIndonesia

2.4OverviewofdifferenttypesofcarboncreditprojectsinIndonesia

14

MarketmechanismsandpotentialIndonesiancarboncreditmarketgrowth

3.1OverviewofIndonesiancarbonmarketschemes

3.2Currentmarketdynamicsandfuturepotential

26

Opportunities,challengesandkeytakeaways

4.1IdentificationandanalysisofkeychallengesfacedbytheIndonesiancarboncreditmarket

4.2Opportunitiesformarketgrowthandexpansion

4.3Keytakeaways

32

References42

Listofsourcesandreferencesusedinthewhitepaper

IndonesiaCarbonMarketWhitePaper|Page7

Glossary

BlendedFinance

Afinancingapproachthatcombinespublicandprivatefundstosupportdevelopmentprojects,sharingrisksandleveragingadditionalinvestment.

CorrespondingAdjustment(CA)

AmechanismunderArticle6oftheParisAgreementwhichensuresthat

carboncreditssoldfromonecountrytoanotherareproperlyaccountedfortoavoiddoublecountingofemissionreductions.

CarbonCaptureandStorage

Technologiesorapproachesforcapturingandstoringcarbondioxideemissionsfromindustrialprocessestopreventthemfromenteringthe

(CCS)

atmosphere.

CarbonCredit

Ameasurable,verifiableGHGemissionsreducedfromacertifiedreductionactivity.

Carbon

OffsettingandReduction

SchemeforInternationalAviation

(CORSIA)

Aninternationalschemetooffsetandreducecarbonemissionsfromavia-tion.

CarbonPricing

AninstrumentthatassignsamonetaryvaluetoGHGemissions,typicallyimplementedthroughmechanismslikecarbontaxes,emissionstradingsystems(ETS),andcarboncredits.

CarbonTaxes

Taxesimposedonthecarboncontentoffuels,aimedatreducingcarbondioxideemissionsbyincreasingthecostofemittingcarbon.

Certified

Emissions

Reduction(CER)

CertificatesissuedundertheKyotoProtocolforemissionreductionsfromCleanDevelopmentMechanism(CDM)projectsthatcanbetradedinthecompliancemarket.

Clean

DevelopmentMechanism

(CDM)

Amarket-basedmechanismundertheKyotoProtocolthatallows

developedcountriestofundemissionreductionprojectsindevelopingcountriesandearnCERs.

ComplianceMarket

Theregulatedmarketwherecarboncreditsaretradedtomeetlegallybindingemissionreductiontargets.

Emission

ReductionCertificates(ERC)

Certificatesrepresentingverifiedemissionreductions,alsoknownas

SertifikatPenguranganEmisiGasRumahKaca(SPEGRK)inIndonesia.

Emissions

TradingSystem(ETS)

Amarket-basedapproachtoprovideeconomicincentivesforachievingreductionsintheemissionsofpollutants.

GoldStandard

Acertificationstandardforcarbonoffsetprojectsthatensurehighenvironmentalintegrityandsustainabledevelopmentbenefits.

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GreenBonds

Bondsissuedtofinanceprojectsthathavepositiveenvironmentalbenefits,suchasrenewableenergyorconservationprojects.

Joint

Implementation(JI)

AmechanismundertheKyotoProtocolwheredevelopedcountriescanundertakeemissions-reducingprojectsinotherdevelopedcountriesandsharetheresultingCERs.

Monitoring,

Reporting,andVerification

(MRV)

Systemsandprocessesusedtoensureaccuratemeasurement,reporting,andverificationofgreenhousegasemissionsandreductions.

Nationally

Determined

Contributions(NDCs)

PlanssubmittedbycountriesundertheParisAgreementthatoutlinetheirtargetsandstrategiesforreducinggreenhousegasemissions.

Nature-basedSolutions

Strategiesthatinvolvetheconservation,restoration,andsustainable

managementofecosystemstoaddresssocietalchallenges,suchas

climatechange,andprovidebenefitsforbothbiodiversityandhumanwell-being.

NilaiEkonomiKarbon(NEK)

Indonesia’sCarbonEconomicValueframework,enactedthrough

PresidentialRegulationNo.98of2021,whichestablishesaframeworkforcarbontradingandemissionreduction.

Non-

CorrespondingAdjustment

(NCA)

AmechanismunderArticle6oftheParisAgreementwhencarboncreditsaretransferredwithoutaccountingadjustments,allowingtheproject’s

countryoforigintocounttheemissionreductionstowardsitsNDC.

ParisAgreement

Aninternationaltreatysignedin2016by196countrieswiththeaimtolimitglobaltemperaturerisetobelow2°C,witheffortstolimititto1.5°C.

ProjectDesign

Document(PDD)

Adetaileddocumentoutliningthedesignandimplementationofacarbonproject,oftenrequiredforvalidationandverification.

Public-PrivatePartnerships(PPP)

Collaborativeagreementsbetweenpublicandprivatesectorstofinance,build,andoperateprojects,oftenusedininfrastructuredevelopment.

SRN-PPI

AsystemoverseenbytheMinistryofEnvironmentandForestry(MoEF)inIndonesiatotrackandreportclimateactionprogress.

VerifiedCarbonStandard(VCS)

Aninternationalstandardforcertifyingcarbonreductionprojectsandissuingcarboncredits.

VoluntaryCarbonMarket(VCM)

Amarketinwhichcarboncreditsaretradedonavoluntarybasis,typicallybyprivatecompaniesandorganisationsseekingtooffsettheiremissions.

VoluntaryEmissions

Reduction(VER)

Carboncreditsgeneratedfromvoluntarycarbonprojectsandverifiedaccordingtointernationalstandards,tradedinthevoluntarycarbonmarket.

IndonesiaCarbonMarketWhitePaper|Page9

1

Introduction

1.1Backgroundoncarboncreditandtheirimportanceinmitigatingclimatechange

In2016,196countriessignedtheParisAgreement,aimingtokeepglobaltemperaturerisebelow2°C,witheffortstolimititto1.5°C.Toachieve

this,globalgreenhousegasemissionsmustbereducedby43%by20301.Underthisagreement,countriesworldwidehavesubmittedtheirNationallyDeterminedContributions(NDCs)whichoutlinetheirclimatetargetsand

decarbonisationplans.Thisrequiressignificantinvestmentinrenewableenergy,energyefficiency,andotherdecarbonisationefforts.

Despiteglobalefforts,theworldisnotontracktomeetthe1.5°Ctarget

setbytheParisAgreement.Projectionsindicatethatifcurrentemission

ratescontinue,temperaturewillrisebyaround2.7°Cbytheendofthe

century2.Forinstance,Indonesia’sactualemissionreductionsstillfallshortofitsNDCtargets.By2030,Indonesiaaimstoreduce915MTCO2-eof

emissionsannually,buttheactualemissionreductionin2022wasrecordedatonly429MTCO2-e3.ToachieveIndonesia’sNDCtargetsby2030,an

estimatedinvestmentofapproximately$281.23billionUSD(or4,002trillionIDR)willberequired4.Thissubstantialamountcannotbecoveredsolelybythestatebudget(APBN).Therefore,thecarbonmarkethasthepotentialtobridgethisfinancialgapandserveasakeydriverinachievingIndonesia’sNDCgoals.

Countriesarenowactivelydevelopingandimplementingdecarbonisationstrategiestailoredtotheirsignificantemissionsources.Oneofthekeys

tosuccessfuldecarbonisationistechnologicaldevelopment,intermsof

improvingexistingtechnologyaswellasdevelopingnew,greentechnology.Itisundeniablethatdevelopingatechnologyrequireslargesourcesof

fundsorcapital.Forseveraldevelopingcountries,thisisoneofthebiggestchallengesinachievingtheirclimatetargets5.

Toovercomethisproblem,asupportinginstrumentfordecarbonisation,

namelycarbonpricing,wasdeveloped.Carbonpricingisaninstrument

thatmeasuresthemonetaryvalueofGHGemissions,usuallyintheform

ofapriceforthecarbondioxide(CO2)emitted.Itisestimatedthattwo-

thirdsofallNDCssubmittedundertheParisAgreementconsiderusingthecarbonpricinginstrumentstoachievetheiremissionsreductiontargets

Carbonpricingcomesinmanyforms,suchastheemissionstradingsystem(“ETS”),carboncredits,carbontaxes,andresult-basedclimatefinance6.

Forexample,China’sNationalETS,whichinitiallyfocusedonthepowersector,isexpandingtoincludecement,steel,andaluminiumindustries.

Forreferences,pleaseseetheEndnotesonpage46.

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IndonesiaCarbonMarketWhitePaper|Page11

Thisexpansionissettobeimplementedbytheendof20247.Thismovedemonstrateshowcarbonpricingcanbeaneffectivetoolforvariousindustriesandcountries,providingapathwaytoreduceemissionswhilemaintainingeconomicviability.

Overall,carbonpricinginstrumentsplayanimportantroleindrivingthetransitiontowardsmore

effectiveandaggressivedecarbonisationmeasures,withtheendgoalofachievingtheParis

Agreementtargetsby2050.Carboncredits,asoneoftheinstrumentstodecarbonisation,providenewopportunitiesforbusinessesbyopeningupnewrevenuestreamsandofferingcapitalto

adoptgreentechnologyandbusinesspractices.Additionally,purchasingcarboncreditscanhelp

companiesmeettheirshortormediumclimatetargetsbycuttingofftheirGHGemissions,while

aimingtoachievelong-termtargets.Throughthecarbonmarket,governmentsandnon-stateactorscanparticipateintradinggreenhousegasemissioncreditstoachievetheirclimatetargetsand

providefundstoclimateactions.

Whatisacarboncredit?

Bydefinition,carboncreditsorcarbonoffsetscanbedefinedastradablecertificatesthatrepresentthereduction,avoidance,orresultofonemetrictonofcarbondioxideequivalent(CO2e)achievedby

acertifiedcarbonproject.Themainideabehindcarboncreditsistoassignamonetaryvaluetotheemissionreductionresultsfromprojectorprogrammebasedactivitiesasanincentivetoincreaseemissionsreductionefforts.ItisconsideredbytheUnitedNations(“UN”)asaneffectiveand

necessarystrategyforcountriestoachievetheirclimatetargetsbytheendof2050.

Figure1.1Illustrationofthecarboncreditsuseforoffsettingemissions

Source:#pasarkarbon:PengantarPasarKarbonuntukPerubahanIklim,PMRIndonesia,2021

Carboncreditisoneofthekeyelementsinthemarket-basedmechanismsfirstintroducedby

theKyotoProtocol.Oneimportantoutcomeofthisprotocolistheestablishmentofmarket-basedmechanismstoassistcountriesinmeetingtheirclimatecommitments8.Inachievingitsgoals,theKyotoProtocolallowstheimplementationofthreetypesofflexiblemarket-basedmechanisms:

?Emissionstrading,wherecoequaldevelopedcountriesareabletobuyandsellGHGemissions;

?CleanDevelopmentMechanism(“CDM”),wheredevelopedcountriesareabletofund/purchasetheresultsofreducingGHGemissionsfromprojectslocatedindevelopingcountries;and

?Jointimplementation(“JI”),whereseveraldevelopedcountriesareabletojointlydevelopclimate

changemitigationactivitieslocatedindevelopedcountrieswheretheresultsofemissionreduction

aresharedaccordingtoagreement.Page12|IndonesiaCarbonMarketWhitePaper

Thesemechanismsviewcarbondioxide(CO2)emissionasamarketcommodityandprovidethe

monetisationopportunitiesaspartofincentivesprovidedtothestates.Furthermore,thisbecame

thebasisforthefirstemergenceofemissionreductioncertificatesorcurrentlyreferredtoascarboncreditsandmarksthebasisinternationalcarbontrading.

Compensatingallthechallengesfacedbythecountries,theParisAgreementstrengthenedtheinternationalcarbontradingsystemoutlinedinArticle6paragraph1:

“PartiesrecognisethatsomePartieschoosetopursuevoluntarycooperationintheimplementationoftheirnationallydeterminedcontributionstoallowforhigherambitionintheirmitigationand

adaptationactionsandtopromotesustainabledevelopmentandenvironmentalintegrity.”

ThisarticlecreatesopportunitiesforeachcountrytocollaborateandcooperatetoachievetheNDC’stargetthroughtradingcarboncreditsintheinternationalcarbonmarket.Undertheseprovisions,

countriesareabletotransfercarboncredits,earnedthroughthereductionofGHGemissions,andcreatenewsourcesofclimatefinance.Thispracticeenhancesthecarboncreditsfeaturesasatoolagainstclimatechangeaswellasafinancialinstrument.

Carboncreditscanbegeneratedfromcarbonprojectsthathavebeenverifiedbyanindependentverificationinstitution.Acarbonprojectwillcarryoutmitigationactionsorcarbonsequestrationactivitieswithcertaintargets.Theamountofcarbonabsorbedwillbeverifiedbyanindependentinstitutionandtheresultsoftheverificationwillbepublishedasaletteroremissionreduction

certificationthatcanbetradedonthecarbonmarket.Byhavingthiscertificate,acompanycanrecognisecarbonabsorptionastheirown,sothatitcanreducetheamountofcarbonemissionsresultingfromthecompany’sactivities.ForGHGemitters,carboncreditprovidessubstantial

assistancetoachieveshortandmediumtermclimatetargets.Whileforsellers,themonetaryincentivesobtainedbecomeanewsourceoffundingforthedevelopmentofmoreadvancedtechnologies,therebyincreasingopportunitiestoadvancetherateofemissionsreduction.

Therearecurrentlytwotypesofcarboncreditstradedinthecomplianceandvoluntarycarbonmarkets:

?VoluntaryEmissionsReduction(“VER”):Carboncreditsareemissionreductionsreleasedfromvoluntarycarbonprojectsandverifiedinaccordancewithapplicableinternationalstandards(e.g.VerraandGoldStandard).Thesecreditsaretradedonthevoluntarycarbonmarket(“VCM”).

?CertifiedEmissionsReduction(“CER”):CertificateofemissionreductionoriginatingfromtheKyotoProtocolmarketmechanism.ThesecertificatescanbetradedonthecompliancemarketintheformofCleanDevelopmentMechanism(“CDM”),JointImplementationandEuropeUnitAllowance.

ThemaindifferencebetweenVERandCERisthatthereisathird-partycertificationinstitutionwhichregulatestheCER(butnotfortheVER).

1.2ObjectivesoftheCarbonMarketWhitePaper

Thiswhitepaper,incollaborationwiththeIndonesiaCarbonTradeAssociation(IDCTA),aims

toexploreandmaximisethepotentialofIndonesianCarbonMarket’sinsupportingIndonesia’s

NDCcommitmentandeconomicgrowththroughstakeholderinvolvementandinfrastructure

enhancement.ThiswhitepaperaimstoexploreandmaximisethepotentialofIndonesia’s

carbonmarketfrommultipleperspectives.Toachievethis,wehaveevaluatedthedevelopment

potentialofthecarbo