As a first step towards creating a mechanism for domestic carbon trading, Indonesia will issue emission quotas for some coal-fired power plants within this month, energy officials said on Tuesday.
Last year, the country set a more ambitious target for reducing carbon emissions by 31.89% on its own as it is among the world’s biggest greenhouse gas emitters, or 43.2% with international support, by 2030. That compared to its 2015 Paris Agreement pledge to cut emissions by 29% or 41% with international help.
“The quota will be set the latest by January 31 at. After obtaining the quota, business players are required to carry out carbon trading,” said energy ministry official Mohamad Priharto Dwinugroho.
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According to Dadan Kusdiana, a senior official at the ministry, the first phase of carbon trade will cover coal power plants with a minimum 100-megawatt capacity that are directly connected to power grids owned by state utility Perusahaan Listrik Negara (PLN).
Data from the ministry showed there are 99 coal plants with a combined installed capacity of 33.6 gigawatts (GW) that may join the carbon trade this year.
Power plants that emitted carbon smaller than their quota can trade their remaining allotment with plants whose emissions exceed their quota while companies not implementing carbon trades will be granted lower emission allocations for the next year.
Indonesia allows direct carbon trading among emitters and authorities plan to launch a carbon exchange this year. Under a 2021 law, Indonesia was supposed to collect taxes on above-quota carbon emissions by power plants in April 2022, but that has been delayed over concerns about purchasing power.
Authorities are studying carbon exchange and have yet to set up agencies that can monitor and validate emissions.
Story was adapted from Reuters.
