JAKARTA - Indonesia aims to issue emission quotas for some coal-fired power plants this month as a first step towards creating a mechanism for domestic carbon trading, energy officials said on Tuesday.
Among the world’s biggest greenhouse gas emitters, Indonesia last year set a more ambitious target for reducing carbon emission by 31.89 per cent from business-as-usual levels on its own or 43.2 per cent with international support, by 2030.
That compared to its 2015 Paris Agreement pledge to cut emissions by 29 per cent or 41 per cent with international help.
“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 trading will cover coal power plants with a minimum of 100 megawatts 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 gigawatts (GW) that may join the carbon trade this year, ministry data showed.
Power plants that emitted carbon dioxide lower than their quota can trade their remaining allotment with plants whose emissions exceed their quota.
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 concern about purchasing power.
Authorities are studying how carbon exchanges work and have yet to set up agencies that can monitor and validate emissions.