As per energy officials, Indonesia plans to issue emission quotas for some coal-fired power plants this month as a first step toward developing a domestic carbon trading mechanism.
Among the world's largest emitters of greenhouse gases, Indonesia set a more ambitious target last year of reducing carbon emissions by 31.89% on its own or 43.2% with international assistance by 2030.
This compares to its 2015 Paris Agreement pledge to reduce emissions by 29% or 41% with international assistance.
"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.
Dadan Kusdiana, a senior ministry official, the first phase of carbon trading will cover coal power plants with a minimum capacity of 100 megawatts that are directly connected to power grids owned by state utility Perusahaan Listrik Negara (PLN).
The ministry data showcased that99 coal plants with a total installed capacity of 33.6 gigatonnes (GW) may participate in the carbon trade this year.
Power plants that emit less carbon than their quota can trade their remaining allotment with plants that emit more carbon than their quota.
Companies that do not participate in carbon trading will be given lower emission allocations for the following year.
Indonesia allows direct carbon trading among emitters, and the government intends to launch a carbon exchange this year.
Indonesia was supposed to collect taxes on above-quota carbon emissions by power plants in April 2022, according to a 2021 law, but that has been delayed due to concerns about purchasing power.
Authorities are researching carbon trading but have yet to establish agencies to monitor and validate emissions.