Indonesia will kick off its first carbon trade on September 26, 2023, seeking to provide funding for carbon reduction initiatives as well as offer businesses and financial institutions a way to reduce their emissions, an official said.  

Mahendra Siregar, Chairman of the Board of Commissioners of the Financial Services Authority (OJK), announced this information on Monday, September 18, 2023, during the OJK National Seminar in Jambi, which was streamed online.   

"According to plans, the launch of the first trading carbon exchange will take place on September 26, so next week," Mr. Siregar said.  

Mr. Siregar further explained that with the opening of the exchange, the nation has tailored all the systems in place for registration, verification, certification, and trading of carbon. At the same time, pertinent policymakers will keep educating and training participants in Indonesia's carbon trading ecosystem.  

"That is the plan for next week, but in parallel, we together must continue to improve ourselves in understanding, knowledge, and capacity to truly comprehend how to shape the aforementioned ecosystem," he added.  

Previously, on August 23, OJK issued Regulation Number 14 of 2023 concerning carbon trading through the Carbon Exchange (POJK Carbon Exchange). This decree serves as a guideline and reference for carbon trading through the Carbon Exchange carried out by market organizers.  

Not long after, OJK also released Financial Services Authority Circular Letter Number 12/SEOJK.04/2023. This instruction was published to regulate technical steps regarding carbon trading through carbon exchanges.  

A carbon exchange provider that satisfies the requirements of OJK Circular Letter Number 12 has not yet been announced. However, the Indonesia Stock Exchange (BEI), which is also in charge of organizing the debut of the carbon stock exchange on September 26, is one of the registered businesses known. 

Indonesia is dedicated to taking part in international initiatives to combat climate change. Reducing greenhouse gas emissions, which are the primary contributor to global warming, is one strategy to use carbon exchange, a market mechanism.  

Carbon trading is the activity of purchasing and selling carbon credits that are noted in carbon emission reduction certificates by companies or other entities. A company that is able to absorb and produce few emissions qualifies to offer carbon unit credits.   

On the other hand, a business or country that produces a lot of emissions is the one that purchases those carbon unit credits. This definition of carbon trading has been regulated in Presidential Regulation (Perpres) Number 46 of 2008 concerning the National Council for Climate Change.