Indonesia launches emissions trading scheme for coal power plants
The Indonesian Ministry of Energy and Mineral Resources (MEMR) recently announced the launch of the first phase of a mandatory carbon trading emissions trading system (ETS) for coal power plants. The first phase (2023-2024) covers 99 power plants that are directly connected to power grids owned by state utility company Perusahaan Listrik Negara (PLN) and have a capacity of at least 100 MW. The emissions quota for power plants is currently set at 20 million tonnes of CO2. Under the carbon trading mechanism, power plants with above-quota emissions can buy carbon credits from plants with below-quota emissions or carbon credits from renewable power plants. The price of carbon credits will be set by a market-based mechanism, with an estimated value between $2 to $18 per tonne.
The government plans to expand the national ETS to include oil and gas power plants and coal plants not connected to PLN’s grid during the second (2025-2027) and third (2028-2030) phases. The ETS will enable Indonesia to decrease carbon emissions by an estimated 36 million tonnes by 2030, advancing the country’s goal of reaching net zero emissions by 2060. By 2030, Indonesia seeks to reduce carbon emissions by 31.89 percent independently or 43.2 percent with international support.