In January 2025, Indonesia officially launched international carbon trading through the Indonesia Carbon Exchange (IDXCarbon) as part of its commitment to achieving the Net Zero Emission target by 2060. This milestone demonstrates the government’s strong dedication to supporting the green energy transition while expanding investment opportunities in environmental and sustainability sectors.
The launch of international carbon trading in Indonesia is regulated under the Financial Services Authority Regulation of the Republic of Indonesia No. 14 of 2023 concerning Carbon Trading Through the Carbon Exchange and Presidential Regulation No. 98 of 2021 concerning the Implementation of Carbon Economic Value for Achieving Nationally Determined Contribution Targets and Controlling Greenhouse Gas Emissions in National Development. These regulations outline key carbon trading schemes, including the Cap and Trade System, which allows companies with emissions below the designated limits to sell their remaining quotas to other entities, as well as the Offset Mechanism which enables companies to compensate for their carbon emissions by investing in environmental projects such as reforestation or renewable energy initiatives. Additionally, the Carbon Exchange serves as a regulated platform facilitating transparent and accountable transaction of carbon credits.
The investment opportunities in Indonesia through international carbon trading open significant prospects, particularly in sectors such as renewable energy, where investors can participate in clean energy development projects such as solar, wind, and hydro power, which have great potential to generate tradable carbon credits. Furthermore, as one of the countries with the largest tropical forests in the world, Indonesia offers opportunities for investors in sustainable ecosystem restoration and forest conservation projects that can generate high-value carbon credits. Investment in emission reduction technologies is also a viable option, such as Carbon Capture and Storage and energy efficiency, which can provide benefits for companies seeking to comply with carbon regulations while receiving economic incentives. Additionally, the development of digital platforms for carbon trading and sustainability-based financial technology opens opportunities for investors in the green finance sector.
With all these potentials, Indonesia offers significant opportunities for investors who wish to engage in the environmental and sustainability sectors. In addition to opportunities related to natural resources, clear and consistent regulations ensure that Indonesia remains a competitive player in the global carbon market. The Carbon Exchange platform, for example, provides security and transparency in carbon credit transactions, boosting investor confidence and encouraging increased capital inflow into sustainability-driven initiatives.
With the government’s unwavering commitment to achieving net-zero emissions by 2060, early investment in carbon reduction strategies offers substantial long-term advantages. Indonesia’s vast natural resources and commitment to sustainability make it an ideal destination for investors seeking opportunities in the green economy sector.
In conclusion, Indonesia has officially launched international carbon trading as part of its efforts to achieve the Net Zero Emission target by 2060, signaling the government’s strong commitment to supporting the green energy transition. This initiative is regulated under Presidential Regulation No. 98 of 2021 and includes various schemes such as the Cap and Trade System, Offset Mechanism, and Carbon Exchange, which provide companies the opportunity to manage carbon emissions and invest in environmental projects. The investment opportunities arising from carbon trading are substantial, especially in sectors such as renewable energy, reforestation, emission reduction technologies, and the development of digital platforms and green fintech.
The launch of international carbon trading in Indonesia underscores the government’s firm commitment to environmental sustainability. Through mechanisms such as the Cap-and-Trade System, Offset Mechanism, and Carbon Exchange, companies can actively manage their carbon emissions while capitalizing on investment prospects in renewable energy, reforestation, emission reduction technologies, and digital finance. With all of this potential, Indonesia offers great opportunities for investors wishing to engage in the rapidly growing environmental and sustainability sectors.
If you, a prospective client, have further inquiries about the topic discussed above, Schinder Law Firm is one of the leading corporate law firms in Indonesia, with extensive experience handling similar matters. Our team of professional corporate and civil lawyers makes us one of the top consulting firms in Indonesia. Feel free to contact us at info@schinderlawfirm.com for further consultation.
Author:
Dewi Susanti