OECD-CEFIM-IEA Focus Group Discussion IV: Regulation and linkages to international carbon markets, 17 May 2022, Paris

1. OPPORTUNITY OF LINKING INTERNATIONAL AND NATIONAL
CARBON MARKET IN INDONESIA AND PLANS TO EXPAND
INDONESIA'S ETS TO OTHER SECTORS
The Coordinating Ministry of Maritime Affairs And
Investment
May 17th , 2022

2. KEMENTERIAN KOORDINATOR BIDANG
KEMARITIMAN DAN INVESTASI
CARBON PRICING IMPLEMENTATION MECHANISM
Based on President Regulation 98/2021
2
• Sector;
and
• Sub Sector
Hosted by:
• Ministries/
Agencies
• Regional
government
• Businessmen
• Public
Implemented
by:
CARBON PRICING IMPLEMENTATION MECHANISM
Carbon Trading
• Emission Trading
• Emission Offset
Performance Based
Payments Carbon Charges
Other mechanisms in
accordance with the
development of science and
technology determined by
the Minister
Art.2 Para(2)
Art.2 Para(3)
Ps.2 Para(4)
CARBON
PRICING

3. KEMENTERIAN KOORDINATOR BIDANG
KEMARITIMAN DAN INVESTASI
CARBON PRICING MECHANISM BASED ON PRESIDENT
REGULATION 98/2021
1. Overseas Carbon Trading after NDC Achieved
• Mandate of the Presidential Regulation Article 51 Paragraph (3) the transfer of carbon units does not
affect the achievement of NDC
• In practice, foreign carbon trading can be carried out, after the sector ensures that the NDC target
achievement plan is set (so that the targets are “in NDC”, “out NDC” and "beyond NDC".
2. National Registration System (SRN) and Measurement, Reporting, and Verification
KLHK continues to develop the SRN and collaborates with Ministries/Agencies to integrate systems into one
GHG emission data for the achievement of the NDC target.
3. Forestry Sector REDD+ Arrangements
• Technical guidelines for REDD+ Performance-Based Payments and Carbon Trading in the Forestry sector
are regulated in a separate Ministerial Regulation;
• REDD+ implementation refers to Article 5 of the Paris Agreement, while carbon trading refers to Article 6
of the Paris Agreement;
• Implemented with the precautionary principle to avoid double counting and double payments on
transfers of carbon units to business partners overseas.

4. KEMENTERIAN KOORDINATOR BIDANG
KEMARITIMAN DAN INVESTASI
THE PRINCIPAL OF THE CARBON MARKET MECHANISM
BASED ON PRESIDENTIAL REGULATION 98/2021
1. The Presidential Regulation also establish institutional frameworks where:
a. Non-market approaches under Article 6.9 of the Paris Agreement to
establish sustainable development and poverty eradication.
b. Cap, trade, and tax mechanisms application to implement carbon
trading. Indonesia will impose carbon tax on power generations in July
2022
2. There are two types of carbon trading instruments (emission trading and
carbon offset) and two types of non-trading instruments (carbon tax and
result based payment). The Emission Trading System (ETS) whereby
entities with higher emissions can purchase emission permits or emission
quotas from entities with lower emissions.

5. KEMENTERIAN KOORDINATOR BIDANG
KEMARITIMAN DAN INVESTASI
OPPORTUNITY FOR CARBON MARKET CORPORATION
THROUGH LINKING INTERNATIONAL CARBON MARKET
1. Carbon Trading (emission trading and offset trading) is carried out through carbon exchange and direct
trading with domestic and international trading
2. International carbon trading is implemented through cooperation by relevant ministers in international
carbon trade to produce GHG emission reduction results in the context of achieving NDC targets and
increasing ambition. And business actor may trades with other international business actor after obtaining
approval from the Minister of Environment and Forestry
3. Indonesia will conduct the Carbon Exchange as a primary and secondary carbon market, including the
development of Carbon Trading infrastructure, regulation on the utilization of state revenues from carbon
trading, and carbon transaction administration. The carbon exchange will be operated on the Indonesia
Stock Exchange and will be authorized by the Financial Services Authority (OJK) in the form of stock
exchange or new carbon market. The carbon market will be automatically integrated into SRN (National
Registry System), which is operated by the Ministry of Environment and Forestry.
4. Furthermore, linking market will be opened and regulated to meet international demands.

6. KEMENTERIAN KOORDINATOR BIDANG
KEMARITIMAN DAN INVESTASI
OPPORTUNITY FOR CARBON MARKET CORPORATION
THROUGH LINKING INTERNATIONAL CARBON MARKET
• One important advantage of emission trading as
an instrument to tackle climate change is that it
is feasible to connect systems across
borders. This “linking” of two or more ETSs
creates a larger carbon market, which can
provide the participating regions with more cost-
efficient options to reduce their emissions.
• Linking can be done either directly or indirectly
and can lead to price convergence, thus offering
efficiency gains. There are however important
compatibility issues with corresponding
regulatory and governance consequences to be
taken into account when considering linking.

7. KEMENTERIAN KOORDINATOR BIDANG
KEMARITIMAN DAN INVESTASI
COUNTRY PLATFORM OF ENERGY TRANSITION
Steering Mechanism/Steering Committee
Fund Manager (Special Purpose Vechile / SPV)
Secretariat
Facilities De-risking
DJPPR PT PII
Finance / risk
reduction
Finance / risk
reduction
Assets
Assets
Operating to
retirement
Investment
ENERGY TRANSITION INSTITUTIONAL FRAMEWORK
CARBON REDUCTION FACILITIES CLEAN ENERGY FACILITIES
Social & Labour
Impact
EARLY-RETIREMENT OF
COAL-FIRED POWERED
PLANTS
Renewable
Energies
Social & Labour
Impact
JUST ENERGY TRANSITION
Moratorium of
Coal Power
Environment People New Clean
Energy
B L E N D E D F I N A N C E
Government
of Indonesia
SDG Indonesia
One
Private /
Philanthropy
Bilateral, Multilateral
& International
SUSTAINABLE FUND
Green Bonds, and Financial Instrument Green Aids, Grant
Energy transition
accelerates the
transformation of the
fossil into renewable
energies by using
different source of
funds (Blended
Finance)
SOURCE
OF
FUNDS
Carbon
Credit
Incentive
Carbon
Credit
Incentive

8. THANK YOU
COORDINATING MINISTRY OF MARITIME
AND INVESTMENT AFFAIRS
8