Stricter caps, trusted supply key for RI to hit $40 carbon price
The Energy and Mineral Resources Ministry is targeting a carbon price of $40 per tonne, up sharply from the current level of $4-5 per tonne.
Indonesia aims to increase its carbon price to $40 per tonne of CO2, from the current $4-5, according to the Energy and Mineral Resources Ministry. The country's goal faces obstacles unless it establishes a robust market with substantial demand and reliable supply, according to Imaduddin Abdullah, the director of international collaboration at the Institute for Development of Economics and Finance (INDEF).
Abdullah emphasized that the target price should be seen as a result of market formation rather than a decree. A strong, consistent, and mandatory demand is crucial, he explained, which entails stricter emission caps, a broader range of entities required to meet those caps, and credible penalties for non-compliance. The ministry is targeting a $40 carbon price, a significant rise from the current $4-5.
Europe's carbon prices have reached $100 per tonne under the EU Emissions Trading System, driven by strict emission caps and controlled allowance supplies. However, Imaduddin cautioned against comparing Indonesia's market with Europe's, as the country is still in the early stages of building demand and liquidity. While a $40 price might be quicker to achieve for high-integrity international credits or those with specific authorizations, it won't be a uniform price for all domestic carbon units.
Written by urgent.news from The Jakarta Post's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
