Stricter caps, trusted supply key for RI to hit $40 carbon price

Indonesia's Energy and Mineral Resources Ministry aims to raise the country's carbon price to $40 per tonne of CO2, a significant increase from the current range of $4-5 per tonne. This ambitious target is seen as crucial for Indonesia's efforts to combat climate change and reduce greenhouse gas emissions. However, achieving this price point will require addressing several challenges, according to Imaduddin Abdullah, director of international collaboration at the Institute for Development of Economics and Finance (INDEF).

The most important factor, according to Abdullah, is the establishment of a strong, consistent, and mandatory demand for carbon credits. To achieve this, the ministry will need to implement increasingly stringent emission caps, expand the number of entities required to meet these caps, and enforce credible penalties for non-compliance.

Despite these challenges, Abdullah cautioned against direct comparisons with Europe's carbon market, which has seen prices reach $100 per tonne under the EU Emissions Trading System. This European market has been driven by strict emission caps and controlled allowance supplies, creating a more robust and predictable carbon price environment.

Brief written by urgent.news from The Jakarta Post's own syndicated text. Machine-written — may contain errors; check the original before relying on it.