ETS Status: Indonesia
PT Jawa Power Plant, East Jawa, Indonesia
Indonesia launched its national ETS in February 2023, initially covering coal-fired power plants. This followed the revision of the NDC target to an unconditional 31.9% reduction by 2030 relative to a Business as Usual (BAU) scenario and a conditional 43.2% reduction by 2030 subject to availability of international support for finance, technology transfer and development and capacity building. Indonesia also aims to cap CO2 emissions from the power sector to 290 million tonnes per year by 2030. The newly launched ETS is a critical tool for assisting Indonesia in meeting these targets.
The first phase will cover two years until the end of 2024, and the second and third phases, which will last three years each, will begin in 2025 and 2028, respectively. The ETS will be expanded in the second and third phases to include oil and gas-fired power plants, coal-fired power plants that are not connected to the PLN's grid, as well as industrial sectors.
The ETS is a mandatory intensity-based system, similar to China's national ETS, and is planned to evolve into a hybrid "cap-tax-and-trade" system, with facilities that fail to meet their obligations under the system subject to the tax.
Indonesia has been working on a domestic ETS since it passed the "Government Regulation on Environmental Economic Instruments" in 2017, which mandates the implementation of an emissions and/or waste permit trading system by 2024. In 2018, guidelines for monitoring, reporting, and verification (MRV) in the power sector were released. The Presidential Regulation No. 98 of 2021 extended the 2017 regulation on environmental economic instruments and laid the groundwork for the upcoming ETS. The Ministry of Environment and Forestry (MOEF) Regulation No. 21 on the Procedures for the Implementation of Carbon Economic Value, released in 2022, provided further arrangements regarding, among other things, the procedure to conduct carbon trading activities, the implementation of a national carbon registry, verification procedures and regulations for carbon trading.
A brief summary of basic details of the Indonesia ETS is given below.
