Written by: William DANIEL
Verified by: Albert SUTANTO
The Carbon Digital Conference Indonesia, hosted by the Indonesia Carbon Trade Association (IDCTA), has established itself as a transformative platform for discussing solutions to carbon reduction and sustainability challenges. Held from December 9 to 11, 2024, at the Four Seasons Hotel in Jakarta, the conference convened over 248 attendees from 50 countries, including industry leaders, policymakers, and sustainability experts. Themed “Reimagining Indonesia’s Carbon Market: Digital Innovations for Global Integrity,” the event emphasized leveraging digital technologies such as Artificial Intelligence (AI) and the Internet of Things (IoT) to enhance transparency, scalability, and integrity in carbon markets.
The event was opened by IDCTA Chairman Mr. Riza Suarga. In his opening remarks, he announced the re-opening of Indonesia’s carbon market, making significant milestone for the nation’s decarbonization journey. This development is a positive step forward for Indonesia, providing new opportunities for achieving its climate goals while contributing to global decarbonization efforts.
The discussions covered key areas including measurement, reporting, and verification (MRV) systems, as well as strategies to achieve Indonesia's Nationally Determined Contributions (NDCs).
Optimizing Indonesia’s Carbon Resources and Market Potential
Indonesia’s carbon market holds immense potential, driven by growing demand from countries such as Japan, China, and the EU aiming to meet their NDC targets, as well as companies seeking greener operations. The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) plays a vital role by enabling Southeast Asia’s offsetting efforts through its crediting mechanism. However, this growing market comes with risks that need mitigation.
Speaker from Ministry of Trade and Industry of Singapore introduced the SLIDE framework to address these risks:
Standardization: Aligning carbon frameworks with international standards.
Land Titles: Ensuring clarity in ownership and usage rights.
Investor Protection: Providing security to encourage participation.
Domestic Carbon Framework: Establishing clear regulations to mitigate uncertainties.
Mr. Riza Suarga emphasized that rather than developing new methodologies, existing ones should be demonstrated effectively across various contexts. He stressed the importance of aligning technical and market regulations, enhancing investment security, and securing corresponding adjustments to protect investor confidence.
Innovations in Energy Transition: Strategies for Carbon Reduction and Sustainability
Indonesia’s energy transition is progressing slower than anticipated due to unclear regulations, PLN’s monopoly over electricity, and significant financing challenges. High transaction and project costs are limiting investment in renewable energy. A proposed solution lies in blended financing, which combines public and private funding to reduce risks and attract more capital.
Steps to Accelerate Energy Transition:
Strengthening Institutions: Promoting low-carbon projects while reducing associated risks.
Building a Carbon Pricing Ecosystem: Advancing beyond basic carbon credit trading to create an integrated market.
Digital tools are pivotal in improving trust in carbon markets through enhanced auditing and real-time performance monitoring. Expanding Indonesia’s energy grid is another priority. The Indonesia Super Grid proposal aims to create a smarter, more efficient grid system, requiring significant investments.
Albert Sutanto, Mt. Stonegate’s Manager of SE Asia and Global EACs Sourcing, highlighted the importance of diversifying financing mechanisms and leveraging digital innovations to enhance the scalability and reliability of renewable energy projects. He also shared insights into strategies for integrating renewable energy certificates (RECs) into Indonesia’s evolving energy network. Emphaiszing that the energy transition is not only in the hands ofpolicymakers and developers; signaling demand from the users side is equally critical. Users play a pivotal role in accelerating the energy transition by adopting RECs demanding PPAs, and suporting sustainable energy practices.
Additionally, nuclear energy is expected to contribute to Indonesia’s energy mix, with the first plant projected to be operational by 2032. While renewable energy projects face barriers like long investment return periods, diversifying energy sources is critical for a sustainable and resilient energy future.
Decarbonization Roadmap in Indonesia
Indonesia’s ambitious decarbonization targets include:
2030: Producing 600,000 battery electric vehicles (BEVs), 13 million electric motorbikes, and 2 million electric cars.
2060: Achieving net-zero emissions.
2025: Increasing renewables to 23% of the national energy mix.
The government has introduced tax incentives, reduced import duties, and other policies to support these goals. However, challenges remain, including limited EV charging infrastructure and emissions-intensive battery manufacturing. A PwC study highlights the need for clearer rules, stronger public-private collaboration, and accessible green financing to overcome these barriers. Achieving these goals will require balancing competitiveness, technology advancements, and social impacts.
Carbon Market Opportunities in the Agriculture Sector
Indonesia’s agriculture sector presents significant opportunities for carbon market growth. Biochar has emerged as a promising solution for carbon removal in agriculture, derived from biomass sources such as agricultural residues and energy crops. Effective biochar projects rely on reliable biomass sources and high-quality machinery to prevent methane leakage. Initivatives like the Biomass Carbon Removal and Storage (BECCS) project showcase biochar’s scalability as a carbon sequestration method.
In the palm oil sector, companies like Astra Agro have adopted methane capture technologies, bio-fertilizers, and petland conservation projects. These efforts align with Nature-Based Solutions (NbS) to restore ecosystems. Despite agriculture’s potential, it contributes only 0.3% to Indonesia’s NDC target of 30%, largely due to insufficient advocacy and limited regulations. Methane-capturing technologies remain underutilized, with significant barriers in financing and community incentives. However, biodigesters in livestock farming present opportunities to generate 30,000–60,000 carbon credits per project, adding value to the carbon market.
Carbon trading projects often deliver co-benefits beyond emissions reduction, such as enhanced biodiversity and improved community well-being. However, tracking these benefits remains challenging. Biodiversity credits, while promising, lack universal frameworks and are more complex to quantify compared to carbon credits. Platforms like Fairatmos are addressing these challenges by improving transparency and measurability for both carbon and biodiversity credits through digital monitoring.
Conclusion
The Carbon Digital Conference Indonesia 2024 highlighted the transformative potential of digital innovations in reshaping Indonesia’s carbon market. From leveraging biochar and regenerative agriculture to advancing renewable energy and decarbonization goals, the discussions underscored the need for collaboration, robust policies, and investment. By addressing existing barriers and embracing innovative solutions, Indonesia can strengthen its carbon market, drive sustainability, and achieve its climate ambitions. Mt. Stonegate is well posistioned to support this efforts. With our expertise in carbon markets, renewable energy and tailored decarbonization strategies, we are committed to empowering stakeholders in Indonesia and across the region to achieve their sustainability goals and drive impactful climate action.
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