Carbon Markets Insight Series: Indonesia

Indonesia launched its international carbon market in January 2025 through IDX Carbon to attract global investment and support its climate goals, including net-zero emissions by 2050 and phasing out coal by 2040. The market currently features 1.78 Mn credits from PLN-owned power plants, including mini-hydro and gas-fired facilities.

While a key step, Indonesia’s carbon market alone is not enough—it must be backed by major renewable expansion and USD 3.8 Trn in climate investment.

This insight article highlights key developments in the carbon market in Indonesia. and planned initiatives by the country.

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Way Forward

The Indoensia governemnt plans a cap-and-trade mechanism for cement, fertilizer, steel, and paper sectors, starting voluntarily and becoming mandatory by 2027. Firms exceeding emission limits can trade allowances, with full policy details expected by August 2025 and sector-wide coverage by 2030.

Further, the country will soon launch forestry-based carbon offset trading, aiming to generate USD 200 Mn in 2025 and over USD 15 Bn by 2034. The government is working to align with global standards like Verra and Gold Standard by mid-2025.

It is critical that there are clear rules, strong infrastructure and well-defined incentives by the government to ensure implementation of these planned initiatives.

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