Marketable Emission Reduction Certificates in the Carbon Market: Who Owns Them?

President Joko Widodo launched the Carbon Exchange at the Indonesia Stock Exchange (IDX) in Jakarta on September 26, 2023.

The Indonesian Carbon Exchange, named IDXCarbon, is a trading venue for securities in the form of Carbon Units.

Carbon Units are proof of carbon ownership in the form of certificates registered in the National Registry System for Climate Change Control (SRN PPI). This system is managed by the Ministry of Environment and Forestry (KLHK).

Based on the Financial Services Authority Regulation (POJK) Number 14 of 2023, Carbon Units traded on the Indonesian Carbon Exchange consist of two types.

First, Greenhouse Gas Emission Reduction Certificates (SPE-GRK), which are certificates proving the reduction of greenhouse gas emissions by businesses and/or activities that have undergone measurement, reporting, and verification, and are recorded in the SRN PPI in the form of registration numbers and/or codes.

Second, Technical Approval for Emission Upper Limits for Business Actors (PTBAE-PU), which are certificates proving the determination of greenhouse gas emission upper limits for business actors and/or the determination of emission quotas for a certain period for business actors.

Of the two types of Carbon Units, the SPE-GRK was the one traded at the opening of IDXCarbon.

Each 1 unit of SPE-GRK represents a company's achievement in reducing or absorbing greenhouse gas emissions by 1 ton of carbon dioxide equivalent (CO2e). On September 27, 2023, the price was traded at Rp77,000 per unit.

Based on SRN PPI data, until September 27, 2023, the companies that owned SPE-GRK were only PT PJB UP Muara Karang, PT Pertamina Geothermal Energy Tbk, and PT UPC Sidrap Bayu Energi.

Here is a breakdown of the SPE-GRK owned by these three companies, along with the name of the project/activity of origin of emission reduction, certificate number, and number of carbon units:

PT PJB UP Muara Karang:

* Construction of a New Natural Gas-Fueled Power Plant, PLTGU Block 3 PJB Muara Karang: SPE-11-PR-V-2023-10867, 927,113 units

PT Pertamina Geothermal Energy Tbk:

* Lahendong Unit 5 & Unit 6 Project: SPE-10-PR-VI-2023-14464-2016, 41,536 units
* Lahendong Unit 5 & Unit 6 Project: SPE-10-PR-VI-2023-14464-2017, 209,013 units
* Lahendong Unit 5 & Unit 6 Project: SPE-10-PR-VI-2023-14464-2018, 204,823 units
* Lahendong Unit 5 & Unit 6 Project: SPE-10-PR-VI-2023-14464-2019, 205,848 units
* Lahendong Unit 5 & Unit 6 Project: SPE-10-PR-VI-2023-14464-2020, 202,989 units
* Total SPE-GRK: 864,209 units

PT UPC Sidrap Bayu Energi:

* Climate Change Mitigation Action Sidrap 75 MW Wind Power Plant Project: SPE-10-PR-XI-2022-11275, 1,000 units

Until September 27, 2023, the only SPE-GRK listed on the IDXCarbon product list belonged to PT Pertamina Geothermal Energy Tbk.

Based on the Minister of Environment and Forestry Regulation Number 21 of 2022, SPE-GRK can only be issued/granted to companies that meet a number of requirements, including:

* Having a Draft Climate Change Mitigation Action Document (DRAM);
* Being located in Indonesia;
* Having conducted greenhouse gas emission reduction/absorption that can be measured, monitored, and reported;
* Complying with the Intergovernmental Panel on Climate Change (IPCC), international standards, or the latest national standards;
* Greenhouse gas emission reduction/absorption has been verified according to the methodology established by the KLHK, the National Standardization Agency, and/or approved by the United Nations Framework Convention on Climate Change (UNFCCC).