22 July 2024 - Technical Assistance II
ARISE+ Indonesia’s International Carbon Trading Expert, Dr. Divaldo Rezende, has recently concluded a second mission to Jakarta to conduct detailed consultations and discussions on his report entitled “Optimising Indonesia’s Carbon Market”, which was shared with key Indonesian Government stakeholders earlier this year.
As the world increasingly adopts more sustainable economic models, Indonesia has been taking noteworthy steps to enhance its carbon trading framework. With the President-Elect and his new administration set to take office in October this year, this mission offered a timely opportunity to discuss a number of the report’s key recommendations both with the President-Elect’s Transition Team, as well as key officials and other stakeholders in the relevant ministries and authorities.
The establishment of a dedicated agency with a direct reporting line to the President's office is among the primary recommendations. This body would oversee the regulatory framework, ensure compliance with international standards, and foster strong coordination with relevant ministries. Additionally, the report advocates for the adoption of public-private partnership (PPP) models to attract foreign investment for the green economy projects, promising advantages for both state and business development.
The strategic enhancements emerged from extensive consultations with Indonesian key stakeholders and analysis of international carbon trading models, both voluntary and compliance-based. Recommendations also include enhancing stakeholder engagement, building capacity and education, refining policy and legal frameworks, developing technology and infrastructure, and integrating financial mechanisms and incentives.
The report’s findings were discussed at a workshop in Jakarta on June 20, 2024, attended by key government stakeholders and European partners, reflecting on the current post-election landscape. Robert Marbun, Expert Staff for Institutional Relations at BKPM, expressed gratitude for the European Union's support through the ARISE+ Indonesia programme, emphasising the importance of implementing these recommendations to boost the visibility of Indonesia's carbon market globally.
"We are keen to enhance the visibility among global stakeholders and investors, particularly those from the EU," said Mr Marbun.
Thibaut Portevin, Head of Cooperation at the EU Delegation to Indonesia and Brunei Darussalam, underscored the relevance of carbon trading for future cooperation. "This analysis is very timely. It offers a good opportunity to take stock and draw inspiration for our future cooperation," Mr Portevin remarked.
The meeting also featured insights from Edo Mahendra, Special Advisor to the Coordinating Minister for Maritime Affairs and Investment on Carbon Trading. Mr Mahendra underscored the imperative of transitioning to a low-carbon economy, citing advanced technological solutions like direct air capture as pivotal to attracting high-quality carbon credit investments. "The future lies in high-quality carbon credits driven by technology. This is where Indonesia, hopefully in partnership with the EU, can seize opportunities to attract significant investments," he elaborated.
Dr. Rezende emphasized the importance of effective implementation of the report recommendations, stating, "The success of these recommendations hinges on their effective implementation, which demands coordinated efforts across various sectors and levels of government." He also highlighted the need for a dynamic, responsive system that adapts to evolving environmental, economic, and social landscapes.
Following the multistakeholder workshop, Dr. Rezende and the ARISE+ Team met with numerous government and private sector stakeholders to discuss individual recommendations in the report in greater detail. The team met the President-Elect’s Transition Team, which is supportive of establishing a dedicated agency to oversee Indonesia’s carbon trading system. The team also met with the Indonesia Carbon Trading Association (ICTA), EuroCham’s Working Groups for Energy and Finance, Tax and Investment, the Joint PPP Office hosted by Bappenas, the EU Delegation in Jakarta, representatives from the EU’s Directorate General for Climate Action (DG CLIMA) in Brussels, and a number of other key stakeholders, to discuss how some of the recommendations could benefit from technical assistance through EU projects in the near future.
As Indonesia navigates the complexities of green industrialisation and carbon market optimisation, the path forward is marked by both challenges and opportunities. The recommendations, if implemented effectively, could not only elevate Indonesia's competitiveness but also contribute significantly to global environmental sustainability efforts.
