Indonesia has launched the first phase of mandatory carbon trading for coal-fired power plants, part of the country’s plan to achieve net zero emissions by 2060. The first stage of the carbon trading mechanism will cover 99 power plants with a total installed capacity of 33.6 GW directly connected to power grids owned by state utility Perusahaan Listrik Negara (PLN).
Coal makes up over half of Indonesia’s power generation.
Arifin Tasrif, Indonesia’s Energy Minister, said that the carbon trade applies to power plants with a capacity of at least 100 MW. It would later be extended to smaller coal-fired plants and other fossil-fuelled plants, as well as power plants not connected to PLN’s grid. He said: “Carbon pricing is one of the policies that could increase energy efficiency, reduce dependence on carbon energy, imported energy, and can be a source of income for the company and the government.” He added that carbon trading in power generation could reduce carbon emissions by 36 million tonnes by 2030.
Mohamad Priharto Dwinugroho, an official with the Energy Ministry, said that a market mechanism would set the price, which was expected to range between $2 and $18 per tonne.