Ready To Help Government Execute NEK, PLN Prepares Two Carbon Trading Schemes

JAKARTA - To support the government in implementing the Carbon Economic Value (NEK) regulation on April 1, PT PLN (Persero) has prepared several strategic steps.

PLN Human Resources Management Director Yusuf Didi Setiarto said that one of PLN's decarbonization initiatives was the use of the NEK instrument, namely carbon pricing.

"For this reason, we have prepared two carbon trading schemes," said Didi in a written statement quoted on Friday, January 21.

Didi explained that PLN had tested the national carbon trading through two schemes, namely trading on emission quotas and offsetting emissions. Emissions trading occurs between generators that exceed emissions and those that have unused emission allocations.

"Emissions offset is carried out by the PLTU by buying carbon credits or emission reduction certificates produced by a climate change mitigation action," he said.

To date, PLN has obtained emission reduction certificates (carbon credits) of 7.9 million tons of CO2e and marketed the carbon credits on international and national carbon markets.

"The implementation of the NEK is one of the strategic pillars to meet the national emission reduction target and NZE 2060 aspiration," he said.

Didi admits that there are still several challenges in implementing the NEK regulations that are currently being faced by PLN. Some of them are related to human resource capacity which still needs to be developed; measurement, reporting and verification system (Measurement, Reporting, Verification/MRV) that is not yet fully operational; and planning for the implementation of the carbon economy value which is still not optimal.

"Therefore, provisions regarding the mechanism for implementing the cap, trade and tax are needed as a reference for PLN to carry out careful planning and strategies in preparation for the implementation of the NEK in Indonesia," said Didi.

Since 2005, PLN has participated in international carbon trading. Several renewable energy plants, such as the Lahendong Geothermal Power Plant (PLTP) and the Kamojang PLTP, have adopted the Clean Development Mechanism (CDM) which is one of the carbon trading mechanisms in the Kyoto Protocol.

"In addition to CDM, PLN has also adopted the Verified Carbon Standard (VCS) mechanism for the Musi Hydroelectric Power Plant (PLTA), Renun Hydro Power Plant, and Sipansihaporas Hydro Power Plant," added Didi.

Another NEK instrument that has been successfully implemented by PLN is the national carbon trading trial at PLTU Tanjung Jati B and 25 other PLTUs. The move was rewarded with the 2021 Subroto Award for Energy Efficiency Category C: Carbon Emission Reduction and Trading in Power Generation.