Moeldoko Says Indonesia Has The Opportunity To Become The Main Player Of Global Carbon Trading

JAKARTA - Presidential Chief of Staff, (KSP) Moeldoko, said the continuation of the Norwegian government's contribution to Indonesia's performance in reducing deforestation opened up opportunities for Indonesia to become a major player in global carbon trading.

According to him, the funding will help the Indonesian government increase the capacity and resources needed in the implementation of carbon trading.

It is known, at the World Climate Action Summit (WCAS) COP28 Dubai, December 1, 2023, the Indonesian government received a continuation of the Norwegian government's contribution of USD 100 million in the result based payment scheme for the performance of reducing deforestation for the 2017/2018 and 2018/2019 periods.

Previously, in October 2022, the Norwegian government had contributed USD 56 million for the 2016/2017 period through BPDLH.

Moeldoko said that the Indonesian government is currently working hard to reduce deforestation, and so far the results are significant.

Citing data from the Ministry of Environment and Forestry (KLHK), he said the deforestation rate in Indonesia in 2022 reached 40.4 thousand hectares, down from 101.4 thousand hectares in 2021. This figure is the lowest in the last 20 years.

"This result shows that the government's efforts to protect forests and reduce deforestation are starting to work," said Moeldoko at the Bina Graha building, Jakarta, Friday, December 8.

Furthermore, he said the decline in deforestation in Indonesia would have a positive impact on carbon trading. This is because carbon credit prices are getting lower, carbon credit availability is becoming more abundant, and market participants' confidence in carbon trading is increasing. "Thus, Indonesia's chances of becoming a major player in global carbon trade are getting bigger," said Moeldoko.

The 2013-2015 TNI Commander reminded that carbon trading is one of the important instruments to reduce the risk of climate change and improve the national economy.

The potential for carbon trading is not open, he said, not only limited to domestic carbon trading, but also abroad. For this reason, optimizing trade on carbon exchanges needs to be done," explained Moeldoko.

The Presidential Chief of Staff admits that there are a number of challenges to maximizing carbon trading in Indonesia. Among them, several supporting regulations are still unfinished, such as regulations related to foreign carbon trading and carbon taxes.

"KSP will invite relevant ministries/agencies to finalize the matter," he said.

Moeldoko observed that the trade value on the Indonesian carbon exchange was far from expectations. Based on the Financial Services Authority (OJK) report, he explained, since the carbon exchange was officially launched by President Joko Widodo on September 29, 2023 to November 2023, the value of carbon trading was IDR 30.7 billion with a trading volume of 490,716 tons equivalent to carbon dioxide (CO2e). We have to work more to improve it. KSP and OJK are ready to guard it," he concluded.

Previously, the Office of the Presidential Staff and the Financial Services Authority (OJK) agreed to oversee President Joko Widodo's direction regarding carbon trading.

This commitment surfaced when the Presidential Chief of Staff, General TNI (Ret.) Dr Moeldoko, met with the Chairman of the Board of Commissioners of the Financial Services Authority (OJK), Mahendra Siregar, on October 11, 2023.