JAKARTA - The Financial Services Authority (OJK) and the Indonesia Stock Exchange (IDX) are currently reviewing the initiative to implement carbon trading or carbon trading in the Indonesian capital market. Citing the ICDX Group's website, carbon trading is an activity of buying and selling carbon credits, where buyers produce carbon emissions that exceed the set limits.
"For the carbon market, we continue to conduct studies and of course we coordinate with relevant ministries, from the Ministry of Environment and Forestry, the Ministry of Communications and Investments and also the Ministry of Finance to carry out or implement these initiatives," said Chief Executive of OJK Capital Market Supervision Inarno Djajadi at the 45th anniversary event of the Reactivation of the Market. Indonesian Capital quoted by Antara, Wednesday 9 August.
A carbon credit is a representation of the right for a company to emit a certain amount of carbon or other greenhouse gas emissions in its industrial processes. One unit of carbon credit is equivalent to a reduction in emissions of 1 tonne of carbon dioxide (CO2).
The carbon credits sold generally come from green projects. The verification agency will calculate the ability of carbon sequestration by forest land in certain projects and issue carbon credits in the form of certificates. Carbon credits can also come from companies that produce emissions below the threshold set in their industry.
The local government will usually issue the credit to a certain limit. If the company emits less than the credit it holds, it can sell the credit on the carbon market.
However, if the resulting emissions exceed the credits held, then the company must pay a fine or buy credits in the carbon market. Thus, countries in the world can control the amount of carbon emissions they produce and reduce the impact of greenhouse gases significantly.
"In the P2SK, we have also included the carbon market. This is still in the process and we are waiting for the appointment of the ministry related to the Ministry of Environment and Forestry to mandate carbon as securities. We continue to coordinate with related ministries and the SRO," said Inarno.
Meanwhile, BEI President Director Iman Rachman said that it is necessary to define carbon as a financial instrument.
"Because if we talk about the stock exchange so far it is securities. Regarding the rules, at the SRO we are currently together asking for a review by a consultant because this is the first time in Indonesia, what are the best practices carried out in other countries," said Faith.
In addition, continued Iman, it is necessary to look at the supply and demand side that will occur in carbon trading. He also stated that the Independent Regulatory Organization (SRO), which consists of the IDX, the Indonesian Central Securities Depository (KSEI), and the Indonesian Clearing and Guarantee Corporation (KPEI), is also ready if later appointed to carry out the carbon trading.
"Of course we are preparing whether we use the current system where there is a guarantee from KPEI or done directly with KSEI, we can examine. Second, whether this is done directly by the stock exchange because it is related to stock trading or is carried out separately as a separate entity on the stock exchange. But We are doing all the studies in coordination between the SRO and the OJK," said Iman.
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