Indonesia launches carbon trading for power sector

Indonesia's energy ministry (ESDM) has officially launched its carbon trading programme for the power generation sector, as part of the country's broader efforts to reduce greenhouse gas (GHG) emissions.

A total of 99 coal-fired power plants with a total capacity of 33.569GW operated by 42 companies are participating in the programme, the ESDM said.

Of the 99 plants, 55 are operated by state-owned power firm PLN while the remaining 44 units are operated by independent power producers. There are 14 mine-mouth power plants and 85 regular plants, the ESDM said. The plants chosen in the initial run of the programme have to be connected to PLN's electricity grid and have to have a capacity of at least 100MW. Each plant will have its own emissions limit, which is based on the Emission Limit Technical Approval framework drawn up by the ESDM in January of this year.

The implementation of the carbon trading programme is based on a ministerial regulation that states the obligation of power generation firms to participate in carbon trading and prepare an annual GHG emission monitoring plan at each power plant.

The implementation of carbon trading has the potential to reduce GHG emissions by more than 36mn t of carbon dioxide equivalent by 2030, the ESDM said. This reduction will play a crucial role in the country's goal to reach net zero emissions by 2060, it added.

Carbon trading in the power generation sector in the future will include other fossil-fuel power plants in addition to coal-fired units, as well as power plants not connected to the PLN transmission network such as standalone power plants powering industrial operations.

By Antonio delos Reyes