Indonesia Aims to Start Pilot Carbon Market as Soon as Next Year

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(Bloomberg) -- Indonesia plans to start a pilot carbon market as soon as next year, part of its effort to meet emission goals the Southeast Asian nation committed to under the 2015 Paris Agreement, according to a government official.

The pilot market will run for “a few years” before it becomes a permanent fixture, Dida Gardera, assistant deputy minister for environment conservation at the Coordinating Ministry for Economic Affairs, said in a phone interview.

“We will give some kind of incentive or reward to companies, or to the private sector, who reduce their emissions,” Gardera said from Madrid, where he’s attending United Nations-organized global climate talks. Indonesia’s market will have a “fairly loose cap” that will gradually become tighter year by year, he added, without providing specifics.

A global emissions trading system is the main agenda item as envoys from nearly 200 countries gather in Madrid this month for the climate talks, known as COP25. Indonesia’s domestic pilot program will go ahead regardless of what’s achieved in Madrid, Gardera said.

Indonesia, the fourth-biggest nation by population and one of the top coal exporters, announced in October that it plans to launch a carbon market under the newly-created Environment Fund Agency, which will be supervised by the finance ministry.

The existing UN carbon market collapsed about seven years ago as demand dried up and supply continued to rise. Envoys at the talks this week are debating how to structure international carbon trading after 2020, as part of the 2015 Paris Agreement on climate change. It’s unclear whether they will reach a deal.

©2019 Bloomberg L.P.

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