Following Singapore's lead, Indonesia became the second country in Southeast Asia to regulate its carbon market. Under Presidential Regulation No. 98 of 2021 ("Regulation"), the government introduced, among other matters, the concept of carbon economic value, as well as the regulatory framework on carbon pricing and carbon trading arrangements.
The Regulation also sets out mitigation and adaptation actions, which are the two main methods to tackle climate change. Both methods apply to the public and the private sectors, and require them to take actions such as establishing a greenhouse gas emissions inventory and increasing the carbon efficiency of power generation and transportation.
The government will also use carbon economic value, which will be implemented through carbon trading, economic incentives, and carbon levies.
As with other great endeavours, details on the implementation of the Regulation will be fleshed out in future ministerial level regulations.
