Sunday, June 4, 2023

IDX Lays the Groundwork for Indonesia's Carbon Exchange

Jakarta Globe
November 1, 2022 | 2:44 pm
This 2018 aerial photo shows a protected forest area in Cikole, Lembang, West Bandung Regency, West Java. (Antara Photo/Raisan Al Farisi)
This 2018 aerial photo shows a protected forest area in Cikole, Lembang, West Bandung Regency, West Java. (Antara Photo/Raisan Al Farisi)

Jakarta. Indonesia Stock Exchange, or IDX, the country's sole securities bourse, has been working toward developing a carbon exchange system to support the government's initiative to establish a carbon trading scheme in the Southeast Asian country. 

According to the government plan, an emissions trading scheme should be up and running by 2025 to help businesses in high-emitting industries slash their carbon emissions. 

"IDX is currently preparing for the possibility of becoming a carbon exchange in Indonesia and started discussions with several parties to deepen our knowledge," Jeffrey Hendrik, the bourse's business development director, said in a statement on Tuesday. 

One of the parties was MetaVerse Green Exchange (MVGX), a digital green exchange startup licensed and regulated by the Monetary Authority of Singapore (MAS). 


Jeffrey said he believed a strategic partnership with MVGX should help the local bourse "in building a robust carbon exchange infrastructure and ecosystem that will underpin the country's plan to develop a sustainable finance ecosystem."

The carbon exchange plan was part of Indonesia's strategy to achieve its target of reducing greenhouse gas emissions. By 2030, the country seeks to cut 43 percent of emissions with financing or technological support from the international community. 

Irvan Susandy, IDX's trading and membership director, said the carbon exchange would unlock new financial opportunities to protect many of Indonesia's carbon sinks like rainforests, mangrove swamps, or even oceans. 

"Indonesia has so many potential nature-based solutions. With a fully operational carbon trading infrastructure in place, businesses and governments will be able to trade carbon credits all while identifying high-quality climate projects," Irvan said. 

MVGX President Michael Sheren highlighted the exchange's role in helping Indonesia achieve its carbon emission reduction target.   

"With COP27 only weeks away, this decisive move by Indonesia's national bourse points to the growing recognition of the important role private sector solutions must play in helping countries meet their sustainability commitments," Sheren said in a written statement to the Globe. 

He was referring to The 2022 United Nations Climate Change Conference, held in Sharm El Sheikh, Egypt, from Nov 6 to 18.

Sheren, who advised the Bank of England and co-chaired the G20 Sustainable Finance Study Group, said Article 6 of the Paris Agreement allows the government to cooperate with other countries or the private sector to meet their carbon emission reduction target. 

"For Indonesia, strategic partners could emerge across  Asia or among global companies operating in especially high-polluting sectors," Sheran said. 

"In line with prevailing themes at this year's G20 summit on structural and financial inclusivity in sustainability initiatives, we can hope to see much-needed infrastructure created by the funds generated from the voluntary carbon market to channel investments directly into the country's green projects," he said. 

Bo Bai, MVGX's executive chairman and co-founder, said he believed his company could offer secure and compliant carbon trading systems for Indonesia's bourse. 

MVGX's exchange uses blockchain technology to record the green projects' carbon reduction performance. The company said it promises a transparent and incorruptible record of the project's performance, in which buyers and issuers of carbon credits could have confidence. 

"Today, carbon markets continue to face challenges around lack of transparency, standardization, and liquidity — we are thrilled to be supporting IDX as they work towards meeting this critical milestone as part of Indonesia's climate policy and as they raise the bar for green finance in the region," Bo Bai said. 

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