Indonesia’s Energy Ministry recorded around one million tonnes of taxable carbon emissions in a recent carbon trading trial of 32 coal-fired power plants, a senior official said on Monday , as the country prepares to launch a clearinghouse mechanism.
The Southeast Asian country, the world’s eighth largest emitter of greenhouse gases, aims to achieve carbon neutrality by 2060 and use a carbon tax and trade to help control emissions.
The region’s largest economy will begin collecting a carbon tax of 30,000 rupees ($ 2.09) per tonne of CO2 equivalent (CO2e) next April, levied on operators of coal-fired power plants whose emissions exceed a limit set by the government.
The tax will serve as the basis for the establishment of a carbon market by 2025.
During the test, the ministry set a cap of 0.918 tonnes of CO2e per megawatt hour for power plants with a capacity greater than 400 MW and 1.013 tonnes for plants of 100 MW to 400 MW and 1.094 tonnes for mining plants of the same capacity.
“We found out that there were potentially taxable emissions of around 1 million tonnes,” Rida Mulyana, a senior energy ministry official, told reporters.
The trial involved power plants emitting more carbon than an allocated cap, swapping their excess production with those emitting below the cap. Under the current plan, excess emissions that could not be covered by carbon trading will be taxed.
The Ministry of Energy has not yet recommended an emissions cap to the Ministry of Finance for the carbon tax.
“In this essay, we were aiming more awareness so that these power plant operators know what to expect,” Rida said, adding that her office was still making adjustments for the cap.
Meanwhile, the head of the finance ministry’s office, Febrio Kacaribu, said that in the short term, authorities would keep tariffs affordable and emission limits manageable.
When the market has been launched and becomes liquid, the government can adjust the parameters, Febrio added.
Finance Minister Sri Mulyani Indrawati said cross-border carbon trading would not be allowed until Indonesia met its greenhouse gas reduction targets, stressing that its domestic carbon price would be among the cheaper in the world.