COP28: Unleashing carbon market opportunities in Indonesia and ASEAN through a new industry alliance
Indonesia, 12 December 2023 – As the world faces record-breaking emissions, carbon markets emerge as a powerful tool for governments and companies aiming to achieve their net zero targets. Projected to reach $245-$546 billion by 2050 for voluntary markets alone, carbon trading offers a promising solution for decarbonisation, alongside the growing number of net-zero pledges. With its vast natural resources, Indonesia holds the potential to store 50 billion tons of carbon, making it a key player in the fight against climate change.
Indonesia and Southeast Asia’s potential as the global carbon sink hub was highlighted at a special talk show session titled "Unleash the Potential: Exploring Carbon Trade Opportunities in Indonesia," held on December 10th at the COP28 Indonesia Pavilion Blue Zone in Dubai. The session, hosted by the Indonesian Chamber of Commerce and Industry (KADIN) in partnership with COP28, Indonesia Pavilion, and the Indonesian Ministry of Environment and Forestry, with support from Fairatmos, Equatorise, International Emissions Trading Association (IETA), and GCMU brought together investors, business leaders, and policymakers from G20 and Middle Eastern countries. Furthermore, this session also showcased the role of the ASEAN Alliance in Carbon Market (AACM) that will foster Voluntary Carbon Markets across ASEAN and to support implementation of compliance markets, which was launched as part of a legacy project of Indonesia's ASEAN BAC Chairmanship in 2023.
Moderated by Steven Marcelino, Sherpa of the Indonesian Chamber of Commerce and Industry (KADIN Indonesia) and Managing Partner of Equatorise, the session explored Indonesia's remarkable potential as well as the challenges to become a global carbon sink hub. Boosting its vast rainforests and mangroves capable of storing up to 50 billion tons of carbon, Indonesia presents a unique opportunity to mitigate climate change, accelerate green jobs, and contribute significantly to the country's economic growth, with the global carbon market expected to reach a value of over $1 trillion per year by 2050.
Dharsono Hartono, the CEO of PT Rimba Makmur, stated:
“The world will not be able to achieve Net Zero without Indonesia's global carbon sink hub.”
Silverius Oscar Unggul, the Vice Chairman of Environment and Forestry at KADIN, Director of Indika Nature, addressed:
“We are getting better. Last COP, there was no trade allowed in Indonesia. Today, we can have a trade in Indonesia domestically in IDX. In B20 and G20 in Bali, we launched the Carbon Centre of Excellence, a legacy from Indonesia’s G20 Chairmanship and now we have the ASEAN Alliance of Carbon Market.”
Dirk Forrister, the CEO of IETA, said:
“We are also really excited about cooperating with the New ASEAN Alliance in the Carbon Market. We’re hoping that this will be an area where we can collaborate, bringing our members’ experience and expertise to build new markets in ASEAN to enable the potential to be realised, particularly in natural climate solutions. Indonesia is so rich in natural climate solutions and it’s a benefit we would like to make sure of the global aspect of being a global carbon sink hub.”
Natalia Rialucky, Founder and CEO of Fairatmos, highlighted the region's immense potential:
"Southeast Asia holds at least 10.5% of our collective GDP from the Forest and other land use (FOLU) economy. We must consider how to sustain this economic engine through sustainable practices." Fairatmos estimates a potential of $300 million in carbon credits from FOLU in Southeast Asia by 2030, with significant growth potential beyond. “AACM will be the platform where private and public engage to learn together, scale carbon markets either voluntarily or in the compliance market needed by each country to unlock their true potential.”
Andrea Bonzanni, International Policy Director at IETA, addressed:
"their initiatives to enhance carbon trade confidence in response to the ongoing demand and negative perceptions of carbon trade in public. “The first initiative is the Integrity Council for the Voluntary Market (ICVCM) by publishing a set of criteria for projects to comply with, we will have the Core Carbon Principle label to differentiatie carbon credit that is good and not. The other initiative is Voluntary Carbon Market Initiative (VCMI), providing the guidance of carbon credits to ensure the companies use them as they way it has to be used, not as a substitute of other effective climate action.”
About Carbon Centre of Excellence
The Carbon Centre of Excellence gives the knowhow and insights to navigate the carbon markets, powered by an online carbon knowledge hub. It is a collaboration between the Indonesian Chamber of Commerce and Industry (KADIN) and BloombergNEF, and part of the Carbon Centre of Excellence – one of Indonesia’s B20 Legacy Programs. https://www.carbonknowledgehub.com/
About ASEAN Alliance on Carbon Markets
Under Indonesia's chairmanship of ASEAN in 2023, a new ASEAN Alliance on Carbon Markets (AACM) was launched to promote scaling Voluntary Carbon Markets across ASEAN and to support the implementation of compliance markets. AACM will foster a regional ecosystem and act as a focal point for international partnerships, with activities including policy advocacy, capacity building and technical assistance. AACM will focus its activities surrounding (1) Supply & generation; (2) Infrastructure; and (3) Demand & Assurance.