Indonesia's Carbon Market Struggles with Low Trading Volume

Limited Activity Since Launch

Indonesia's carbon trading platform, launched in 2023, has recorded only Rp 78 billion ($5.2 million USD) in transactions. The Indonesian Parliament's Commission XI has expressed concerns about the market's effectiveness, questioning whether the current trading volume meets expectations. The market currently features only four registered carbon projects on the Indonesia Stock Exchange's IDXCarbon platform.

Dominance of State-Owned Enterprises

The limited participation is evident as state-owned power plants (PLTU) remain the primary buyers in the carbon market. This dominance raises questions about the market's ability to drive broader emission reductions across various sectors. Commission XI Chairman Mukhamad Misbakhun highlighted that the current market dynamics are not meeting expectations, emphasizing the need for more diverse participation.

Challenges and Future Prospects

The Indonesian government faces the challenge of expanding participation in the carbon market beyond state-owned enterprises. Developing additional carbon projects and increasing market liquidity will be crucial for the market's success. The low trading volume suggests that more incentives or regulatory measures may be needed to stimulate broader corporate participation in Indonesia's carbon trading platform.