• Indonesia opens international carbon exchange to facilitate its carbon credit market.
• The funds raised will be used to address climate change and help the country achieve its carbon-neutral goals by 2050.

Indonesia has opened an international carbon exchange to firm up its efforts to address climate change and reduce environmental impact.

Through the carbon exchange, companies and businesses can buy carbon credits, which in turn reduce carbon dioxide (CO2) emissions. They can purchase these credits to reduce their own emissions, meet regulations or improve their environmental reputation and image.

Despite having sustainable agreements with the US and European nations, the country has not done so much to shift its economy away from depending on fossil fuels like coal. The Southeast Asian country is also one of the largest emitters of greenhouse gases (GHGs) in the world.

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In 2024, President Prabowo Subianto said that Indonesia aims to achieve carbon neutrality by 2050, with plans to shut down its coal and other fossil fuel plants by 2040. The Indonesian government has also mooted initiatives to build 75 gigawatts of renewable energy by 2040.

With the carbon exchange now launched, global investors can buy carbon credits in the country, supporting its green energy transition by raising sustainable finance.

However, there are tensions and concerns in the domestic markets. Some argue that carbon credits may not always be effective or genuinely used to reduce carbon emissions. Another issue is whether the credits on Indonesia's exchange will comply with global regulations and standards. Despite having these apprehensions, the exchange has already carried out some transactions, providing a fillip to the market.

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Source: PHYS.ORG