Carbon Market/Pasar Karbon is a trading system where carbon credits are sold and bought.2 The Carbon Market facilitates an ecosystem of carbon exchange and greenhouse gas emissions as principal trading commodities where it can be traded among various stakeholders, ranging from countries, governments, and business actors, down to individuals that emit greenhouse gasses/Gas Rumah Kaca (GHG) into the atmosphere.
In Indonesia, a carbon Unit/Unit Karbon represents proof of carbon ownership in the form of a certificate or allowance verified to produce GHG emission, which values one (1) ton of GHG emission per slip registered in the National Registry System for Climate Change/Sistem Registri Nasional Pengendalian Perubahan Iklim (SRN-PPI). Additionally, the reduced GHG emissions/or an increase in carbon storage used to compensate for the generated GHG emissions is referred to as a carbon offsetting process,5 represented by an offset credit that can be traded among entities.
The SRN-PPI refers to a web-based management system that tracks national actions/aksi nasional and resources for mitigation, adaptation, and carbon pricing/Nilai Ekonomi Karbon (NEK). Carbon Pricing/Nilai Ekonomi Karbon is identified as the value of each unit of GHG emissions produced. Once the carbon unit is processed and verified by SRN PPI, a certificate will be generated, known as the GHG Emission Reduction Certificate/Sertifikat Pengurangan Emisi GRK (SPE-GRK). SPE-GRK will be acquired in the form of a registry number and/or code.
Once the SPE-GRK is obtained, the carbon trading activity can be carried out to fulfill the Emission Cap Allowance settled. The Emission Cap Allowance/Persetujuan Teknis Batas Atas Emisi bagi Pelaku Usaha (PTBAE-PU) is determined for pertaining stakeholders, specifically to business actors, to set a limited cap of GHG emissions that can be produced within a certain period for each actor. There are two (2) available instruments in meeting the emissions caps/PTBAE-PU determined for business stakeholders which can be done through:
- Carbon Trading/Perdagangan Karbon: a market-based mechanism to reduce GHG Emissions through Carbon Units tradings.
- Carbon Exchange/Bursa Karbon: a system regulating the carbon stocks registry, carbon trading, and the carbon units.