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Indonesia’s Carbon Pricing Scheme Promises Business Opportunities

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The carbon pricing scheme developed by Indonesia (NEK) can support the achievement of the country’s commitment to reduce greenhouse gas (GHG) emissions.

At the same time, NEK can be a business opportunity for Forest Utilization Licensing Companies (PBPH) and communities that manage forests.

The Executive Director of the Belantara Foundation, Dolly Priatna, explained that the issue of forest carbon had been raised during the climate change conference in Bali 15 years ago.

At that time, a scheme to reduce GHG emissions from deforestation and forest degradation (REDD) was launched.

“Over time, carbon issues have progressed to support commitments to reduce GHG emissions but also have business potential,” he said during the online Belantara Learning Series Episode 2: Economic Value and Forest Carbon Estimation, Wednesday, March 16, 2022.

This business potential can not only be utilized by entrepreneurs who have a Forest Utilization Business Permit (PBPH) from the government but also by people who manage forests such as customary forests, community forests, or other forest management patterns.

“Therefore, we held this discussion to help the community understand regulatory developments, understand the concept of calculating and estimating forest carbon,” said Dolly.

Present at the event were participants with various backgrounds ranging from academics, researchers, government, students, to business people from Aceh to Papua.

This activity is a collaboration between the Belantara Foundation, the Environmental Management Study Program at the Graduate School of Pakuan University, and PT Gaia Eko Daya Buana.

Researcher from the National Research and Innovation Agency (BRIN) I Wayan Susi Dharmawan explained that the government had issued Presidential Regulation No. 98 of 2021 as an umbrella for the implementation of the NEK.

“Those who can become NEK actors are Ministries/Institutions, Regional Governments, business actors and the community,” said Wayan Susi.

Mechanisms that include carbon pricing/NEK are carbon trading, result based payments, levies on carbon, or other mechanisms that are in line with science and technology developments.

Based on the Presidential Decree, all NEK activities must be registered with the National Registry System (SRN) at the Ministry of Environment and Forestry (KLHK).

This is because NEK is part of the achievement of Indonesia’s commitment to reduce GHG emissions by 29% with its own efforts or reaching 41% with international support.

Joseph Hutabarat, Director of PT Gaia Eko Daya Buana, a consulting company that assists a number of carbon projects, said that the current valuation of NEK is quite promising.

“In 2019, the average carbon price was 4.19 US dollars per tonne,” he said.

Joseph revealed that the reducing emissions from deforestation and degradation (REDD) project has a fairly high carbon price compared to other carbon projects.

Joseph said that if an entity or community wants to propose a REDD project, there are several stages that must be followed.

This stage starts from a pre-feasibility study, then a feasibility study, preparation of project documents, validation and verification, then registration and issuance of a GHG emission reduction certificate.

The emission reduction certificate can be valued in the carbon market.

The Dean of the Graduate School of Pakuan University Professor Soewarto Hardhienata stated that the Belantara Learning Series was very helpful in increasing the capacity of practitioners and researchers in the field of natural resource management in Indonesia.

According to Soewarto, the issue of climate change has long emerged in developed countries such as Germany. The issue of climate change has even become a strategic issue.

Soewarto requested that activities that discuss climate change and carbon can be carried out regularly.

“This should become a routine activity for the Environmental Management Study Program at Pakuan University. It is very beneficial for lecturers and students,” he said. ***

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