Indonesia, the UK ink agreement to set carbon pricing: Minister


Jakarta, –  Indonesian and the United Kingdom (UK) governments signed the Implementing Arrangement (IA) on UK Partnering for Accelerated Climate Transitions (UK PACT) Carbon Pricing to support the development and coordination of carbon economic value policies (carbon pricing).

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The signing, which was witnessed by Indonesian Coordinating Minister for Maritime Affairs and Investment, Luhut Binsar Pandjaitan, and the British Ambassador to Indonesia, Owen Jenkins, on Monday, showed the UK’s commitment of 2.7 million pound sterling (equivalent to Rp52.2 billion) to provide technical assistance in the development and coordination of carbon pricing policies.

“We carry out many efforts and strategies to mitigate climate change and reduce greenhouse gas emissions, including carbon pricing. Various countries have adopted and applied these efforts to encourage the transition towards more sustainable and low-carbon practices,” Pandjaitan remarked.

He said the Indonesian government realized that the country needs support and collaboration with other parties to achieve ambitious targets.

Hence, the two countries realize the importance of partnership to address global challenges related to climate change and agreed to sign this MoU on the UK PACT, he remarked.

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According to the minister, the Indonesian government has started the foundation of carbon pricing by enacting the Presidential Regulation on the Economic Value of Carbon. In addition, the Ministry of Energy and Mineral Resources (ESDM) issued a Ministerial Regulation concerning the Governance of Carbon Economic Value in the Power Generation Sub-sector.

Meanwhile, other complementary instruments, such as the Sectoral Carbon Pricing Roadmap, Carbon Exchange regulations, International Carbon Trading regulations, and Online GHG Emission Reduction Inventory, are simultaneously being developed, the minister affirmed.

“We plan to launch carbon trading in September 2023 as part of the efforts to increase the use of renewable energy and achieve net-zero emissions by 2060 or sooner,” he remarked.

Through the UK PACT, the UK aims to provide technical assistance to support the development and coordination of carbon pricing policies. This program will also support the Coordinating Ministry for Maritime Affairs and Investment in chairing the Indonesian Carbon Pricing Steering Committee in addition to backing the Ministry of Finance in drafting a carbon tax.

Meanwhile, Ambassador Jenkins affirmed that both Indonesia and the UK had shared experiences and expertise with each other in carbon pricing through technical assistance, capacity building, and knowledge exchange.

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“The first year of this partnership has shown significant results in helping Indonesia to build a database for its carbon pricing policies and achieve key milestones, such as setting a carbon floor price. We hope we can continue to support Indonesia’s Net Zero ambition in the future,” he stated.

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