Minister of Energy and Mineral Resources Launches Power Plant Subsector Carbon Trading

Minister of Energy and Mineral Resources (ESDM), Arifin Tasrif, officially launched the carbon trading mechanism for the power plant subsector today, Wednesday (22/2). He hopes that this mechanism can be supported by all business actors.

Arifin said, to achieve the Greenhouse Gas (GHG) emission reduction target in the energy sector in accordance with the enhanced Nationally Determined Contribution (NDC), support and participation from power plants that utilize new renewable energy (EBT) are needed. Based on the road map of carbon trading in the power plant subsector, he continued, the implementation of carbon trading has the potential to reduce carbon emissions by more than 36 million tons of CO2 equivalent in 2030.

“Carbon Economic Value is a market mechanism that gives the burden of emissions produced to emitters, so that Carbon Economic Value can provide incentives for activities that can reduce greenhouse gas emissions,” he said during the Launching of Carbon Trading in the Power Plant Subsector.

The Ministry of Energy and Mineral Resources has issued Ministerial Regulation (Permen) of Energy and Mineral Resources Number 16 of 2022 concerning Procedures for Implementing the Value of Carbon Economy in the Power Plant Subsector at the end of last year which will become a reference in the implementation of carbon trading. “Through carbon trading, it is expected to change our behavior to move towards lower-carbon green economic activities and accelerate the development of renewable energy,” Arifin continued.

Director General of Electricity Jisman Hutajulu added that this year carbon trading will be implemented in the power plant subsector in a mandatory phase. In the first phase, carbon trading will be implemented on coal-fired power plants connected to the PT PLN (Persero) power grid with a capacity greater than or equal to 100 megawatts (MW).

Gradually, carbon trading in the power generation subsector in the second and third phases will be applied to fossil power plants other than coal-fired power plants and not only those connected to the PT PLN (Persero) network. “To support the implementation of carbon trading, the Ministry of Energy and Mineral Resources has stipulated the Technical Approval of Upper Emission Limit (PTBAE),” Jisman said. Furthermore, he said that his party had determined the value of the Technical Approval of the Upper Emission Limit for Business Actors (PTBAE-PU) to 99 coal-fired power plant units owned by 42 companies that would become carbon trading participants with a total installed capacity of 33,569 MW.

Representative, Norimasa Shimomura, expressed support for the implementation of carbon trading in the power generation subsector. “It is an honor for UNDP to participate in Indonesia’s Energy Transition with funding from the Japanese government,” said Norimasa.