Jakarta – The Institute of Chartered Accountants in England and Wales (ICAEW), a worldwide popular expert accountancy body, has lauded Indonesia’s commitment to lowering carbon emissions through the Indonesia Carbon Exchange.
The commitment has been detailed in Indonesia’s Nationally Determined Contributions (NDC) file.
” Indonesia’s terrific potential to become an essential player in the carbon market further verifies Indonesia’s important role in shaping an international sustainable financial landscape,” the head of ICAEW Indonesia, Conny Siahaan, said in Jakarta on Wednesday.
ICAEW chartered accounting professional Julian Smith stated that the forestry sector is a crucial contributor of carbon systems from the supply side due to the fact that it has excellent possible to generate carbon credits through different mitigation efforts.
According to the Ministry of Environment and Forestry (KLHK), the area under forested land in Indonesia reached 96 million hectares, or 51.2 percent of the total acreage, in 2022.
” On the need side, coal-fired electricity producers are now required to reduce emissions by 25 percent by 2030 from their initial emissions, triggering them to evaluate the most affordable techniques, either through purchasing carbon credits from the Carbon Exchange, or by converting the way they run to decrease greenhouse gas emissions,” Smith said.
The Carbon Exchange itself can run in combination with other carbon pricing systems, including emission limitations and carbon trading systems, as well as emission limits and taxes, which guarantee that the market identifies the cost of carbon systems based on supply and demand, just like conventional market dynamics, he added.
He continued, there is a growing trend among monetary institutions and financiers to support sustainability efforts and achieve net zero emissions (NZE), hence motivating business to focus on and integrate sustainability and carbon efforts into core company methods.
The Carbon Exchange is a system that regulates trading or ownership records of carbon systems with the primary goal of creating incentives for companies and countries to minimize greenhouse gas (GHG) emissions by supplying a mechanism for buying and offering emission permits or carbon credits.
Carbon credits represent the ‘best’ of a company to release a particular quantity of carbon emissions or other greenhouse gases in its commercial procedures. One unit of carbon credit is equivalent to minimizing emissions of one ton of co2 (CO2).
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