Accelerating Net Zero and Unlocking

Indonesia Carbon Market Potential through

IDXCarbon
(Indonesia Carbon Exchange)

Versi 1.02
 1. Carbon Pricing & Carbon Trading in Indonesia
AGENDA 2. Indonesia Carbon Exchange Trading Mechanism
3. Join Us

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‘Climate Action Failure’ is Identified as the Most Severe Risk on a
Global Scale Over the Next 10 Years
Source: WEF Global Risk Report 2021 Source: WEF Global Risk Report 2022

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The Higher the Temperature, the More Damage Will Be Inflicted

Source: TCFD Guidance on Risk

Management Integration and Disclosure

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Net Zero by Mid Century will be the Only Solution to Mitigate the
Climate Change

Source: BloombergNEF Presentation

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Carbon Pricing is a Critical Tool to Address Climate Change
Annual Earth Surface Temperature (1850-2019)

DISINCENTIVE INCENTIVE

Carbon
pricing

Trading mechanism Penalty mechanism

Source: US National Academy of Sciences Emissions Trading Crediting / Offsetting

Carbon taxes
System (ETS) mechanisms
Concentration of greenhouse gases (GHG) creates the
greenhouse effect
Carbon pricing reduces GHG emissions with :
Earth's surface temperature is increasing to 1˚C higher  Disincentives: additional costs for higher emitters
than the average temperature in 1961-1990
 Incentives: reduced costs and additional revenue for
Mitigation action is needed, one of which is a carbon those who reduce emissions
pricing mechanism (‘Polluter pays’ principle)

Source: IDX document

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There are two types of carbon markets: compliance (ETS) and voluntary (VCM)

Emissions Trading System (ETS) Carbon Crediting / Offsetting (VCM)

Emission Tax Emissions Emissions
permit deficit object Business as reduction SPE
usual efforts
Upper emission Emission
limit (cap) permit Permitted
surplus emission
Revised annually A B levels in
to achieve the this sector
national target Sold to reduce
Companies with no emissions
emission reduction records (e.g., for Green
PTE net zero targets) project
$$ Trade obligations

Method Cap and trade (and tax) Baseline and crediting

Carbon unit Emissions Technical Approval / Carbon allowance (PTE) Emission Reduction Certificate / Carbon offset (SPE)

Carbon unit Number of PTEs by sector is issued in accordance with the Emission
SPEs are issued following:
creation Upper Limit (cap) of sectors covered by ETS
‒ Recognition of emission reduction efforts from a company that
PTEs distribution:
does not have an emission reduction obligation; or
‒ Free allocation, depending on historical levels of emissions or
‒ Green projects with measured carbon sequestration or avoidance
BAU emissions; and / or
‒ Auction

Seller (S) – Companies with excess emission permits (S) Companies that do emission reduction efforts / green projects (S) –
Buyer (B) Companies that lack emission permits (B) Companies that want to obtain carbon offsets (B)

Source: IDX document 7

Carbon Trading through the Carbon Exchange is one of Available Mechanisms
to Achieve Indonesia’s NDC

Indonesia ratified the Paris

Agreement in 2016 Regulation of Ministry of Environment and
Presidential Regulation 98 of 2021 Forestry Regulation No. 21 of 2022 concerning the
of Carbon Economic Value Implementation of Carbon Economic Value
Indonesia set Enhanced NDC (Sep in Achieving NDC
2022): 31.89%-43.20% in 2030 Carbon Trading:
Mechanisms for achieving the NDC:
Mitigation Action  Can be done domesticaly and/or internationally.
 Form of market mechanisms:
Indonesia Net Zero 2060 or sooner Adaptation a. Emission trading; and  allowance
trading 6
Carbon Economic Value b. GHG emission offset  credits trading
Sectors included in the enhanced 1. Carbon Trading  Carbon trading could be done through:
NDC scope: a. Carbon exchange
Target 2030, 2. Performance-Based Payments b. Direct trading
Sector
of Total BaU
3. Carbon Levy / Tax
Energy and Fugitive 12.5% –15.5%
4. Other Mechanism
Waste 1.4% – 1.5%
IPPU 0.2 – 0.3%
Agriculture 0.3% – 0.4%
Forestry and Other
17.4% – 25.4%
Land Uses (FOLU)

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IDX has Obtained the License from OJK to Become a Carbon Exchange
Operator

Law No 4 of 2023 on Financial Sector • OJK Regulation No 14 of 2023 on Carbon

Development and Reinforcement Trading through Carbon Exchange
• Circular Letter OJK No 12/04/2023 on
• Carbon unit is defined as securities under this Procedures for Organizing Carbon Trading
Law. through the Carbon Exchange
• OJK has the authority to regulate secondary
trading of instruments related to the economic
value of carbon on the carbon exchange;
• Obtain the license as a Carbon Exchange
• Carbon trading can be conducted domestically
Operator.
and/or internationally. • Provides carbon trading infrastructure.
• Carbon exchange can only conducted by market • Issue regulations related to the carbon trading.
operator who has obtained a business permit (Service Users, Trading, Carbon Unit
from the OJK. Registration, Trade Surveillance).
• Carbon trading done via the carbon exchange • Issuing Circular Letters regarding carbon
who meet the requirements and has obtained a trading. (Standardization of Unit Grouping and
User Fees for Carbon Exchange Services)
license from OJK.

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Problems & Opportunities of the Carbon Trading
The Needs of Carbon Exchange

Problems Opportunity
• Climate Action Failure is one of the biggest issues. • The potential for carbon trading in Indonesia is huge

Source: Presentasi Kemenko Marves

Source: WEF Global Risk Report 2022 • Regional and global exchanges have started carbon trading

• Many countries have stated their commitment to reduce their

carbon emissions and become Net Zero, including Indonesia

• Indonesia Enhanced NDC (Sep 2022): 31,89%-43,20% pada 2030

• Indonesia Net-Zero Emissions commitment in 2060 or sooner

SGX Group
Hong Kong Exchange

The establishment of the Carbon Exchange is expected to help the climate change problems, assist Indonesia in achieving NDC and unlock
Indonesia's enormous potential for carbon trading.
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The Carbon Exchange is the Secondary Trading Platform for
Carbon Units under the Supervisory of the OJK
Users Primary Market Secondary Market

Compliance Company
Technical International
Ministries Standard
Supervisory

Mutual
allocation
Recognition
Project Developers PTBAE-
PU

Sistem
Issuance of Registri Integration
Corporate Buyers SPE-GRK
Nasional
(SRN-PPI)

Indonesia
Carbon
Financial Institutions Exchange
and Intermediaries Listing & Trading

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IDX Officially Launched Indonesia Carbon Exchange to Support Government and
Companies Initiatives Toward Decarbonization and Net Zero - 26 September 2023

First Listed Carbon Credit Project 15 Buyers on The First Trading Day

1. PT Bank Central Asia Tbk,

2. PT Bank CIMB Niaga Tbk​,
3. PT Bank DBS Indonesia,
4. PT Bank Mandiri (Persero) Tbk,
5. PT BNI Sekuritas,
6. PT BRI Danareksa Sekuritas (bagian dari PT
Bank Rakyat Indonesia (Persero) Tbk),
The President of the Republic of Indonesia 7. PT CarbonX Bumi Harmoni,
Joko Widodo officially launched the 8. PT MMS Group Indonesia,
Indonesia Carbon Exchange (IDXCarbon) on 9. PT Multi Optimal Riset dan Edukasi,
26 September 2023.
10. PT Pamapersada Nusantara,
Key Statistics 11. PT Pelita Air Service,
• Registered Project: Lahendong Unit 5 & 6 PT 12. PT Pertamina Hulu Energi​,
Pertamina Geothermal Energy Tbk. 13. PT Pertamina Patra Niaga,
• Project provider: Pertamina New and 14. PT Truclimate Dekarbonisasi Indonesia,
Renewable Energy (PNRE)
15. PT Udara Untuk Semua (Fairatmos).
• Registry: Indonesia Registry (SRN-PPI)
• Traded Volume: 459.953 tCO2e
• Type: IDTBS (Indonesia Tech Based Solution)
• Closing Price (26 Sep 2023) : Rp 77.000 ($5.5)
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 1. Carbon Pricing & Carbon Trading in Indonesia
AGENDA 2. Indonesia Carbon Exchange Trading Mechanism
3. Join Us

13
About IDXCarbon/Indonesia Carbon Exchange
IDXCarbon/Indonesia Carbon Exchange is the brand name of the Carbon Exchange which is run by the
Indonesia Stock Exchange. IDX, through the Indonesia Carbon Exchange, is committed to developing carbon
trading that is transparent, orderly, and in accordance with the world practice so that it can unlock Indonesia's
carbon trading potential.

Carbon allowances /
Value Proposition
offsets IDXCarbon

Price transparency

Easy and simple way to buy

Carbon & sell
exchange
Liquidity
Project Owner/Surplus ESG/Net Zero
Allowance Owner companies and
Deficit Allowance Efficient & low cost
Owner
Best price according to
supply and demand
Payment
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IDXCarbon also Complements the Initiatives in Decarbonization and Net Zero for Listed
Companies
Expected to Attract Investment in the Indonesia Capital Market

Benefit
Increasing demand of ESG Investment:
• ESG Integration & Sustainable Investment Long Term
Sustainability
• Net Zero Initiatives
Global
Investors
Regulatory
Listed Companies Compliance
Journey to Net Zero / Carbon Neutral
KPI & Strategy Green Carbon
Understand Calculate Disclosed Business
Reduce Emission Investment Offset
Reputation

Attracting
Investment

Green Bonds Indonesia

Employee
• Workshop and Socialization ESG Indeks Carbon Exchange Engagement & Talent
• MoU Carbon Calculator dan disclosure dengan BM dan SET ESG rating Attraction
ESG & • On progress New ESG Website Sustainable
Stock Exchange
Carbon Sustainability of
Supply Chain
Initiatives

Competitive Edge

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 IDXCarbon – Carbon Market Design
IDX would like to play a central role in Indonesian carbon markets: both facilitating sectoral trading for compliance company and cross sectoral trading to be accessed by
domestic and international carbon credit buyers.

Supply Trading Demand

Carbon Exchange Buy/sell PTBAE-PU
Allowance
Sectoral • allocated by related Sell SPE-GRK
ministry PTBAE-PU
trading1 Compliance Buy SPE-GRK
• excess from (Allowance)
compliance company companies in the SPE-GRK into
(for compliance
sub-sector cross-sectoral
purpose) trading
Carbon credits SPE-GRK regulated with
generated by project (Carbon credits) emissions
developers or companies allowance
in the sub-sector
After sectoral NDC
Excess SPE-GRK allowed into cross-sectoral trading
has been met

Market feature
Cross- Settlement T+0/Instant
sectoral Excess carbon credits
generated by project
Carbon
Trading Direct
SPE-GRK credits
trading developers or companies (Carbon credits) buyers
Participant Trading
and after claimed by sub-
(for voluntary (domestic and Clearing Gross
sectoral NDC
purpose) international) Pre-
Risk-
Management Validation /
pre-funded
1. only allowed to trade instrument specific to related sector
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 Four Available Trading Mechanism on IDXCarbon
Auction Regular Trading Negotiated Trading Marketplace

Create auction with Deal outside the Submit project's

floor auction price Exchange details including price
and available volume
Regulators/ Exchange Buyers Sellers Project Exchange
Project Developers Exchange Developers
Buyers Sellers
Submit preferred Exchange
buy sell
volume and price order order input order and input order and
Buyers Exchange seller ID buyer ID
Order Book Project A Project B Project C
Auction Book Rp5000 Rp6000 Rp10000
Bid Ask
Buyer Volume Price
5 800
Buyer A 100 800
7 900 Browse and buy
Buyer B 150 900
10 1000 1000 10
Buyer C 75 1000 project at desirable
1100 15
volume and at project
1200 3 Buyers
Decide auction developer's price Exchange
allocation
Regulators/
• Buyers and sellers submit order
Project Developers
volume and price.
• Regulators/Project Developers create an • Buyers and sellers make deal • Project developers input project and
• Buy order will queue in bid order price in the marketplace.
auction and submit auction details outside the exchange.
book, sell order will queue in ask
including minimum price. • Participants submit arranged • Buyers browse the project and buy
order book.
• Buyers will place desirable volume at volume, price, and counterpart to prefered project with designated
• Exchange will match the order with volume.
minimum price or higher. execute the trade.
price and time priority.
• Regulators/Project Developers decide • Settlement will be done in the • Transaction price will be done at set
• The matched price will be the market price.
allocation. exchange
price.
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Products Comparison
Allowance Market / Cap & Trade / Perdagangan Emisi Offset Market / Offset Emisi GRK
(Persetujuan Teknis Batas Atas Emisi Pelaku Usaha, PTBAE-PU) (Sertifikat Pengurangan Emisi GRK, SPE GRK)
Allocation / Effective Free allocation or via auction mechanism, and registed in SRN After project verified and SPE is issued in SRN

Satuan perdagangan 1 ton CO2e 1 ton CO2e

Trading Period 1 Period = Different for each subsector, banking for 2 years Can be continuously traded until retired

Surrender / Retirement Ending of compliance period (subject to related ministries) Retirement from Buyer

Trading Actors Buyer dan Seller: Compliance Companies Seller: Project developers, 2nd hand buyers.
Buyer: Not limited, including compliance companies

Series 1 serial for a) Standardized product, i.e:

- each sub-sector for Nature-based product: Indonesia NBS,
- each period Indonesia NBS Global Verification b) Credits per
Tech-based product: project
Indonesia TBS, Indonesia TBS Global
Verification

Market a) Continuous Auction Board for Std. Product b) Auction, Project

Auction, Continuous Auction Board, Negotiated Board Marketplace,
Negotiated Board
Settlement T+0/Instantaneously

Trading Participant Direct Trading

Clearing Gross

Risk-Management Pre-Validation/Pre-funded

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 Product Features
Allowances (PTBAE-PU) Credits/Offsets (SPE-GRK)

Single Project Standardized Product

Ministry A Ministry B
Project A Project B Project C
Project A

Certification

Sector A Sector B Sector C Certification

Credits A Credits B Credits C

Allowance A Allowance A Allowance B Allowance B Allowance C Allowance C Credits A

Year 2023 Year 202X Year 2023 Year 202X Year 2023 Year 202X NBS, NBSGlobal,
via Marketplace, TBS,TBSGlobal
Auction, Nego via Reg and
via Auction, Nego Market
Reg, Nego
Market

Compliance Compliance Compliance Compliance Non-Compliance Project Developers

Company Company Company Company Company (as Seller)
Sector A Sector B Sector C
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Pasar Primer & Sekunder pada Perdagangan Karbon, Serta
Mekanisme yang Ditawarkan

Layanan yang
dapat
A R,N
diakomodasi oleh
PT BAE-PU Bursa Karbon

A: Auction
M: Marketplace
SPE-GRK R: Reguler
N: Nego

A,M R,N

• Pre-Efektif
• Penunjukan • Book building
Profesi • Penentuan
Penunjang Harga • Spot - Reguler,
• Due Dilligence • Efektif Tunai,
Equity • Penyiapan • Penawaran Negosiasi
Delisting
dokumen IPO Umum • Derivatif
• Registrasi Perdana
• Penjatahan
• Alokasi

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 1. Carbon Pricing & Carbon Trading in Indonesia
AGENDA 2. Indonesia Carbon Exchange Trading Mechanism
3. Join Us

21
Requirements & Procedures to Become a User of IDXCarbon
Sub Detil
Requirement 1. Have officers who are responsible for the use of 5. pay the registration fee as a Carbon Exchange Service
facilities provided by IDXCarbon; User; (free until September 2024)
2. take part in training related to the Carbon Exchange 6. have an account at a bank connected to the BI-FAST
organized by IDXCarbon; and BI-RTGS systems; dan
3. have an electronic mail address using the company's 7. have an annual financial report for the last 1 (one)
domain name; financial year;
4. have at least 2 (two) Carbon Exchange Service Users 8. Additional Documents for Local Users: Articles of
representing the Users who have attended training Association, NPWP, and Business Identification
organized by IDXCarbon; Number (NIB).
9. Additional Documents for Foreign Users: Have a Legal
Entity Identifier (LEI) – will be implemented in the
future.
Procedure 1. Submit applications by filling in the form and another attachment needed.
2. IDXCarbon may request additional documents .
3. IDXCarbon may ask prospective Users to open a securities account at a Securities Exchange Member.
4. No later than the 5th Trading Day after the prospective Carbon Exchange User submits complete information, the
IDXCarbon reviews the submitted documents.
5. No later than 5 (five) Trading Days after the entire review process is completed, IDXCarbon will give
confirmation (approval or rejection) to prospective Carbon Exchange Service Users.

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 Carbon Unit Selling Procedure – SPE GRK

Ministry of Environment & Forestry (SRN – PPI) IDXCarbon

Registration and Validation of DRAM Creation of Mitigation Issuance of SPE Become a User in IDXCarbon
filling in general data by Validator Action Report (LCAM)

Change Status from Available to

Available Carbon Exchange on SRN

Decide which market and what price

you want to sell the carbon credit
Producing DRAM DRAM Validation Verification of Mitigation
(Document of Report from Validator Action Report from
Mitigation Action Plan) Validator Submit the registration form to
IDXCarbon
Source: Ministry of Environment & Forestry

Sell your Carbon Credit

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As a Buyer, What Can I do After I Buy Carbon Credit?

Investor can receive capital

gain for selling the carbon
Sell on Regular /
unit. However investor can
Negotiation Market
only sell it in Regular or
Negotiation Market.
View Detail
Buy Carbon
Projects in
Credit in
your Wallet /
IDXCarbon
Inventory
IDXCarbon will send the
Retired Carbon retirement request to SRN-
Unit to Offset Your PPI, and will give
Emissions / Net confirmation of the retired
Zero Strategy SPE-GRK.

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NEXT LISTED PROJECT – 23 OCTOBER 2023

Type: IDTBS (Last Traded Price Rp 69.600)

More info
https://srn.menlhk.go.id/index.php?r=home%2Faksi&id=10867

Contact PLN

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Join Us

Join Us in IDXCarbon

https://idxcarbon.co.id/join-us
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 Thank You
Contact us

support.idxcarbon@idx.co.id

Join us
https://idxcarbon.co.id/join-us

Disclaimer
The facts and opinions stated or expressed in this publication are for information purposes only and are not necessarily and must not be relied upon as being those of the publisher or of the institutions for which the contributing authors work.
Although every care has been taken to ensure the accuracy of the information contained within the publication, it should not be by any person relied upon as the basis for taking any action or making any decision. The Indonesia Stock
Exchange cannot be held liable or otherwise responsible in anyway for any advice, action taken or decision made on the basis of the facts and opinions stated or expressed or stated within this document.

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