Digital Carbon Markets in Indonesia: Business Strategies and Market Mechanisms
DOI:
https://doi.org/10.5281/zenodo.24079941Keywords:
carbon market, IDXCarbon, carbon economic value, emissions trading system, measurement, reporting and verification, IndonesiaAbstract
Indonesia has built one of the most ambitious carbon market architectures in Southeast Asia, yet its organised market remains small, thinly traded, and weakly priced. This paper analyses the design of Indonesia's digital carbon market and the business strategies it induces, using a literature review combined with policy and market analysis of publicly available data. The institutional foundations are Presidential Regulation No. 98 of 2021 on Carbon Economic Value, substantially replaced by Presidential Regulation No. 110 of 2025, the power sector emissions trading scheme operating since February 2023, and IDXCarbon, the carbon exchange launched by the Indonesia Stock Exchange on 26 September 2023 under the supervision of the Financial Services Authority (OJK) through OJK Regulation No. 14 of 2023. The analysis shows that Indonesia operates a hybrid system in which intensity based cap and trade for power generation, organised around technical emission ceiling approvals (PTBAE-PU), coexists with project based offset crediting through greenhouse gas emission reduction certificates (SPE-GRK), both recorded in the national registry SRN PPI. This hybridity fragments supply and complicates price formation. The digital layer of registry, measurement, reporting and verification, and exchange infrastructure improves traceability, but the second registry introduced in 2025 raises reconciliation questions, and tokenisation remains a debate rather than a practice. Drawing on figures published by the exchange and compiled by independent analysts, the paper shows that cumulative trading value on IDXCarbon reached only about IDR 78 billion in its first two years, with average prices far below international benchmarks. Business strategies therefore diverge sharply: compliance driven hedging by emitters, supply creation by project developers, and intermediation by brokers and verifiers. Integrity risks, including double counting, weak additionality, and greenwashing, condition every strategy. The paper closes with recommendations on cap tightening, price stabilisation, registry interoperability, and integrity safeguards.
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