Economist Comments on Carbon Trading Agreement Between OJK, Environment Ministry

TEMPO.CO, Jakarta - Financial Services Authority (OJK) and the Ministry of Environment and Forestry ( KLHK) signed a memorandum of understanding concerning carbon trade. Celios Bhima Yudhistira, an economist from the Center of Economic and Law Studies commented on this decision.

Bhima said that OJK often mentioned Indonesia's carbon potential reached thousands of trillions. However, several forests such as mangrove or peat forests already entered into another program besides carbon trading, for example, REDD+ (Reducing Emission from Deforestation and Forest Degradation Plus Conservation). "Thus, cross-checking is important to avoid double entry or double counting," said Bhima to Tempo on Thursday, July 20, 2023.

With cross-checking, he said, the asset eligible for carbon credit could be counted, which made the integration between OJK and the Environment Ministry important. "To avoid that (double entry and double counting) needs KLHK, OJK, and possibly other technical ministries," he said.

Bhima also appreciated the carbon trading MoU, since the synchronization of OJK and KLHK could mean a standardized calculation of carbon emission and carbon credit being offered in the carbon market. 

OJK and the Environment Ministry have agreed to cost their cooperation in the area of sustainable finance to realize the Carbon Economic Value, specifically through carbon trading in Indonesia. The cooperation between OJK and KLHK is in accordance with Law No. 4 of 2023 on Financial Sector Development and Reinforcement. 

The MoU was signed by the Head of the Board of Commissioner of OJK Mahendra Siregar and the Minister of Environment and Forestry Siti Nurbaya Bakar in Jakarta on Tuesday, July 18, 2023. The agreement is the legal basis for a standardized exchange and utilization of carbon trading data through the National Registry System for Climate Change Control. 

In the MoU, OJK and KLHK agreed on five collaboration points:

1. Harmonization between the policies in the Financial Services Sector with the regulations concerning the protection and maintenance of the environment;

2. Boost human resources capacities in the environment and forestry sector and Financial Services sector

3. Preparation, exchange, and utilization of data and/or information to support the duty and function of OJK and KLHK;

4. Research and/or survey for drafting policies and development in the Environment and Forestry sector and Financial Services Sector in sustainable finance to realize the Carbon Economic Value; and

 5. Provide Experts/Sources in the Environment and Forestry and Financial Services sectors

Currently, the OJK Regulation Draft concerning Carbon Trading through Carbon Exchange has been consulted with Commission XI of the House of Representatives (DPR RI) and is expected to be promulgated in the near future as part of the preparation process to launch the Carbon Exchange in Indonesia.

AMELIA RAHIMA SARI

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