Can Carbon Trading Truly Lead to Emission Reductions and Ensure Climate Justice
Translator
Editor
22 November 2023 21:58 WIB
By: Nadia Hadad, the Executive Director of MADANI
Indonesia marked a milestone on September 26, 2023, with the official launch of the Indonesian Carbon Exchange (IDXCarbon). President Joko Widodo emphasized that this is Indonesia's concrete contribution to combat the climate crisis. The revenue generated will be reinvested in environmental preservation efforts, with a specific focus on reducing carbon emissions.
The President also underscored the importance of implementing regulations and voluntary carbon market facilitation in alignment with international best practices, while ensuring they do not impede Indonesia's Nationally Determined Contributions (NDCs) targets.
However, the climate crisis is a multifaceted challenge that demands more than just global emission reductions; it requires an equitable approach that can ensure climate justice. The most severe impacts of the climate crisis are disproportionately felt by marginalized and vulnerable communities.
Based on the ‘polluter pays’ concept, parties responsible for the largest Greenhouse Gas (GHG) emissions must take responsibility for addressing climate change. Not only the mitigation efforts but also adaptation and compensation for those experiencing losses and adverse impacts (loss and damage).
In recent years, major economies and businesses have sought to cancel out their polluting activities by paying for emissions to be reduced elsewhere. Those practices have become a cornerstone for businesses seeking to offset their carbon footprint. This leads to a critical question: does this count as a ‘polluters pay’ concept and whether carbon trading genuinely leads to a reduction in emissions?
Moreover, can the system be implemented in a way that is equitable and guarantees justice, ensuring that vulnerable communities and Indigenous Peoples and Local Communities (IPLCs) can genuinely reap the benefits from this system?
In Indonesia, carbon trading can be conducted either directly or through the carbon exchange. Presidential Regulation 98/2021 outlines two types of carbon trading: emissions trading and GHG offset trading. Domestic offsetting can occur within the same sector or across sectors outlined in the NDC. International offsetting is also permissible, often achieved through schemes like forest protection or avoided deforestation projects, per Ministerial Regulation No. 7 of 2023. Alas, the dominant mechanism in the forestry sector's trading is offsetting.
