PwC Indonesia highlight carbon market's role in achieving emission targets and economic growth

Jakarta, 13 March 2025 – The Paris Agreement aims to limit global temperature rise to below 2ºC, with efforts to cap it at 1.5ºC. However, current actions could lead to a 2.7ºC rise by the end of the century, underscoring the need for significant investment and market adjustments. As the urgency grows, carbon markets are becoming crucial in reducing greenhouse gas (GHG) emissions, and Indonesia plays a key role in global climate solutions.

PwC Indonesia has published a white paper titled “Indonesia Carbon White Paper” on the carbon market's potential to enhance Indonesia’s Nationally Determined Contributions (NDCs) and stimulate economic growth. This white paper in collaboration with the Indonesia Carbon Trade Association (IDCTA). It highlights that Indonesia aims to reduce emissions by 915 million tonnes of CO2 annually by 2030 but only achieved 429 million tonnes in 2022. Meeting these targets requires an estimated US$281.23 billion, which exceeds the state budget's capacity. Another challenge is the current low carbon pricing hinders optimal emission reductions and the under development of carbon market mechanisms. The white paper outlines key strategies to address these challenges and bridge the financial gap.

Yuliana Sudjonno, PwC Indonesia Partner and Sustainability Leader, emphasised the significance of a robust carbon market, stating, "Indonesia holds significant potential to be a major player in the global carbon market. By developing an internationally recognised Monitoring, Reporting, and Verification (MRV) framework and aligning our carbon project methodologies with global standards, we can enhance the credibility of Indonesian carbon credits and support seamless international exports."

Enhancing project information transparency within the National Registry System for Climate Change Control/Sistem Registri Nasional Pengendalian Perubahan Iklim (SRN-PPI) is crucial, as providing comprehensive project details similar to international registries can build greater stakeholder confidence and attract international investors. Clear guidance on accounting and tax treatments for carbon credit transactions is also necessary to ensure consistent and accurate measurement and reporting. 

Additionally, the white paper suggests leveraging advanced technologies like blockchain for transparent data recording and real-time analytics to improve the SRN-PPI registry system. This technological enhancement is expected to allow for accurate tracking and verification of carbon credits, thereby increasing the system's reliability and efficiency. To close, Yuliana said, “By clarifying regulatory supports on carbon market development and enhancing its transparency, Indonesia can attract international investors and promote the long-term sustainability of its carbon market.”