Oil Report

Indonesia drafting regulations for the sale of carbon credits

JAKARTA, Dec 10 (Reuters) - Indonesia is drafting regulations for the sale of carbon credits to take advantage of carbon reserves stored in peatlands, rain forests and mangroves, a minister said on Tuesday, estimating that such sales could generate up to $100 billion a year.

Indonesia does hold large carbon reserves, but the country is also criticized by some experts as being among the world’s top emitters of greenhouse gases due to deforestation and fires that regularly hit the country during its annual dry seasons.

“Currently we are drafting the format together with the Environment and Forestry Ministry so we can start selling carbon credits and generate revenue for the state,” Coordinating Minister for Maritime and Investment Affairs Luhut Pandjaitan told reporters in a news briefing.

Pandjaitan said Indonesia has millions of hectares of peatland and forests that can be used to generate carbon credits to be sold to companies or individuals who need to compensate for carbon dioxide or other greenhouse gases they emit.

The funds collected - which Pandjaitan said could generate between $82 billion and $100 billion a year - could be used to help Indonesia preserve its rain and mangrove forests and peatlands to help absorb carbon dioxide from the atmosphere and reduce its own carbon emissions.

Pandjaitan did not address Indonesia’s forest fires and deforestation for the planting of palm oil plantations and the development of other natural resources, saying, however, that the foreign community “should not dictate” the country’s domestic policies.

Forest fires in Indonesia between January and November this year have resulted in an estimated total equivalent of 720 megatonnes of CO2 emissions, data from the European Centre for Medium Range Weather Forecast showed.

Indonesia’s environment ministry data shows a total of 857,755 hectares were burned this year.

Indonesia aims to cut its carbon emissions by 29% by 2030 through its own efforts. This could rise to 41% with sufficient international assistance.

In 2017, the government said the country needs $64 billion between 2016 and 2020 for climate adaptation and an additional $17 billion for climate change mitigation efforts.

Earlier this year the government also launched an agency that will control funds for climate change management as part of its efforts to meet its climate goals.

Funds for the agency currently come from land reclamation payments and fines the government collects from environment criminal cases, as well as from donors.

Reporting by Wilda Asmarini; Writing by Fransiska Nangoy; Editing by Tom Hogue