This Year, 99 Steam Power Plants Will Implement Carbon Trading

Coal-Fired Steam Power Plant (PLTU)

The government is trying to achieve Indonesia’s zero-emission target. One of the ways is to reduce 500,000 tons of carbon dioxide (CO2) emissions through the carbon trading scheme this year.

This program will be implemented by the Ministry of Energy and Mineral Resources (ESDM). This year ESDM plans to include 99 Steam Power Plants (PLTU) in a commercial carbon trading scheme.

This number consists of 55 generator units from the portfolio of PT Perusahaan Listrik Negara (Persero) or PLN and the rest from private generators.

Acting Director General of Electricity of the Ministry of Energy and Mineral Resources Dadan Kusdiana, Tuesday (24/1/2023), said, “From our calculations, the reduction is 500,000 tons for this year, indeed if you look at the figure of 250 million tons originating from the electricity sector, only 1 per 500, not big.”

However, Dadan emphasized that the target is fairly progressive concerning efforts to accelerate emission reduction from the power generation sector while adding financing options for the new renewable energy (EBT) sector.

Furthermore, based on the records of the Ministry of Energy and Mineral Resources, the 99 PLTU units that have the potential to participate in the carbon trading scheme this year have a total installed capacity of 33,569 megawatts (MW).

Meanwhile, the total installed capacity of coal-fired power plants nationally reaches approximately 39,016 MW.

On the other hand, carbon trading which is regulated in the Financial Sector Development and Strengthening Law (P2SK) is referred to as a form of market deepening on the Indonesian Stock Exchange.

The Main Director of the Indonesia Stock Exchange (IDX) Iman Rachman said that his party appreciated the existence of the P2SK Law, especially related to carbon trading.

For information, carbon trading is an activity of buying and selling carbon credits in which the buyer produces carbon emissions that exceed the set limit.

Carbon credits are a representation of the ‘right’ for a company to emit some carbon emissions or other greenhouse gases in its industrial processes. One unit of carbon credit is equivalent to reducing the emission of 1 ton of carbon dioxide (CO2).

Carbon credits that are sold generally come from green projects. Verification agencies such as Verra will calculate the ability of forest land to absorb carbon in certain projects and issue carbon credits in the form of certificates.

Carbon credits can also come from companies that produce emissions below the threshold set by their industry.