Jakarta. Indonesia on Tuesday officially launched its first-ever carbon exchange which would facilitate the trading of carbon credit trading between emitters.

A carbon credit is a permit that allows organizations to emit a certain amount of carbon. The freshly launched Indonesia Carbon Exchange (IDX) Carbon enables major emitters to purchase carbon credits from companies with spare quotas. 

According to President Joko “Jokowi” Widodo, Indonesia possesses approximately 1 gigaton of carbon credit potential. This means that the bourse can generate thousands of trillions of rupiahs in value. 

“Our carbon bourse’s potential stands at Rp 3,000 trillion [$194 billion] or even more,” Jokowi said, when launching IDX Carbon in Jakarta on Tuesday.

“That is a huge number. [The carbon bourse] is set to become a new sustainable economy opportunity. It also fits with how the world is now moving towards a green economy,” the president added.

Jokowi said IDX Carbon could help Indonesia reach its so-called “enhanced nationally determined contribution” targets. Indonesia vows to reduce 31.89 percent of its emissions by 2030 with its own efforts. The country is willing to raise these targets to 43.2 percent as long as it receives technology transfers and funding from other nations. 

According to Financial Services Authority (OJK) chairman Mahendra Siregar, there are 99 coal-fired power plants that can participate in the bourse. This is equivalent to 86 percent of the coal-fired plants that are operating in the country. OJK hopes that these power plants can start trading at IDX Carbon this year. 

Businesses in other sectors such as forestry, agriculture, waste, general industry, and oil and gas are expected to trade their carbon allowances at the exchange. The maritime industry is also set to follow suit.

“As a comparison, it took 3-4 months for the first transaction to finally take place in our close neighbor’s carbon bourse,” Mahendra said, alluding to Malaysia’s Bursa Carbon Exchange.

“We hope that we can record that inaugural transaction today,” the former diplomat said.

Read More: IDX Set to Launch Carbon Trading Platform