Analysis of Carbon Credit Implementation in Indonesia in an Effort to Realize Global Climate Mitigation and Sustainability of an Environmentally Friendly Business World

Abstract

The threat of climate change affects the fate of the earth and the future of humans, for this reason a program to save the environment is needed from various aspects that are of concern to governments throughout the world, so that carbon exchange trading emerges. Indonesia is the world's carbon axis by having the world's third largest tropical rainforest and as a producer of greenhouse gas emissions. The aim of carbon trading in Indonesia is to provide economic value for the carbon units produced or for any efforts to reduce carbon emissions. This research aims to analyze the implementation of global climate mitigation and the sustainability of an environmentally friendly business world carried out by the Indonesian government through the carbon exchange. The limitation of the problem in this research is the implementation of carbon credits before and after the carbon exchange is in accordance with the regulations and laws made by the government. The research methodology used was qualitative by analyzing the BPDLH institution and the non-financial benefits carried out. Meanwhile, the quantitative method involves simulating the calculation of financial benefits from carbon trading. The research results show that carbon trading in Indonesia is carried out through direct trading and carbon exchanges. The implementation of carbon credit trading in Indonesia begins in the electricity energy sector through trading regulations and conditions regulated by the Ministry of Environment and Forestry and the Ministry of Energy and Mineral Resources (ESDM). Based on data from Coordinating Ministry for Maritime Affairs and Investment, Indonesia has the 3rd largest tropical rainforest in the world with an area of 125.9 million hectares which is capable of absorbing carbon emissions of 25.18 billion tonnes. Meanwhile, the area of mangrove forests in Indonesia currently reaches 3.31 million hectares, which is capable of absorbing carbon emissions of around 950 tonnes of carbon per hectare or the equivalent of 33 billion carbon. Indonesia also has the largest peatland in the world with an area of 7.5 million hectares which is capable of absorbing around 55 billion tonnes of carbon emissions. The Indonesian government can sell carbon credits at a price of USD 5 on the carbon market, so Indonesia's potential income reaches USD 565.9 billion or the equivalent of IDR 8,000 trillion. If the Carbon Credits available on the IDX Exchange are sold on the European market at a price of € 90 per ton, then the actual sales that can be received are € 7,516,980 or the equivalent of IDR 126,764,997,663.6. For potential sales of remaining unsold carbon, the amount will be obtained € 36,965,880 or equivalent to IDR 623,385,946,461.6.