Global upheaval, which has led to an exponential rise in energy prices and increased their volatility, is posing a challenge to the development of the carbon market, Finance Minister Sri Mulyani Indrawati has said.

“Not only Indonesia but also all countries are focusing on climate change,” she noted at the 2022 Institute of International Finance (IIF) Sustainable Finance Summit, accessed online from Jakarta on Thursday.

Regardless of the issue, in the medium and long run, Indonesia as a large country deems it necessary to build a foundation for addressing climate change, particularly through the carbon market, the minister said.

The challenge to introducing the carbon market is that the market will not trade carbon dioxide (CO2) in its original form but CO2-based underlying securities, she pointed out. “So the question of how to measure CO2 and produce a credible certificate to be traded in the market will become important,” she informed.

The former World Bank managing director said that she is currently discussing a reasonable carbon price with the capital market in Indonesia.

She further said she had received cooperation offers from London and Singapore, which are currently developing their carbon markets.

The Indonesian government has endorsed the carbon tax law as part of its commitment to reduce CO2.

“That is what we are currently discussing in details (particularly) how Indonesia can prepare itself. However, all principles of this policy are important,” Indrawati said.

Source: Antara News