Carbon trading system as a climate mitigation scheme: Why Indonesia should adopt it?

Abstract

Peatland fires and deforestation are prominent environmental issues in Indonesia due to industrial and plantation activities. The Indonesian government is pressured to take mitigation measures to overcome the issue since there are legal obligations to do so. One of the climate mitigation strategies is by establishing a carbon market in which the entities will be assigned certain 'permits' on how much greenhouse gases (GHG) emissions can be emitted, and when they have exceeded their 'permits', they are allowed to buy 'extra permits' from the other entities who still have the spare. This market has been adopted by the European Union (EU) and other countries in Asia. Therefore, this paper aims to introduce the carbon market concept by taking into account its implementation in the EU, as well as analyse how the market can become one of the climate mitigation policies in Indonesia. The research uses a doctrinal methodology that involves an in-depth legal analysis of the regulatory framework related to the issue. The authors found that the market will enhance the REDD+ Project and projected to bring revenues. However, there are challenges due to the absence of technology and the number of stakeholders involved.