Ministry of Industry Eliminates Carbon Emission Cap for Industrial Sector

The Ministry of Industry (Kementerian Perindustrian- “ Kemenperin ”) plans to implement carbon trading specifically for the industrial sector as a step to implement green industry policies. The Head of the Ministry of Industry’s Green Industry Center, Apit Pria Nugraha, said that the implementation of carbon trading is different from the general mechanism with the application of caps or emission limits in certain sectors.

“Finally, yesterday it was decided that we will not use a cap, we will directly limit the emissions, directly at the business actor level,” said Apit.

Apit explained that the reason for eliminating the cap was considering a number of things, namely the complexity of the emission quota distribution mechanism which requires emission inventory data and the auction mechanism as an alternative to determining the emission limit quota. The Ministry of Industry considers this to be unfair between large and small companies.

Therefore, Apit ensured that the emission allowance application system applied in carbon trading will be carried out by calculating the emission intensity multiplied by the production output of the business actor.

Apit ensured that other mechanisms in the industrial sector carbon trading will follow business as usual. Later, business actors only need to verify their actual emissions after 1 year of implementing the emission limit. Business actors who have remaining emissions can sell them to business actors who exceed the specified emission limit.