Global Climate – Indonesia has taken a major step toward becoming a global leader in international carbon markets. On the sidelines of the COP30 Summit in Belém, Brazil, state utility firm PLN signed a mutual expression of intent with the Global Green Growth Institute (GGGI). The collaboration aims to develop a generation-based incentive program, a mechanism that could unlock up to 12 million tons of internationally transferred mitigation outcomes (ITMOs) under Article 6 of the Paris Agreement.
This agreement builds on the long-standing Indonesia–Norway partnership and marks Indonesia’s shift from nature-based climate contributions to technology-based carbon trading solutions—a move that signals readiness for large-scale, transparent, and measurable emissions reduction.
A Milestone in Indonesia–Norway Climate Cooperation
Minister of Environment and Forestry, Hanif Faisol Nurofiq, described the agreement as a turning point.
According to him, the collaboration is not only a continuation of Indonesia–Norway bilateral climate work but a step that proves Indonesia is ready to lead in technology-based carbon market mechanisms.
He emphasized that this achievement aligns with President Prabowo Subianto’s direction to strengthen the country’s renewable energy vision through multi-sector carbon trading.
Hanif stated that this milestone “will determine the next phase of Indonesia-Norway cooperation and demonstrate to the world that we are capable of becoming leaders in implementing carbon trading through Article 6 of the Paris Agreement.”
His Norwegian counterpart, Andreas Bjelland Eriksen, echoed the sentiment, asserting that this collaboration is “only the beginning,” and that it sets the foundation for expanded work in green technology, climate finance, and sustainable investment.
Shifting From Nature-Based to Technology-Based Carbon Markets
Article 6 of the Paris Agreement enables countries to collaborate on emissions reduction by trading mitigation outcomes. Historically, focused on nature-based solutions, including forest protection and result-based contributions.
This new agreement signals a strategic upgrade:
Indonesia is now incorporating technology-driven mechanisms—especially through the energy sector—to boost emissions reductions more rapidly and transparently.
This evolution matters, because:
- It diversifies Indonesia’s carbon market portfolio
- It accelerates renewable energy adoption
- It supports long-term climate governance reforms
- It positions Indonesia as a regional hub for Article 6 implementation
The generation-based incentive program is designed to reward renewable energy production and displace coal-generated electricity—directly contributing to emissions cuts.
PLN’s Role in Building Indonesia’s First Large-Scale ITMO Infrastructure
PLN, through its Technology, Engineering, and Sustainability Division, plays a central role in this transformation.
Director Evy Haryadi emphasized that PLN and the Indonesian government are committed to unlocking green investments that directly contribute to environmental sustainability.
He noted that climate change is a global challenge requiring global solutions, and this agreement represents a concrete joint effort to address escalating climate risks.
PLN is now preparing:
- The world’s first bilateral carbon transaction under this scheme
- Indonesia’s first and largest carbon financing program for renewable energy projects
- A reliable foundation for future ITMO and MOPA (Mitigation Outcome Purchase Agreement) structures
With this infrastructure, Indonesia stands to become a leading model for transparent, scalable, and verifiable climate cooperation under Article 6.
The Generation-Based Incentive Scheme: Accelerating Renewable Energy and Cutting Coal Dependence
The core mechanism of the cooperation is the generation-based incentive scheme, which rewards renewable energy generation that replaces fossil-based energy—specifically coal.
Its impact includes:
- Faster reduction of greenhouse gas emissions
- More bankable renewable energy projects
- Greater investor confidence
- Enhanced competitiveness of Indonesia’s clean energy sector
- Stronger alignment with global climate pathways
By designing incentives tied to actual electricity generation, Indonesia creates a performance-driven model that other developing countries can follow.
Building the Mitigation Outcome Purchase Agreement (MOPA)
This cooperation document becomes the essential groundwork for the upcoming Mitigation Outcome Purchase Agreement (MOPA), which will regulate the purchase of internationally transferred mitigation outcomes (ITMOs).
Once finalized, MOPA will:
- Set the accounting rules for carbon transfers
- Ensure compliance with Article 6
- Safeguard transparency and environmental integrity
- Open Indonesia to more global buyers in the carbon market
This paves the way for long-term, market-driven climate financing.
Indonesia’s Positioning as a Global Carbon Market Leader
With this agreement, demonstrates:
- Readiness to scale technology-based climate actions
- Capacity to implement complex Article 6 mechanisms
- Ambition to lead in the Indo-Pacific and global carbon markets
- Strong political commitment to climate governance
The partnership also sends a strong signal to:
- Private sector investors
- Renewable energy developers
- International governments
- Global carbon market actors
Indonesia is not just participating—it is shaping the future of carbon trading.
Build Your Expertise in Climate Governance and Carbon Markets
For professionals, institutions, and organizations aiming to deepen their understanding of carbon markets, renewable energy policy, and sustainable development, Mutu Institute offers specialized training designed to equip you with practical, up-to-date knowledge aligned with current international standards.
Mutu Institute provides:
- Training in ISO, sustainability, and climate governance
- Courses relevant to carbon markets and emissions reduction frameworks
- Expert-led sessions tailored for industry and government stakeholders
In addition, Mutu Institute operates Carbon Nature, an NGO focused on environmental sustainability, carbon governance, and community-based climate initiatives.
These programs are ideal if you want to:
- Strengthen your skills in carbon regulation
- Prepare for the future of Article 6 implementation
- Contribute to Indonesia’s green transition
- Engage professionally in the global carbon market
Join Mutu Institute’s training programs and collaborate with Carbon Nature to be part of Indonesia’s next chapter in sustainable development.
