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1. www.idsurvey.id
Will Carbon Tax and Other
Green Revenue Sources Make
Contribution?
March 2023
www.ptsi.co.id

2. 2
1 Indonesia is Committed to Making an Energy Transition.
2 Indonesia has Set NDC Targets
3 Regulation on Carbon Economic Value
4 SPE Issuance Flow
Table of Content
5 What’s The Problem

3. 3
Scaling Up and Greening Decentralized Energy in Rural Area
❏ The development of IKN is a manifestation of Indonesia’s
commitment in tackling climate change. Indonesia targets
zero carbon emissions and 100 percent use of new and
renewable energy by 2045.
❏ Renewable energy company must be able to take
advantages of this captive market and free from legal
barriers by applying the Pareto principle, namely by working
out on 20 percent of the most critical part the overall
performance improving by 80 percent: Company’s
performance and reputation significantly improves, and it
is easier for renewable energy company to get funding.
❏ Renewable energy company must capitalize on this
opportunity as PLN is still troubled by its IDR 631,6 trillion
making it no longer eligible to apply debt and cannot do
much for IKN. Regarding funding, apparently will not meet
any difficulties because may global institutional investors
are interested and ready to help, such as the European
Investment Bank, Asian Development Bank, KfW, and the
Green Climate Fund (GCF) with very soft requirements.
https://setkab.go.id/en/new-capital-city-of-nusantara-to-represent-excellent-nation/

4. 4
Indonesia Needs to Take an Important Strategic Role in The Energy
Transition
4
❏ According to the Minister of Finance, the energy sector
with a contribution targeted at reducing 450 million tons
of CO2e requires funds of up to IDR 3,500 trillion by
2060.
❏ The Secretary-General of the Ministry of Energy and
Mineral Resources, Ego Syahrial, said that Indonesia had
determined to reduce greenhouse gas emissions from
the energy sector by 314 million CO2e with its efforts
and 466 million tons of CO2e with international
assistance.
❏ Indonesia needs to take an important strategic role in
the energy transition through developing carbon
solutions, new renewable energy, and building future
businesses in the energy sector.
"It is very different. Energy is a costly sector.
However, energy is important for the people, and it
is important to reduce C02 after FoLU (Forestry and
other Land Use)."
- Sri Mulyani
4

5. 5
This figure describe how
coal energy source
transition into cleaner and
renewable energy and
Indonesia set cut off date
for coal on 2035. And
Indonesia also set target
to reduce methane by
30% on 2030.
Source: LTS LCCR, 2021
Transition into
Cleaner Energy
Projection of primary energy supply Projection of power generation mix and grid emission factor
Projection of final energy demand by fuel type Projection of energy sector emissions by emitting sector
Type under CPOS, TRNS, and LCCP

6. IDSurvey adalah Holding BUMN Jasa Survei Indonesia
yang berfokus pada TIC (Testing, Inspection,
Certification)beranggotakan:
PT Biro Klasifikasi Indonesia (Persero),
PT Sucofindo dan
PT Surveyor Indonesia.
Kami hadir untuk memberi solusi kepastian atas produk
maupun jasa secara menyeluruh untuk memberikan
dampak positif terhadap proses bisnis melalui kapabilitas,
kompetensi serta pengalaman kami yang sudah berdiri
lebih dari 50 tahun.
IDSurvey merupakan wajah Indonesia di mata dunia yang
memberikan jawaban atas kebutuhan jasa pemastian dan
berkomitmen untuk memberikan dampak kepada
seluruh lapisan bisnis dalam bidang TIC.
2
Indonesia has Set NDC Targets
Unconditionally with own efforts
29%
Reducing emissions
in the first period>>
41% With International support
In the Enhanced NDC
(ENDC) Indonesia's GHG
emission reduction target
increases to 31.89% with
its efforts:
29%
31,89%
Also, 43.20% with
international support:
41%
43,20%
6
Mitigation
Emission Reduction
Targets
(Million Tonnes CO2e)
Renewable energy 170.42
Energy Conservation 96.33
Clean Power Plant 31.80
Fuel switching 10.02
Post Mining Reclamation 5.46
Total 314.03
Source: national policy, Surveyor Indonesia Analysis
Enhanced Nationally Determined
Contribution (NDC) Indonesia 2022
Sector
GHG
Emission
Level 2010*
(MTon
CO2-eq)
GHG Emission Level 2030 GHG Emission Reduction
Annual
Average
Growth BAU
(2010-2030)
Average
Growth
(2000-2012)
MTon CO2-eq MTon CO2-eq % of Total BaU
CM1 BaU CM1 CM2 CM1 CM2 CM1 CM2
1. Energy* 453.2 1.669 1.311 1.223 358 446 12.5% 15.5% 6.7% 4.50%
2. Waste 88 296 256 253 40 43.5 1.4% 1.5% 6.3% 4.00%
3. IPPU 36 69.6 63 61 7 9 0.2% 0.3% 3.4% 0.10%
4. Agriculture 110.5 119.66 110 108 10 12 0.3% 0.4% 0.4% 1.30%
5. Forestry and
Other Land
Uses (FOLU)**
647 714 214 -15 500 729 17.4% 25.4% 0.5% 2.70%
TOTAL 1,334 2,869 1,953 1,632 915 1,240 31.89% 43.2% 3.9% 3.20%
Notes:
CM1 = Counter Measure 1 (unconditional mitigation scenario)
CM2 = Counter Measure 2 (conditional mitigation scenario)
TARGET NDC INDONESIA

7. IDSurvey adalah Holding BUMN Jasa Survei Indonesia
yang berfokus pada TIC (Testing, Inspection,
Certification)beranggotakan:
PT Biro Klasifikasi Indonesia (Persero),
PT Sucofindo dan
PT Surveyor Indonesia.
Kami hadir untuk memberi solusi kepastian atas produk
maupun jasa secara menyeluruh untuk memberikan
dampak positif terhadap proses bisnis melalui kapabilitas,
kompetensi serta pengalaman kami yang sudah berdiri
lebih dari 50 tahun.
IDSurvey merupakan wajah Indonesia di mata dunia yang
memberikan jawaban atas kebutuhan jasa pemastian dan
berkomitmen untuk memberikan dampak kepada
seluruh lapisan bisnis dalam bidang TIC.
2
The 2015 Paris Agreement is committed to
keeping a global temperature rise this century
well below 2 degrees Celsius above pre-industrial
levels and to pursue efforts to limit the
temperature increase even further to 1.5 degrees
Celsius.
Indonesia has Set NDC Targets
The Establishment Of The UNFCCC Brings The world’s
Attention To Climate Change
Series of Conference of the Parties (COP) UNFCCC
1992
2007
Kyoto
Protocol
2007
Bali
Roadmap
2009
Copenhagen
Accord
2019
Kotowice
Climate
Package
Agreement to reduce
emissions to keep global
temperature rise below 2
degrees celsius
Ditandatangani atas nama Negara
The National Actor is INDONESIA
Paris Agreement
It means that:
1. The NDC achievement target is an obligation at the national
(Indonesia) level
2. Carbon trading between actors at the sub-national scale does
not affect the achievement of the NDC
3. If carbon trading to multinational companies (B to B) across
countries is not used to reduce emissions in destination
countries, it will not reduce the achievement of Indonesia's
NDC either.
National Level
Sub-National Level
Business
Actor
NGO Society

8. 8
Indonesia Has a Large Carbon Trading Potential in The FOLU Sector
● The potential for carbon trading in Indonesia is quite large because it has
forests and peatlands that can be used as a source of reducing carbon
emissions. According to data from the Ministry of Environment and Forestry, the
potential for reducing carbon emissions in Indonesia is around 1.1 billion
tonnes of CO2eq per year. This potential can be utilized to generate income
from carbon trading with countries that have high carbon emission reduction
targets. However, to take advantage of this potential, Indonesia needs to make
efforts to reduce deforestation and forest degradation and develop
renewable energy and environmentally friendly technologies.
● According to a report from the World Bank, potential income from carbon
trading in Indonesia reaches US$1.2 billion per year. However, this figure is only
an estimate and cannot be used as an exact value because the price of carbon
on the market fluctuates.
● The Katingan Mentaya Project is a carbon reduction project in Indonesia that
focuses on forest and peatland management in the Katingan and Mentaya
areas, Central Kalimantan. This project is managed by the Tambuhak Sinta
Foundation and has received Verified Carbon Standard (VCS) and Climate,
Community and Biodiversity (CCB) Standards certification. According to
reports, the Project has an emission reduction potential of 7.5 million tCO2eq
over a 30 year period. Assuming a carbon trading price of around US$ 5-10 per
tCO2eq, the potential revenue from this project could reach around US$ 37.5
million - US$ 75 million per year.

9. 9
Regulation on Carbon Economic Value
• Carbon Economic Value (Trading & Taxes)
Indonesia has issued regulations regarding the economic value of carbon governing carbon taxes and carbon trading
Perpres No. 98/2021 The Implementation on
Carbon Pricing to Achieve the NDC
UU No. 7/2021 Harmonization of Tax Regulation
Permen LHK No. 21/2022 Guidelines of Carbon
Economic Value Implementation
Permen ESDM No. 16/2022 Procedures for the Implementation of
Carbon Economic Value in the Power Plant Sub-Sector
Permen ESDM No. 2/2023 Implementation of CCS, CCUS
in Upstream Oil and Natural Gas
Draft Regulation of MoEF on NDC and GHG Inventory
Policies & Regulations
Related to Carbon Economic Value

10. 10
Business actors whose emissions
exceed PTBAE can perform offset
schemes to reduce carbon taxes.
Business actors whose emissions
are under PTBAE can trade the
remaining allocation of emissions.
The government will apply a carbon tax for business actors whose
emissions exceed the Upper Emission Limit (BAE) through the
Technical Approval for the Upper Emission Limit (PTBAE).
Cap and Trade As a Scheme in The Implementing of Carbon Economic Values
Trading Offset
GHG emission offset is a
compensation mechanism for GHG
emissions released by business actors
or activities by funding emission
reduction activities.

11. 11
Scoping Study (Identification
of carbon potential, and social
conditions)
Compilation of
reports on the results
of scoping studies
Approval Report on
the results of the
scoping study
Preparation of
Mitigation Action Plan
Documents (DRAM)
Registration and general
data filling into the National
Registry System (SRN)
Determination of
management schemes
and agreements on
carbon rights
Socialization of the
program with the
community and
related stakeholders.
Review and Approval
DRAM
VDRAM validation by the
Validation-Verification Agency
• Mutuagung Lestari
• TUV Nord
DRAM validation
report by Validator
Preparation of Mitigation
Action Achievement
Report (LCAM)
Request for Issuance
of Emission
Reduction Certificate
(SPE)
Convert DRAM ke PDD
2
1 3 4
6
7 5
8
9 10 11 LCAM Verification and
Verification Reports by
Verifiers
12
13
Trading
Voluntary Carbon
Market (VCM)
• VERRA
• Gold Standard
Nasional
Internasional
1. Offset emission
2. Direct trading (B to B)
SPE issuance flow

12. 12
Miss perception on double counting in government level
The Upper Emission Limits (BAE) for each sub-sector have not
been set, especially the power plant/PLTU sector
Mutual recognition that has yet to be realized in the
agreement
Emission reduction calculation using the SRN method has
lower results than those calculated using Verra's method?
Limited validation and verification body
What’s The Problem?

13. 13
There is No Double Counting in The B to B Scheme
Ditandatangani atas nama Negara
The National Actor is INDONESIA
Paris Agreement
National Level
Sub-National Level
Business
Actor
NGO Society
It means that:
1. The NDC achievement target is an obligation at the national
(Indonesia) level
2. Carbon trading between actors at the sub-national scale does
not affect the achievement of the NDC
3. If carbon trading to multinational companies (B to B) across
countries is not used to reduce emissions in destination
countries, it will not reduce the achievement of Indonesia's
NDC either.

14. 14
Certificates such as Plan Vivo Certificates (PVCs) issued by
Plan Vivo and Verified Carbon Units (VCUs) issued by Verra
could be recognized to be traded domestically. In order to
do this, a mutual recognition between the MOEF and
Verra, Plan Vivo, or any other certification scheme must
be carried out by disclosing their standards to each
other to reach conformity. Related to this, Indonesia is
currently in the process of discussing with Verra.
Mutual recognition that has yet to be realized in the
agreement has affected the process of SPEs issuing for
ongoing carbon projects. It is because even though many
international methodologies can be used as references,
there are only around 38 available methodologies on the
SRN platform, and they have not been able to cover all
types of carbon projects. Fewer than Verra which is
currently around 80 methodologies.
Indonesia is in the process of carrying out mutual
recognition with international institutions
https://www.mongabay.co.id/2021/11/17/kesepakatan-article-6-perjanjian-paris-pada-cop26-
gembira-tapi-tidak-bahagia/

15. 15
The current carbon trading system is considered
to have the potential to cause a conflict of
interest because the government acts as a
regulator, certifier approval provider, and also
a carbon trading agent.
The government, in this case, the Ministry of
Environment and Forestry (KLHK) needs to
improve the governance of the domestic
carbon project certification mechanism.
Carbon certification governance can refer to the
ISPO certification mechanism through the
establishment of a Committee, so as to increase
acceptance in the international market
through independence and transparency.
Governance of the Carbon Certification Mechanism Needs
Improvement
ISPO Committee Structure (Perpres No. 44/2020)
Gabungan
Kementerian dan Lembaga
Dewan Pengarah
Menteri
Ketua
Unsur
pemerintah
Anggota
Asosiasi
pelaku
usaha
Anggota
Akademisi
Anggota
Pemantau
independen
Anggota

16. 16
There is a potential difference between the results of calculating emission reduction values from the methodology
prepared by voluntary carbon market institutions and the methodology available at the SRN. To cite an example, the
FOLU's sector emission reduction calculation methodology using the SRN method has lower results than those
calculated using Verra's method.
Emission reduction calculation using the SRN method has lower
results than those calculated using Verra's method?
https://verra.org/methodologies-main/#vcs-methodologies
https://srn.menlhk.go.id/index.php?r=metodologi%2Findex

17. 17
The number of validator and verifier institutions in SRN is currently limited to 2 LVVs (Mutu Agung Lestari, TUV North) and
this condition potentially slows down the SPE auditing and issuance process.
To cite an example, a pilot project in the power generation (renewable energy) sector carried out by the Ministry of
Environment and Forestry-UNDP experienced a delay in the validation process of up to one year from the time the
project was registered with the SRN.
The Number of Validator and Verifier Institutions in SRN is Currently
Limited to 2 LVVs
https://srn.menlhk.go.id/index.php?r=lvv%2Findex

18. 18
We found that the Upper Emission Limits (BAE) for each sub-sector have not been set, especially the power
plant/PLTU sector, which is one of the obstacles to the start of implementing a carbon tax in supporting transition
scheme.
Nonetheless, we found a sub-sector that has researched the intensity of carbon emissions, namely the cement
industry. The results of the joint research with the Ministry of Industry show that the emission intensity of the
cement industry is 724 – 1059 kgCO2e/ton cement.
Emissions Upper Limit Technical Approval
Carbon intensity of cement industry
Research of the Ministry of Industry, 2012

19. 19
MOEF Reg 21/2022 has cemented the initial step of the Indonesian carbon exchange development that has been
discussed these last few months. However, the MOEF Reg 21/2022 still leaves room for further regulation on such
carbon exchange, as the lead for its development will be bestowed on the financial sector. We note in some
discussions with the relevant authorities that the carbon market through carbon exchange will be commenced
at least in 2025; thus, certain regulations in financial sectors need to be issued prior to the implementation of
carbon trading through carbon exchange.
Carbon Trading Mechanism (Carbon Exchange)
Governing body?
Trading mechanism?
Carbon rating mechanism and carbon
rating body?
1. Reference prices from international markets (Trove)
2. The reference price is determined on a national scale: there is a need for a carbon rating agency to assess
carbon quality to produce high-quality carbon. In this case, PTSI partners with Sylvera.
3. High-value carbon at least has a positive impact on increasing biodiversity and the local people's income.
So it encourages the Theory of Change.
Some points that need to
be considered in the
development of this
scheme are:
Others consideration

20. 20
Several International institutions provide information on carbon price trends based on the type of project.
International Carbon Pricing

21. 21
International Carbon Pricing

22. 22
International Carbon Pricing

23. 23
International Carbon Pricing

24. 24
Strategic Issue on Sustainability & Environment - ESG
... where the development priority is the implementation of ESG aspects in risk management to increase resilience and risk
mitigation and make ESG one of the principles of sustainable finance
Sustainable Finance Roadmap
Level II (2021-2025)
ESG
in Sustainable Finance Principles
▪ Sustainable Finance is overall support from the
financial services sector to create sustainable
economic growth by aligning economic, social,
and environmental interests.
▪ Roadmap Development Priorities
- Green Taxonomy Development
Implementation of ESG aspects in risk
management.
Real program development
Sustainable product & service innovation
National campaign for sustainable finance
Source : Sustainable Finance Roadmap Phase II (2021-2025),
Indonesian Surveyor Analysis

25. 25
Thank you and
Let’s Connect !
Contact Us :
marketing.corporate@ptsi.co.id

26. 26
OPERATIONAL PLAN IN FOLU NET SINK 2013
1. Reduction of rate of deforestation on mineral soil
2. Reduction of rate of deforestation on peat soil
3. Reduction of rate of degradation on mineral soil
4. Reduction of rate of degradation on peat soil
5. Development of plantation forest
6. Sustainable Forest Management
7. Rehabilitation with Rotation
8. Rehabilitation without Rotation
9. Peat restoration
10. Peat hydrology restoration
11. Biodiversity conservation
12. Mangrove Management
SUPPORTING POLICY AND INSTITUTIONAL PROGRAMS
1. Strengthening Policies on GHG Emission;
2. Development of Incentive / Disincentive policies;
3. Information System Development;
4. Public Campaign;
5. Human Resource Capacity Building
6. Monitoring & Evaluation;
7. Law Enforcement
GOALS
Reduce
Emission
Increase
Carbon
Absorption
Maintain
Absorption
Increase
Institutional
Capabilities
Operation Plan
in FOLU Net
Sink 2030
FOLU NET SINK Programs:
How Forest Transition Happen?