Advantages and Challenges of Market Based Mechanism Implementation in Indonesia

A session by Ministry of Environment and Forestry, and Coordinating Minister for Economic Affairs

Date : Thursday, 10 November 2016
Time : 09.00 – 10.30 GMT
Venue : Indonesia Pavilion at COP22, Marrakech, Morocco


As stated in Indonesia’s INDC, Indonesia is committed to reduce emissions by 29% compared to the business as usual (BAU) scenario by 2030, as a fair reduction target scenario based on country’s most recent assessment of the 2010’s National Action Plan on GHG Reduction.  The BAU scenario is projected approximately 2,881 GtCO2eq in 2030. Indonesia also has its conditionality target that will encourage support from international cooperation, which is expected to help Indonesia to increase its contribution up to 41% reduction in emissions by 2030.

Indonesia’s additional 12% of intended contribution by 2030 is subject to provision in the global agreement including through bilateral cooperation, covering technology / deployment and transfer, capacity building, payment for performance mechanisms, technical cooperation and access to financial resources.

For the conditionality target, Indonesia should prepare cooperation which can brings, not only technology support, but also financial support. In this regard, this seminar will discuss the possibilities to develop cooperation, particularly among countries for market based mechanism.

Market based mechanism is one of the most effective global tool to reach global target on emission reduction.  Market based mechanism also one of the most important mechanism under Paris Agreement to be used by the parties to reduce the emission.  As a country that also has a target to reduce GHG emission, Indonesia also will utilize market based mechanism to reach its target.

Globally, market based mechanisms have developed in multilateral, bilateral, national, and sub national level.  Currently, more than 34 market based mechanism schemes have been implemented well in developed and developing countries.

In Indonesia, market based mechanism initiatives as a tool for mitigation activities have provided lessons learned for the private sectors in developing emission reduction projects. Further, this experience is currently being integrated in their business processes. In this session, various market based financial support that have been implemented in Indonesia will be explained. Joint Crediting Mechanism (JCM) and plan vivo are two examples while the MRV development and its policies needed also will be emphasized.


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