Indonesia Net-Zero Series: Carbon Trading Explained

BACKGROUND

Countries worldwide have been progressively pivoting towards the implementation of international agreements relating to climate change, such as the Kyoto Protocol (1997), Paris Agreement (2015), and Glasgow Climate Pact (2021) that were initiated within the framework of the United Nations Framework Convention on Climate Change ("UNFCCC"), with the objective of mitigating the impact of climate change. As climate change continues to accelerate, driven primarily by the increasing levels of Greenhouse Gases ("GHG")¹ in the atmosphere, the global community recognizes the urgent need to mitigate the negative effect of climate change through GHG reduction.

Indonesia, as a participant in the UNFCCC, has endorsed both the Kyoto Protocol and Paris Agreement. These international commitments were formalized through Law Number 17 of 2004 and Law Number 16 of 2016, respectively. In line with these ratifications, Indonesia is committed to contribute to achieving