Jakarta, February 19, 2025 – In recent years, the threat of the climate crisis has impacted daily life, including business and development activities. The Paris Agreement, which has a target to limit global temperature rise to below 1.5 degrees, requires greater commitment and effort. Indonesia itself committed to reduce GHG emissions by 30-48% by 2030. At the same time, the new Prabowo Administration aims for a strong 8% annual GDP growth, posing a challenge in finding effective ways to balance economic progress and preservation of the environment. The progress towards carbon market, as one of the vehicles to achieve the above, has room for improvement and acceleration. Indonesia was among the first developing countries to launch a carbon exchange in Q3 2023, now consisting of over 100 participants in the power sector. President Prabowo, however, is targeting trade worth $65 billion through the exchange by 2028, from domestic and international transactions. For the first time, the exchange was opened to foreign buyers on January 20, 2025, with over 41,000 tons of CO2 traded internationally on the first day. To strengthen such progress, Indonesia is urgently in need of setting up a new institutional arrangement for such climate finance and carbon market, which responsibilities include advancing carbon market results. At the same time, Indonesia is also repositioning itself in Paris Agreement following the recent development in international stage. Moreover, by early 2025, Indonesia is also expected to state its enhanced NDC targets and think about its role and contribution in the upcoming COP30 later in the year. In this dialogue, the Government estimates that $280B is needed from public and private investment to achieve both the economic growth and emission reduction targets, with the carbon market indeed playing a key role in mobilizing these funds. Key requirements of unlocking the carbon market include revising Presidential Regulation 98/2021 on Carbon Pricing to cater demand side challenges, improving market credibility through aligning with international standards yet making it locally relevant with national frameworks and capacity building, increasing corporate accountability and just transition commitment in their decarbonization efforts, and balance scientific measures with practical implementation using transparent carbon registry system. Even stronger coordination between Ministries of Forestry, Environment, Finance and Financial Services Authority are also imperative. It is important to note as well, that the European Union, through its newly established task force and the ongoing Carbon Border Adjustment Mechanism (CBAM), has identified Indonesia as a priority country for carbon market from its nature based solutions and beyond, though its regulations currently limit carbon credit purchases from Indonesia. There were diverse opinions, however, on whether to open domestic carbon market first, or to international buyers simultaneously as well. This would require further discussion in the upcoming thematic and sector specific roundtables.