DEN: Verifying Industrial Emissions Could Cut CBAM Costs by 90 Per Cent
“The price or cost could be much lower, falling by around 90 per cent compared with the default value in the European Union’s policy framework.”
Jakarta (ANTARA) — National Economic Council (DEN) member Mochamad Firman Hidayat said industrial emissions verification could potentially reduce estimated costs under the European Union’s Carbon Border Adjustment Mechanism (CBAM) by around 90 per cent in a simulation of one case.
Firman made the remarks at a discussion organised by the Center for Indonesian Policy Studies (CIPS) in Jakarta on Thursday. He said the DEN had analysed CBAM’s potential effects on the competitiveness of Indonesian exports, including comparing cost calculations based on the EU’s default emissions values with a case provided by the Ministry of Industry.
The example suggested that estimated carbon costs could fall if businesses used actual emissions data measured and verified in accordance with applicable requirements. However, the 90 per cent figure represents a potential reduction in one case, not a realised saving or a reduction that would apply to all exporters.
Firman said using default emissions values could undermine the competitiveness of some Indonesian steel products, particularly hot-rolled coil (HRC) and carbon-steel wire rod. DEN simulations indicated that, for some of these products, carbon costs calculated using the EU’s default values could even exceed their sale value.
He therefore called for the measurement, reporting and verification (MRV) of industrial emissions to be accelerated, particularly in sectors likely to be directly affected by CBAM. “This is one of the quick wins we need to deliver,” he said.
Firman said MRV should be prioritised for iron and steel products and related sectors, enabling exporters to demonstrate product emissions using accountable data. Actual emissions data that meet EU verification requirements could reduce exporters’ reliance on default values when calculating their carbon obligations.
According to the DEN’s analysis of 2025 trade data, Indonesia’s exports to the EU in product groups covered by CBAM were worth about US$2.32 billion, equivalent to Rp42.18 trillion. This represented around 11.9 per cent of Indonesia’s total exports to the EU.
Indonesia’s exports of similar product groups to the rest of the world were valued at about US$33.3 billion, or Rp605.49 trillion. Firman warned that the amount of trade potentially affected could increase if other countries adopted similar carbon-adjustment policies.
He stressed that these trade figures show the exposure of export products to carbon policies; they do not represent losses or CBAM costs payable by exporters. Product mapping, he said, should guide policy priorities so that the industries most at risk can prepare early for market requirements.
CIPS researcher Andree Surianta said Indonesia needed an integrated industrial emissions measurement system that is recognised internationally to support trade competitiveness. “We should not develop it just for our own use, but so that we can actually trade carbon with our trading partners,” he said.
Andree said the emissions measurement system being developed by the Ministry of Industry should be aligned with the carbon trading system overseen by the Ministry of Environment. Such coordination is important to ensure national systems do not develop separately and can help meet trading partners’ sustainability requirements, he said.
The Ministry of Industry has also included decarbonisation road maps for nine industrial subsectors—including metals, cement, fertilisers and chemicals—as part of its strategy for a transition to low-carbon production.
The EU’s CBAM entered its definitive phase on 1 January 2026, initially covering iron and steel, aluminium, cement, fertilisers, hydrogen and electricity. Under European Commission rules, importers can report emissions using default values or actual emissions data verified by an accredited verifier in line with CBAM requirements.
Purchases of CBAM certificates for goods imported during 2026 are scheduled to begin in February 2027. The first annual declaration and the corresponding surrender of certificates are due by 30 September 2027.