IDX proposes incentive and disincentive schemes for carbon trading

Jakarta (ANTARA) - PT Bursa Efek Indonesia (IDX) has proposed the implementation of an incentive and disincentive scheme to increase carbon trading transactions through the exchange.

IDX Development Director Iding Pardi stated that the exchange is currently preparing a proposal for the government so that carbon transactions via the exchange can receive incentives, while transactions conducted outside the exchange could be subject to disincentives.

“Therefore, there must be an incentive and disincentive mechanism for carbon transactions. If traded on the exchange, there should be incentives; if outside the exchange, there should be disincentives. This is what we are currently drafting in our proposal, which we will submit to the government,” Iding said in Jakarta on Friday.

According to him, one form of incentive that could be considered is the imposition of lower state levies on carbon transactions conducted through the exchange.

“For carbon transactions on the exchange, there should be incentives, for example, by adjusting the current Non-Tax State Revenue (PNBP). The hope is that the imposition of PNBP on the carbon exchange will be lower than for those transacting outside the exchange,” he said.

Iding believes that transactions through the exchange offer several advantages, particularly in terms of transparency and supervision, ensuring that all transactions occurring on the exchange are visible.

“Because the exchange certainly has many advantages, as there is transparency, everything is visible, and supervision is easy; the government or regulators can also see the overall potential of our carbon,” he said.

Conversely, transactions conducted directly outside the exchange are considered more difficult to monitor because they rely on the reporting of each individual party.

“If it is outside, it is just up to each party. If they do not report, the government will not know that a carbon sale has taken place,” Iding said.

In addition to increasing transparency, the IDX believes that carbon trading through the exchange can strengthen price discovery.

“So, we are encouraging this and will also propose a proposal for disincentives. This is because the benefits include better price discovery, as it is based on supply and demand, whereas outside the exchange, it is just individual negotiations,” he said.