Ministry of Environment Develops Carbon Trading for Nickel Industry
Indonesia is encouraging the utilisation of carbon trading as an instrument to accelerate the decarbonisation of the nickel industry. The Deputy Minister of Environment/Deputy Head of the Environmental Control Agency (KLH/BPLH), Diaz Hendropriyono, stated that this mechanism can provide incentives for companies capable of keeping emissions below the limits set by the government.
“Every company certainly produces emissions, and the government will determine the allowable limit. If emissions exceed this limit, the company must purchase carbon from the market; however, if they are below the limit, this can provide an incentive for a company to sell carbon,” said Diaz during the National Conference on “Strengthening Nickel Industry Competitiveness through ESG, Decarbonisation, and Business and Human Rights Due Diligence” held by Aksi Ekologi dan Emansipasi Rakyat (AEER) on Thursday (9/9/2025).
Diaz explained that the government has established an Emissions Trading System (ETS) using a cap-and-trade mechanism to control greenhouse gas (GHG) emissions. The current application of the ETS covers coal-fired steam power plants (PLTU), but its scope is intended to be expanded to other sectors and industries.
“We are pushing for the ETS system. It is already in effect for coal-fired power plants but not yet for biomass, oil, geothermal, cement, nickel, and other industries. We need to push this together to achieve decarbonisation. This requires a cap-and-trade system where emission limits are determined by the government or the Ministry of Energy and Mineral Resources, and subsequently, companies can sell their excess credits,” said Diaz.
According to Diaz, expanding the application of the ETS could open up broader emission control mechanisms, including for the nickel industry. Under this scheme, companies producing emissions above the limit must purchase carbon units, while companies operating below the limit can derive economic benefits from their surplus carbon units.
From the perspective of the Ministry of Environment, the government is also preparing registration infrastructure to support carbon trading. Diaz noted that the Carbon Unit Registry System (SRUK) has been launched and that the regulatory readiness for conducting carbon trading is in place.
“From the Ministry of Environment’s side, for carbon trading, there is a system called SRUK. We have launched the carbon trading system; systemically, we are ready, and regulatorily, we are prepared,” said Diaz.
Diaz expressed hope that this mechanism would encourage the nickel industry to reduce emissions from its production processes. He noted that the processing of laterite nickel has a high carbon dioxide emission intensity, making decarbonisation efforts essential to reducing GHG emissions.
Reducing emissions from the industrial sector is also considered vital in helping to mitigate the rising concentration of greenhouse gases in the atmosphere, which contributes to climate change.