Indonesia's State Electricity Company Signs Agreement for 12 Million Tons of Carbon Emission Reductions

en.Wedoany.com Reported - On November 11, Indonesia's state electricity company PLN and the Global Green Growth Institute (GGGI) signed a Mitigation Outcome Purchase Agreement (MOPA) during the 31st Conference of the Parties to the United Nations Framework Convention on Climate Change (COP31) held in Antalya, Turkey, with funding support from Norway's Article 6.2 Climate Action Fund. Under the agreement, Norway will purchase up to 12 million tons of carbon dioxide equivalent emission reductions generated by Indonesian photovoltaic power projects, with the transaction period extending to 2038 and a reference price of USD 20 to 40 per ton.

The agreement was signed by PLN and GGGI, with GGGI participating in the transaction as the trustee and administrator of Norway's Article 6.2 Climate Action Fund. This agreement is Indonesia's first mitigation outcome purchase agreement for implementing the bilateral cooperation mechanism under Article 6.2 of the Paris Agreement, building on the bilateral carbon market cooperation framework previously established between the Governments of Indonesia and Norway, as well as the letter of intent signed by PLN and GGGI during COP30 in 2025.

The core implementation mechanism corresponding to the agreement is Indonesia's Generation-Based Incentive (GBI) program. The program links carbon emission reduction financing to actual power generation and certified emission reduction outcomes, providing additional incentive funding when eligible renewable energy projects cannot achieve financial viability relying solely on conventional power purchase prices. The first phase focuses on supporting floating photovoltaic power stations, with priority given to new projects equipped with battery energy storage systems. Project participation is voluntary, and independent power producers must meet financial, technical, and regional conditions and demonstrate additionality, quantifiable emission reduction effects, and sustainable development benefits.

Emission reduction accounting adopts a digital monitoring, reporting, and verification system that records the actual on-grid electricity of projects and is audited by independent institutions. Only certified emission reduction outcomes can enter the subsequent carbon payment and international transfer processes. The relevant emission reductions will, in accordance with Article 6.2 rules of the Paris Agreement and upon authorization by the Indonesian government, be converted into Internationally Transferred Mitigation Outcomes (ITMOs) for bilateral transfer and accounting between Indonesia and Norway.

Following the signing of the agreement, PLN, GGGI, the Indonesian government, and the Norwegian Ministry of Climate and Environment still need to complete specific implementation and operational arrangements, including developing the GBI program rulebook, clarifying project eligibility conditions and the responsibilities of all parties, and improving data linkage between Indonesia's carbon unit registry system (SRUK) and the Article 6.2 international registry system of the United Nations Framework Convention on Climate Change.