In September, Indonesia’s President Joko Widodo opened the country’s first carbon exchange IDX Carbon, declaring “this is Indonesia’s real contribution to fight with the world against climate crisis”.
In the launch video, a calm female voice makes a plea over jangly guitar. “Join us to accelerate net zero with more transparency, liquidity and efficiency,” she says, as a headless businessman fondles a hologram of a globe.
Two months on, this call has been largely ignored. Climate Home’s analysis of trading data suggests most days see no trading at all.
Carbon credit traders and experts blamed a lack of incentives to buy, administrative mistakes and muddled government priorities.
A divisive solution
A carbon exchange allows the trade of carbon credits. One company takes carbon dioxide out of the atmosphere and another pays to take credit for it.
Carbon credit supporters argue they are a way of financing climate action which wouldn’t otherwise take place while critics say their real-world benefits are overstated and they offer polluters an excuse to keep emitting.
The European Union and China’s exchanges are among the biggest in the world. President Widodo predicted in September that Indonesia’s could soon rival them.
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But the exchange has got off to a very slow start. Of the 19 trading days that Climate Home was able to obtain data for, there was no trading on 17 days.
This data was gleaned from IDX statements and from some of its daily reports, which regularly vanish from its website. IDX did not respond to repeated requests for the full data.
The price of carbon has remained the same since the launch, suggesting it is an inactive market.
Low demand
Demand for the credits is low. This is reflected by the price of carbon – just RP 69,600 ($4.50) per tonne of carbon dioxide.
Demand could be boosted if Indonesia implements a scheme to cap company's emissions and tax them on any excess.
The idea is to allow them to avoid tax by buying another company's unused emissions allowance or by buying carbon credits.
The government initially suggested a tax would be set up in 2022 but now says it will be set up next year or the year after, saying carbon markets must be set up first.
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The voluntary market has been launched and the compliance market will begin next year, when the cap and tax is piloted on coal-fired power plants.
The government has given out mixed messages on the extent to which companies will be able to buy voluntary credits to cover their cap and tax obligations. The energy ministry wants a limited role, while the environment ministry wants a more expansive one.
Suppliers kept out
All that has dampened domestic demand and the regulations to allow foreign companies to buy credits have yet to be put in place.
Dessi Yuliana is the director of CarbonX, a company which buys and sells credits. She told Climate Home that this is because of pending international trading regulations and divided priorities in the government.
While some groups in government are keen to attract foreign investment the main administration priority is ensuring that carbon credits issued are counted towards national carbon reduction commitments, Yuliana said.
So far, the exchange lacks sellers as well as buyers. The government has authorised just three companies to sell credits.
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Fifiek Mulyana from PWC Legal Indonesia said this was because, with more regulations on carbon trading to be issued soon, many companies are still in a “wait and see situation”.
One Indonesian carbon credit seller, who did not want to be named, complained that regulations are often vague and inflexibly enforced.
A lack of expertise and experience needed to swiftly assess projects credibility is a particular problem, they added, with only four verification and validation bodies signed up.
With carbon credit projects plagued by accusations of overcounting and human rights abuses, the role of verifiers will be crucial.
“A lot of investors basically use carbon credits as a form of green virtue signaling," says Bill Sullivan, a mining and energy lawyer with Christian Teo & Associates.
“Accordingly,” he added, “any scandals in this sector could undermine the whole point of carbon credits as far as they are concerned and, so, make buying carbon credits must less attractive for them."
The post Slow start for Indonesia’s much-hyped carbon market appeared first on Climate Home News.
Climate Change
Corpus Christi Cuts Timeline to Disaster as Abbott Issues Emergency Orders
The governor’s office said the city’s two main reservoirs could dry up by May, much sooner than previous timelines. But authorities still offer no plan for curtailment of water use.
City officials in Corpus Christi on Tuesday released modeling that showed emergency cuts to water demand could be required as soon as May as reservoir levels continue to decline.
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Climate Change
Middle East war is another wake-up call for fossil fuel-reliant food systems
Lena Luig is the head of the International Agricultural Policy Division at the Heinrich Böll Foundation, a member of the Global Alliance for the Future of Food. Anna Lappé is the Executive Director of the Global Alliance for the Future of Food.
As toxic clouds loom over Tehran and Beirut from the US and Israel’s bombardment of oil depots and civilian infrastructure in the region’s ongoing war, the world is once again witnessing the not-so-subtle connections between conflict, hunger, food insecurity and the vulnerability of global food systems dependent on fossil fuels, dominated by a few powerful countries and corporations.
The conflict in Iran is having a huge impact on the world’s fertilizer supply. The Strait of Hormuz is a critical trade route in the region for nearly half of the global supply of urea, the main synthetic fertilizer derived from natural gas through the conversion of ammonia.
With the Strait impacted by Iran’s blockades, prices of urea have shot up by 35% since the war started, just as planting season starts in many parts of the world, putting millions of farmers and consumers at risk of increasing production costs and food price spikes, resulting in food insecurity, particularly for low-income households. The World Food Programme has projected that an extra 45 million people would be pushed into acute hunger because of rises in food, oil and shipping costs, if the war continues until June.
Pesticides and synthetic fertilizer leave system fragile
On the face of it, this looks like a supply chain issue, but at the core of this crisis lies a truth about many of our food systems around the world: the instability and injustice in the very design of systems so reliant on these fossil fuel inputs for our food.
At the Global Alliance, a strategic alliance of philanthropic foundations working to transform food systems, we have been documenting the fossil fuel-food nexus, raising alarm about the fragility of a system propped up by fossil fuels, with 15% of annual fossil fuel use going into food systems, in part because of high-cost, fossil fuel-based inputs like pesticides and synthetic fertilizer. The Heinrich Böll Foundation has also been flagging this threat consistently, most recently in the Pesticide Atlas and Soil Atlas compendia.
We’ve seen this before: Russia’s invasion of Ukraine in 2022 sparked global disruptions in fertilizer supply and food price volatility. As the conflict worsened, fertilizer prices spiked – as much from input companies capitalizing on the crisis for speculation as from real cost increases from production and transport – triggering a food price crisis around the world.
Since then, fertilizer industry profit margins have continued to soar. In 2022, the largest nine fertilizer producers increased their profit margins by more than 35% compared to the year before—when fertilizer prices were already high. As Lena Bassermann and Dr. Gideon Tups underscore in the Heinrich Böll Foundation’s Soil Atlas, the global dependencies of nitrogen fertilizer impacted economies around the world, especially state budgets in already indebted and import-dependent economies, as well as farmers across Africa.
Learning lessons from the war in Ukraine, many countries invested heavily in renewable energy and/or increased domestic oil production as a way to decrease dependency on foreign fossil fuels. But few took the same approach to reimagining domestic food systems and their food sovereignty.
Agroecology as an alternative
There is another way. Governments can adopt policy frameworks to encourage reductions in synthetic fertilizer and pesticide use, especially in regions that currently massively overuse nitrogen fertilizer. At the African Union fertilizer and Soil Health Summit in 2024, African leaders at least agreed that organic fertilizers should be subsidized as well, not only mineral fertilizers, but we can go farther in actively promoting agricultural pathways that reduce fossil fuel dependency.
In 2024, the Global Alliance organized dozens of philanthropies to call for a tenfold increase in investments to help farmers transition from fossil fuel dependency towards agroecological approaches that prioritize livelihoods, health, climate, and biodiversity.
In our research, we detail the huge opportunity to repurpose harmful subsidies currently supporting inputs like synthetic fertilizer and pesticides towards locally-sourced bio-inputs and biofertilizer production. We know this works: There are powerful stories of hope and change from those who have made this transition, despite only receiving a fraction of the financing that industrial agriculture receives, with evidence of benefits from stable incomes and livelihoods to better health and climate outcomes.
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Inspiring examples abound: G-BIACK in Kenya is training farmers how to produce their own high-quality compost; start-ups like the Evola Company in Cambodia are producing both nutrient-rich organic fertilizer and protein-rich animal feed with black soldier fly farming; Sabon Sake in Ghana is enriching sugarcane bagasse – usually organic waste – with microbial agents and earthworms to turn it into a rich vermicompost.
These efforts, grounded in ecosystems and tapping nature for soil fertility and to manage pest pressures, are just some of the countless examples around the world, tapping the skill and knowledge of millions of farmers. On a national and global policy level, the Agroecology Coalition, with 480+ members, including governments, civil society organizations, academic institutions, and philanthropic foundations, is supporting a transition toward agroecology, working with natural systems to produce abundant food, boost biodiversity, and foster community well-being.
Fertilizer industry spins “clean” products
We must also inoculate ourselves from the fertilizer industry’s public relations spin, which includes promoting the promise that their products can be produced without heavy reliance on fossil fuels. Despite experts debunking the viability of what the industry has dubbed “green hydrogen” or “green or clean ammonia”, the sector still promotes this narrative, arguing that these are produced with resource-intensive renewable energy or Carbon Capture and Storage (CCS), a costly and unreliable technology for reducing emissions.
As we mourn this conflict’s senseless destruction and death, including hundreds of children, we also recognize that peace cannot mean a return to business-as-usual. We need to upend the systems that allow the richest and most powerful to have dominion over so much.
This includes fighting for a food system that is based on genuine sovereignty and justice, free from dependency on fossil fuels, one that honors natural systems and puts power into the hands of communities and food producers themselves.
The post Middle East war is another wake-up call for fossil fuel-reliant food systems appeared first on Climate Home News.
Middle East war is another wake-up call for fossil fuel-reliant food systems
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