Indonesia launched a mandatory carbon trading mechanism for coal power plants on Wednesday. The carbon trading program will apply to 99 of the country’s coal power plants, Reuters reports. There are at least 237 coal-fired power plants in Indonesia, according to Argus Media, with around 100 more under construction.
The equivalent of over 500,000 tons of carbon dioxide emissions are eligible to be traded. Power plants that exceed their emissions quota will need to make up for the excess by buying carbon credits from lower-emitting plants. The price of the credits will be set by the market.
The mandatory trading mechanism currently applies only to coal plants of a certain size, but it could soon be applied to smaller coal plants and other types of power plants, such as liquified natural gas.
Indonesia is planning to phase out its coal power plants by 2040, according to Mongabay, as part of its goal to reach net-zero emissions by 2060.