Indonesia’s Carbon Exchange and the Search for Liquidity
Indonesia launched IDX Carbon in September 2023 as a domestic platform for trading carbon credits. However, the market has struggled with low liquidity and limited buyer participation. By the end of July 2026, IDX Carbon recorded a trading volume of only 165,240 tons of CO2 equivalent, valued at Rp 6.88 billion, with 155 active participants. Recognizing these constraints, IDX has begun exploring collaboration with regional carbon exchanges, particularly Singapore’s carbon market, which is viewed as a potential source of buyers for Indonesian carbon credits. This cross-border linkage represents a significant opportunity to inject liquidity into Indonesia’s carbon market and accelerate the financing of emission reduction projects.
OJK’s Strategic Engagement with SGX and Global Exchanges
In February 2026, Indonesia’s Financial Services Authority (OJK) announced plans to partner with SGX and the London Stock Exchange (LSE) to expand the reach of IDX Carbon and attract global green fund flows. This tripartite approach signals a recognition that domestic carbon markets alone cannot generate sufficient demand to finance Indonesia’s substantial climate mitigation potential. By connecting IDX Carbon with SGX’s Climate Impact Exchange—a platform backed by SGX and Temasek focused on high-quality nature-based solutions—Indonesia can access a global pool of corporate buyers committed to voluntary carbon credit purchases.
Nature-Based Solutions: Indonesia’s Comparative Advantage
Southeast Asia holds approximately 30% of the world’s potential for nature-based solutions, with Indonesia, Cambodia, Malaysia, and the Philippines identified as standout contributors. Indonesia’s vast tropical forests, mangrove ecosystems, and peatlands represent enormous carbon sequestration capacity. Through SGX-linked carbon markets, Indonesian conservation and restoration projects can monetize their climate benefits, generating revenue for local communities while preserving critical ecosystems. This creates a virtuous cycle: carbon finance incentivizes forest protection, which in turn sustains biodiversity and supports rural livelihoods.
The Macroeconomic Implications of Carbon Market Integration
The integration of Indonesia’s carbon market with SGX has profound macroeconomic implications. Carbon credit revenues can supplement regional budgets, fund sustainable development initiatives, and diversify income streams away from extractive industries. Furthermore, a liquid carbon market enhances Indonesia’s attractiveness to environmentally conscious foreign investors, who increasingly prioritize ESG criteria in their capital allocation decisions. By leveraging SGX’s financial infrastructure and global connectivity, Indonesia can position itself as a leader in the emerging green economy, attracting investment that simultaneously advances economic growth and climate goals.
