Indonesia's REC Market Assessment and Opportunities for Regional Integration

Highlights

• Policy Framework: Indonesia is developing comprehensive regulations for carbon economic value and renewable energy integration, emphasising market-based mechanisms like carbon pricing, Renewable Portfolio Standards (RPS), and RECs role in both regulatory frameworks.
• Market Growth: The Indonesian REC market is rapidly expanding, driven by strong corporate demand and the country’s commitment to renewable energy targets. It is characterised by diverse actors, high issuance and consumption volumes, and a variety of REC instruments.
• Challenges: The market faces challenges such as ownership disputes, lack of a local issuer, an inadequate legal framework, underutilisation of renewable energy capacity, and limited acceptance of cross-border transactions. Potential for Regional Integration: Indonesia’s abundant renewable energy resources, planned grid interconnections with neighbouring countries, and growing regional demand for clean energy present significant opportunities for REC exports and regional market integration.
• Recommendations: To fully realise the potential of its REC market, Indonesia should establish a local issuer, clarify ownership rights, develop a comprehensive legal framework, enhance market transparency and accessibility, encourage broader participation, and actively pursue regional collaboration on REC standards and trade.