Tuesday saw the kcik-off the of the first Mutual Recognition Arrangement (MRA) under the Paris Agreement’s Article 6.2 carbon trading system. The agreement sees Indonesia becoming an issuer of carbon credits with Japan being the buyer.
The two countries will now officially recognize each other’s carbon credits, enabling their exchange.
Speaking at Indonesia pavilion at COP29 Hashim S. Djojohadikusumo, Indonesia’s special Presidential envoy to the event said: “The Indonesian government is ready to execute any agreement signed in the MRA,” he noted at the Indonesia Pavilion at the Baku Olympic Stadium in Azerbaijan on Tuesday.”
Japan’s Vice Minister of Global Environmental Affairs, Yutaka Matsuzawa visited the Indonesian pavilion and together the two officials formally announced the kick-off after formal agreements were signed earlier on October 18th.
Earlier in October Djojohadikusumo indicated that Indonesia is looking at issuing credits for over 200 million tons of CO2 annually in the next three years and is aiming for a selling price of $10 per credit.
The agreement is expected to pave the way for Japan and Indonesia to sign carbon trading agreements with other partners using this one as a template. It could also serve as the blueprint for other bilateral deals in Asia, as well as between countries in the Global North and South in other regions.
Two other countries reported to be working on a similar agreement are Italy and South Korea.
The deal also follows the successful rollout of a global carbon market under Article 6.4 which established standards and methodologies for trading carbon credits.
