Indonesia seeks to decarbonize nickel industry via carbon trading

Indonesia is working to reconcile its dominant position in the global nickel market with the need for decarbonization. As the producer of approximately 60 per cent of the world's nickel, the country has transitioned from a raw ore exporter to a major hub for refining, battery materials, and electric vehicle manufacturing. However, the industry faces challenges due to its heavy reliance on high-emission industrial power.

To address this, the Indonesian government is promoting the use of carbon trading as a tool to accelerate industrial decarbonization. Deputy Minister of Environment Diaz Hendropriyono stated that the Emissions Trading System (ETS), which currently applies to coal-fired power plants, could be expanded to include the nickel sector. Under this cap-and-trade mechanism, companies exceeding government-set emission limits must purchase carbon units, while those below the limits can sell their excess to generate economic incentives.