TEMPO.CO, Jakarta - The Governments of Indonesia and Japan have reached an agreement to initiate the implementation of the Mutual Recognition Arrangement (MRA) for bilateral carbon credit trading cooperation between the two countries.

This was announced at the Indonesia Pavilion during the 29th United Nations Framework Convention on Climate Change/Conference of Parties (COP29) in Baku, Azerbaijan, on Tuesday, November 12, 2024. This MRA agreement is the first bilateral cooperation model between countries in the world under the framework of the Paris Agreement, specifically Article 6.2.

"The Indonesian government is ready to implement the agreement that has been signed. On behalf of President Prabowo, I convey his commitment to continue all the work done by the previous administration," said Indonesia's Special Envoy for COP 29 UNFCCC, Hashim Djojohadikusumo, in a written statement on Wednesday, November 13, 2024.

Regarding this cooperation, Vice Minister for Global Environment Affairs, Ministry of Environment Japan, Matsuzawa stated that through the MRA, the Indonesian and Japanese governments can develop collaboration and cooperation towards net zero emission between the two countries.

"Through this MRA, we aim to formulate and develop concrete projects for emission reduction in Indonesia, and based on this experience, both countries can also contribute to global emission reduction," he said.

The Ministry of Environment and Forestry of Indonesia and the Ministry of the Environment of Japan are the authorities responsible for the carbon credit systems in their respective countries. The two parties have prepared this Mutual Recognition Arrangement (MRA) through a series of dialogues and discussions at the Ministerial, Deputy Ministerial, and technical team levels of both parties held since August 2024.

The MRA document was signed circularly on October 18, 2024, by the Minister of Environment and Forestry of Indonesia and on October 28, 2024, by the Minister of Environment of Japan. According to the agreement, the MRA came into effect on October 28, 2024.

MRA is built on the principle of equality between the carbon credit systems of Indonesia and partner countries. The carbon credit system components recognized by both countries include mitigation action methodologies, emission reduction calculations, monitoring, reporting, and verification systems (MRV), and carbon credit certification. In Indonesia, this certification is known as the Indonesian Emission Reduction Certification (SPEI).

This MRA ensures that Indonesia's carbon credit system is recognized by the authorities of partner countries to support the achievement of greenhouse gas (GHG) emission reduction targets mandated by the Paris Agreement.

Presidential Regulation Number 98 of 2021 has regulated the implementation of carbon economic value as part of efforts to achieve national contribution targets (NDC) including through carbon trading cooperation with the MRA instrument. The Paris Agreement mandates that this carbon trading cooperation refers to the principles of Transparency, Accuracy, Completeness, Comparability, and Consistency (TACCC), which ensure high integrity in carbon credit trading.

Implementing the MRA with partner country authorities will have a significant impact on Indonesia in international carbon trading. Indonesian carbon credit certificates are recognized on par with those in partner countries. Mitigation action projects taking place in Indonesia supported by partner country resources must comply with existing national environmental regulations and follow the Indonesian certification system.

The distribution of generated carbon credits will be determined based on agreements between the two involved parties, with direct supervision from the Indonesian government and partner countries. Indonesia will gain greater benefits in climate change mitigation efforts while strengthening its position in global carbon trading.

Since 2013, Indonesia has collaborated with Japan through the Joint Crediting Mechanism (JCM) for mitigation action projects in Indonesia. Prior to the MRA, carbon credits generated by JCM projects in Indonesia were not fully recorded in the Indonesian National Registry System. With the implementation of the MRA, all JCM mitigation projects in Indonesia are required to be registered in the Indonesian National Registry System and use the SPEI system.

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