The governments of Indonesia and Japan have officially launched a Mutual Recognition Arrangement (MRA) for bilateral carbon trading, marking the first inter-country collaboration under Article 6.2 of the Paris Agreement. Announced at the Indonesia Pavilion during COP29 UNFCCC in Baku, Azerbaijan, on November 12, 2024, this agreement is a strategic step toward achieving more ambitious emission reduction targets in both nations. Indonesia's President's Special Envoy to COP29, Hashim S. Djojohadikusumo, stated Indonesia’s commitment to advancing existing initiatives, representing President Prabowo’s support for the arrangement. Japan’s Vice Minister for Global Environment, Matsuzawa, expressed optimism, noting the MRA's potential to foster concrete projects for emission reduction in Indonesia and contribute to global emission mitigation. Developed through close discussions between Indonesia's Ministry of Environment and Forestry and Japan’s Environment Ministry since August 2024, the MRA became effective on October 28, 2024.
The MRA is founded on mutual recognition of each country's carbon credit systems, with core components including mitigation methodologies, emissions reduction accounting, and Monitoring, Reporting, and Verification (MRV) protocols. Indonesia’s Greenhouse Gas Emission Reduction Certification (SPEI), now acknowledged by Japan, supports Indonesia's Nationally Determined Contribution (NDC) targets under Presidential Regulation No. 98/2021, ensuring compliance with TACCC (Transparency, Accuracy, Completeness, Comparability, and Consistency) principles. Under the MRA, Indonesian carbon credits will be recognized in Japan, expanding opportunities for international carbon trade. Mitigation projects in Indonesia, supported by Japan, will comply with local environmental regulations and the SPEI system. This collaboration builds on the Joint Crediting Mechanism (JCM) launched in 2013. The MRA requires all JCM projects in Indonesia to register under the SPEI, enhancing transparency in carbon trading. In November and December 2024, Indonesia's Ministry of Environment will work with the JCM Secretariat to inventory active projects, existing carbon credits, and new Japanese investments, while engaging Japanese investors and stakeholders in the MRA’s implementation.
