Antara News·Indonesia·Thursday, October 29, 2026 at 09:23 AM UTC

Indonesia urged to accelerate industrial emission verification

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Aria Ananda, Yashinta Difa

Jakarta (ANTARA) - Accurate verification of industrial emissions could reduce compliance costs under the European Union's Carbon Border Adjustment Mechanism (CBAM) by approximately 90 percent compared to using EU default values, according to Indonesia’s National Economic Council (DEN).

DEN member Mochamad Firman Hidayat stated that the finding emerged from a single-case simulation comparing cost calculations based on EU default figures against specific data from the Ministry of Industry.

Speaking at a discussion hosted by the Center for Indonesian Policy Studies (CIPS) in Jakarta on Thursday, Firman noted that while the 90 percent figure highlights a major potential saving, it is based on a specific case and does not represent a uniform reduction rate for all exporters.

The warning highlights a critical vulnerability for Indonesian exporters as the CBAM enters its definitive implementation phase.

Relying on the EU's default carbon emission values—often applied when verified actual data is absent—risks pricing certain Indonesian products, notably hot-rolled coils (HRC) and carbon steel wire rods, entirely out of the European market.

DEN simulations indicate that default calculations could cause carbon costs for certain products to exceed their actual selling prices.

To safeguard export competitiveness, Firman urged an immediate acceleration in establishing robust Measurement, Reporting and Verification (MRV) frameworks for industrial emissions—prioritizing high-risk sectors such as iron and steel.

"This is one of the quick wins that we must pursue," Firman said, emphasizing that accountable, verifiable data allows exporters to bypass punishing default penalties.

According to DEN mapping of 2025 data, Indonesia’s exports to the EU under CBAM-covered product groups total approximately US$2.32 billion, representing about 11.9 percent of the country's total exports to the bloc.

Total global exports for those same vulnerable product groups stand at roughly US$33.3 billion, a figure that could face broader headwinds if other trading partners adopt similar carbon pricing mechanisms.

Addressing the structural challenges, CIPS researcher Andree Surianta stressed that Indonesia requires an integrated measurement framework that holds international recognition.

"It is not just about developing a system for our own internal use; it is about enabling carbon-related trade with our international partners," Andree noted.

He advocated for seamless alignment between the Industry Ministry’s emerging emission measurement mechanisms and the Environment Ministry’s carbon trading oversight to prevent regulatory fragmentation.

The Industry Ministry is currently advancing decarbonization roadmaps across nine key industrial subsectors, including metals, cement, chemicals and fertilizers.

Under current EU timelines, importers face a critical window: while CBAM certificates for 2026 imports will be purchased starting in February 2027, the initial annual declarations and surrender of certificates must be completed by September 30, 2027.

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