Norway to purchase Indonesian carbon credits tied to solar projects

what happened

Reuters reports that Norway has agreed to acquire as many as 12 million metric tons of carbon credits. The credits come from solar power projects developed by PLN, Indonesia's state utility, according to a statement from the Indonesian government issued on Thursday.

The government put the value of the credits at $20 to $40 per ton of CO2e. The deal was signed on the margins of the COP31 UN climate conference in Turkey.

Jakarta says the arrangement should provide a sustainable funding channel for its energy transition under Article 6.2 of the Paris Agreement. That article lets countries cooperate on emission cuts through bilateral deals, transferring surplus reductions as credits to nations working toward their own targets.

why it matters

For markets, the deal is mainly a sign that cross-border carbon trading is expanding. Its size is small next to oil, gas or power markets, so the direct price effect is limited, though it adds a financing route for clean power in Indonesia.

market impact

Carbon credit market and Indonesian solar projects: new buyer and funding source for energy transition

instruments