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Article 6.4 Goes Live: Can the UN Carbon Market Deliver Scalable Supply?

Francisco Pinto — Wed, 22 Apr 2026 17:45:23 +0000

Listen to this article 24:16

From Rulemaking to Asset Generation

The UN carbon market established under the Paris Agreement has formally shifted from rulemaking into live operation. On February 26, the Article 6.4 Supervisory Body approved the first-ever issuance of carbon credits (Article 6.4 Emission Reductions, or A6.4ERs) under the Paris Agreement Crediting Mechanism (PACM), completing, for the first time, the full cycle of project registration, verification, and credit issuance under the UN’s Paris-aligned framework. The mechanism is now operational. Proof of concept, yes. Proof of scale, not yet.

The initial credits come from a clean-cooking project in Myanmar distributing efficient cookstoves to reduce household air pollution and forest pressure, financed by South Korean companies and authorized by Myanmar for use toward South Korea’s NDC and potential CORSIA compliance. The programme (a CDM Programme of Activities that completed its transition to PACM in March 2025) verified 648,783 tCO₂e for the January 2021–May 2022 monitoring period, with a total of approximately 60,000 A6.4ERs approved in the first provisional issuance batch. The issuance is operationally significant, but it carries an immediate analytical signal that the market should not overlook: under PACM’s more conservative methodology, the project’s fraction of non-renewable biomass (fNRB), the share of fuel displaced by the cookstoves that would otherwise have come from unsustainable sources, was revised down from 0.615 to Myanmar’s current default value of 0.36 under Tool 33.

That single parameter adjustment drove a 41.5% reduction in credited volume relative to the CDM baseline, compressing verified reductions from a CDM-estimated 1.1 MtCO₂e to 648,783 tCO₂e for the monitoring period. The commercial question this raises is simple: at lower volumes, do the numbers still work? For some projects, viability will hinge on whether buyers pay enough per credit to compensate for the compression. This is not a project-level anomaly. It is a preview of systemic downward revision across the transition pipeline, driven not only by fNRB recalculation, but also by PACM’s strengthened additionality requirements, which now require projects to account for host-country NDC policies as a regulatory baseline factor. Developers who built commercial models on CDM-era volumes should expect material recalibration. And the mechanism’s permanent structural deductions: 5% to the Adaptation Fund, 2% for overall mitigation, mean headline issuance consistently overstates net deliverable supply.

The symbolic value of this milestone is real. But the question the market is actually asking is different: can the mechanism make this repeatable? The Myanmar programme completed its full cycle, from PACM transition approval in March 2025 to first issuance in February 2026, in approximately eleven months. Whether that cadence is structurally replicable, or reflects first-mover conditions unlikely to be sustained, is itself an open question. A single issuance demonstrates that the system works. Repeatable issuance, across multiple projects, geographies, and methodologies, at a cadence buyers and financiers can plan around, is what transforms a mechanism into a supply channel. And the gap between the demand signals now visible in the market and what the PACM can currently deliver makes that question urgent. A parallel constraint compounds the picture: as of early 2026, only one PACM-originated methodology has been adopted (AMM001, for landfill gas), meaning that all current issuance activity depends on transitioned CDM methodologies under provisional arrangements. The pace of new methodology adoption is, in structural terms, a more reliable indicator of when the mechanism will begin generating genuinely new supply than the status of the CDM transition pipeline alone.

The Demand Signal: Real, But Structurally Mismatched

The scale of the supply challenge becomes clear when set against the demand landscape. Estimates by South Pole adapted by The Nature Conservancy project cumulative ITMO demand through 2030 at approximately 734 MtCO₂e, roughly 515 Mt from CORSIA across both its phases and 219 Mt from sovereign buyer countries. South Korea alone accounts for approximately 37.5 Mt of that sovereign demand, directly relevant given its role as the first PACM buyer. Japan’s projected demand stands at 100 Mt, making it the largest single sovereign buyer in that pipeline. The World Bank’s 2025 State and Trends report adds granularity to the CORSIA component: ICAO estimates Phase 1 obligations alone, covering international aviation emissions from 2024 to 2026, at between 102 and 148 million tons, a volume equivalent to up to three-quarters of all carbon credits retired globally in 2024, against a supply base still heavily constrained by host-country authorization bottlenecks.

That said, the CORSIA figures warrant a direct qualification: PACM credits are not eligible for Phase 1, and Phase 2 eligibility, which covers the 2027–2029 compliance period, remains pending. ICAO’s Technical Advisory Body (TAB) began its formal assessment of PACM in early 2026, with a Council decision expected in late 2026. Until that determination is made, CORSIA demand is potential, not accessible, and the largest compliance channel in the pipeline has no confirmed buyer for PACM supply.

These are projections from sources with commercial exposure to Article 6 transactions and should be read with appropriate calibration. But the directional signal across assessments is consistent: demand is real, growing, and compliance-anchored. Against projected demand in the hundreds of megatonnes, the first PACM issuance delivered 42,000 tonnes, after the fNRB correction that will apply across the broader pipeline. That number defines the challenge.

Supply Constraints: Authorization, Methodology, and MRV Capacity

The near-term supply outlook rests primarily on the CDM transition pipeline. As of February 2026, transition requests were submitted for 1,389 Project Activities and 119 Programmes of Activities, with more than 165 host-Party-approved projects actively transitioning. The UNFCCC has already extended the CDM transition deadline to June 2026, providing additional time for projects to complete their approval processes. On paper, a substantial base of potential supply. In practice, three reinforcing constraints determine how much of it becomes deliverable credits.

Host-country authorization

Host-country authorization is the most visible bottleneck. China and India hold roughly 36 and 33% of transition-eligible projects respectively, yet neither has approved any transition request to date. The A6IP Center’s 2025 Implementation Status Report puts this in an institutional context: of 100 Parties analyzed, only 13 have both authorization and tracking arrangements fully operational. Interest in Article 6 is broad; functional readiness is narrow. Until major host countries move, the bulk of the pipeline remains nominal. Yet host countries across Latin America, Africa, and Southeast Asia, where authorization frameworks are more advanced and bilateral agreements with Japan, Korea, and Switzerland are already operational, represent a near-term supply base that can activate independently, and whose trajectory will shape early market signals regardless of what Beijing and New Delhi decide. Near-term PACM supply will be geographically concentrated: buyers building procurement strategies around Chinese or Indian project pipelines should treat that supply as contingent.

Methodological integrity

Methodological integrity is the second constraint. Over 70 percent of CDM activities eligible to transition utilize grid-connected renewable energy methodologies (World Bank, 2025), specifically ACM0002 and AMS-I.D., among the methodologies rejected by the ICVCM’s Core Carbon Principles assessment, which declined to approve all existing grid-connected renewable energy methodologies, citing additionality concerns. Whether the PACM’s adoption of these methodologies, even under updated parameters, satisfies buyers operating under high-integrity procurement frameworks remains genuinely uncertain. UN issuance approval and market acceptance are not the same determination. For buyers operating under high-integrity procurement frameworks, UN approval of these methodologies is a necessary but not sufficient condition. Market acceptance will have to be earned separately.

MRV capacity

MRV capacity is the most underappreciated constraint, and the one most likely to determine whether supply can scale even once the first two barriers are resolved. The verification of PACM projects depends on Designated Operational Entities (DOEs), accredited third-party bodies responsible for validating project designs and verifying reported emission reductions before credits can be issued. DOE supply is limited, accreditation processes are slow, and their workload will scale non-linearly as the transition pipeline activates. The CDM era demonstrated that verification throughput, not project availability, is often the binding constraint on issuance cadence. The PACM inherits that structural vulnerability without having meaningfully expanded the pool of qualified verifiers. For project developers and financiers, this means that even a project with host-country authorization and a solid methodology faces an uncertain path to issuance. Verification throughput is the variable that neither developers nor buyers can fully control.

The MRV challenge runs deeper than capacity alone. The fNRB correction in the Myanmar issuance is itself a measurement problem: legacy monitoring protocols captured proxy data where direct measurement was needed, and the Supervisory Body’s correction, while methodologically sound, compresses credit volumes and increases the complexity of future monitoring plans. Projects now face more rigorous baseline reassessments, more conservative parameter estimation, and higher documentation standards than under CDM practice. Each of these requirements adds verification time and cost, further slowing the cadence at which issuances can accumulate. For a market where bankability depends on predictable delivery, this friction is not incidental; it is structural.

The registry situation compounds these constraints. In January 2026, UNFCCC awarded a multi-year contract to Trovio and EY to build and operate the core registry infrastructure for Article 6.2 and 6.4, including an interoperability hub for national registries. The system is under development, with a minimum viable product phase planned before full deployment. Cross-registry interoperability, a prerequisite for institutional buyers requiring seamless transfer between the PACM Mechanism Registry and national registries such as the Korean ETS at scale, is not yet operational at the scale the market requires.

Implications for Private Finance

For private capital, the significance of this first issuance is less about the specific credits produced than about what their existence makes structurally possible. Until a UN-governed crediting mechanism had demonstrably completed the full issuance cycle, forward offtake agreements referencing PACM credits carried execution risk with no historical precedent to anchor against. That risk layer has been reduced, though not eliminated.

The Myanmar-Korea linkage, where PACM credits flow into the Korean ETS toward Korea’s NDC, demonstrates the Article 6 accounting architecture functioning as designed. That precedent is directly relevant to financiers structuring instruments around compliance-grade offtake, and it connects to a documented sovereign demand pipeline that makes South Korea one of the most commercially concrete near-term buyers.

The supply constraints described above have a direct read-through to project economics. When verification timelines lengthen, issuance volumes compress, and forward contracts price in administrative delay as a baseline scenario, project IRRs deteriorate and the cost of capital rises. Developers who modeled returns on CDM-era volumes and CDM-era verification cadence are carrying assumptions that the Myanmar issuance has now called into question. For capital allocators, the implication is that risk-adjusted pricing for PACM-linked instruments needs to reflect structural uncertainty, not just project-level execution risk.

The longer-term demand picture adds strategic weight. The EU 2040 Climate Law, for which the Council and Parliament reached a provisional agreement in December 2025, allows up to 5% of 1990 net emissions to be met through high-quality international carbon credits, with operational use from 2036 and a pilot phase anticipated for 2031–2035. The eligibility framework and specific rules for credit use remain to be defined in post-2030 sectoral legislation, meaning the commercial contours of this demand channel will not crystallize for years. Those rules may extend beyond PACM to cover credits from independent high-integrity standards that meet the criteria set. Given the greater rigor and transparency of PACM emission reductions (A6.4ERs) relative to bilateral Article 6.2 credits, they are positioned to become the instrument of choice if EU eligibility rules favor compliance-grade instruments. That potential creates a long-term anchor for investment positioning, but it requires credible near-term pipeline development to be commercially actionable.

The near-term supply constraint under PACM also has implications for the broader carbon market. If PACM cannot deliver predictable volume in the 2025–2030 window, some compliance-motivated buyers may redirect demand toward high-integrity voluntary carbon market (VCM) credits, particularly those aligned with ICVCM’s Core Carbon Principles, as a near-term bridge. That dynamic would not reduce pressure on PACM to scale, but it would shape short-term pricing and procurement strategies in ways that matter for both markets.

The bankability threshold for sophisticated capital, however, is not proof of concept; it is cadence predictability. Forward contracts in carbon markets are structured around delivery milestones tied to verified issuance. When verification timelines are uncertain and administratively variable, as MRV capacity constraints and registry gaps currently make them, the risk premium embedded in offtake pricing rises, project economics deteriorate, and capital deployment stalls. Until the mechanism demonstrates repeatable issuance across a meaningful number of projects, the rational posture for buyers and financiers is to link deployment to verified delivery rather than anticipated supply, and to treat administrative delay as a baseline scenario rather than an edge case.

A Market Now Live, But Not Yet Functional at Scale

The first PACM issuance is a credible milestone. The Supervisory Body has demonstrated that the system can produce credits under tighter methodological standards than its CDM predecessor, that the NDC-linked compliance pathway works, and that the Article 6 accounting architecture can connect project-level activity to sovereign climate commitments. These are necessary conditions for a functioning market.

They are not sufficient. China and India together hold the majority of transition-eligible projects, yet neither has approved a single transition request. Until those approvals come, the bulk of the pipeline remains nominal. Beyond that, verifier capacity across emerging market host countries remains thin, and the commercial terms on which developers and buyers are willing to transact under current uncertainty have not yet stabilized. The first issuance narrows the uncertainty marginally. The gap between that and the predictability the market needs remains the central problem.

Key Takeaways

Project Developers

For project developers, the operational implications of this first issuance are immediate. Credit volume projections built on CDM baselines require systematic revision: the fNRB adjustment, which, in cases of significant downward revision from CDM-era values, may render some legacy projects financially unviable, is pipeline-wide, not project-specific, and the shift to PACM-originated methodologies (applying to projects registered directly under PACM rather than transitioning from CDM, of which only one (AMM001, for landfill gas flaring) has been adopted to date) will introduce further recalibration. Equally important: higher MRV standards mean longer verification cycles and greater documentation complexity. Project timelines and financing structures need to be built around those realities, not against them.

Buyers and Financiers

For buyers and financiers, the Myanmar issuance confirms the NDC-linked compliance pathway is functional. But a single completed cycle is not the same as predictable issuance cadence, and cadence predictability is what bankable structures require. Until the mechanism demonstrates repeatable issuance across a meaningful number of projects, procurement strategies that depend on material PACM supply in 2026 are premature. Linking capital deployment to verified delivery milestones, treating administrative delay as a baseline scenario rather than an edge case, remains the prudent posture. The EU 2040 demand signal creates a long-term investment anchor, but it requires near-term pipeline development to be commercially actionable. In the interim, high-integrity VCM credits may serve as a practical bridge for buyers who cannot wait for PACM supply to stabilize.

Policymakers

For policymakers, two variables stand above all others in unlocking the bulk of the transition pipeline. Transition approval rates in China and India, which together hold the majority of transition-eligible projects, are the single most consequential near-term factor. And PACM’s CORSIA eligibility determination by ICAO is the gateway to the largest projected demand channel through 2030. But the supply response does not depend on those two countries alone. Host countries across Latin America, Africa, and Southeast Asia, where authorization frameworks are in more advanced stages and bilateral agreements with Japan, Korea, and Switzerland are already in place, can deliver meaningful near-term supply independently of what Beijing and New Delhi decide. Expanding DOE accreditation and investing in national MRV capacity are equally urgent across all host country contexts: supply cannot scale through authorization decisions alone if verification infrastructure is not ready to process it.

Acknowledgments

Neyen would like to thank the following individuals for their valuable contributions to this article:

Tiza Mafira, Director, Climate Policy Initiative (CPI)

Erlinda Ekaputri, Indonesia Country Director, Wildlife Works Carbon

Hugh Salway, Principal, Markets, Gold Standard

Any remaining errors or omissions are the sole responsibility of Neyen.

The post Article 6.4 Goes Live: Can the UN Carbon Market Deliver Scalable Supply? appeared first on NEYEN.

Mobilizing Private Capital under Article 6: The Role of De-risking Instruments

Francisco Pinto — Thu, 26 Feb 2026 17:03:36 +0000

Listen to this article 24:27

As Article 6 of the Paris Agreement moves from negotiated text to early transactions, a familiar gap is emerging. Political commitments are multiplying, bilateral agreements are being signed, and mitigation pipelines are taking shape. Yet private capital—the scale of finance needed to turn ambition into delivery—continues to enter cautiously.

The reason is not a lack of interest, nor a shortage of mitigation opportunities. The bottleneck lies elsewhere: risk—combined with regulatory fragmentation and transaction complexity. Under Article 6, private investors face a landscape that differs fundamentally from both traditional climate finance and the voluntary carbon market (VCM). Until those risks are credibly managed and transaction frameworks become more predictable and standardized, Article 6 will struggle to mobilize private finance at scale.

Article 6 Is Not “Just Another Carbon Market”

Much of the early discourse around Article 6 framed it as a successor—or upgrade—to existing carbon markets. In practice, this framing obscures a more fundamental distinction. Article 6, and particularly Article 6.2, was conceived as a Party-driven mechanism for international cooperation to achieve nationally determined contributions (NDCs), not as a market designed to mobilize private investment from the outset.

Early implementation reflects—and continues to reflect—this intergovernmental logic. Cooperation under Article 6.2 is structured between governments, and demand for mitigation outcomes is, by design, sovereign. At the same time, implementation has relied heavily on private project developers from the start, particularly in early-mover jurisdictions. While the treaty architecture centers on government-to-government cooperation, project-level delivery has often been private.

This reliance on public demand is not a response to investment risk; it is a defining feature of the mechanism as designed. Article 6.2 was expected to be government-driven on both demand and supply sides. In practice, however, governments have largely acted as buyers and regulators, while project origination and delivery have remained predominantly private.

Over time, the limits of this model have become apparent. Public finance and administrative capacity alone have proven insufficient to mobilize mitigation at scale or deliver sustained implementation. Some earlier crediting approaches combined government finance with private implementation by design. By contrast, many current Article 6.2 arrangements expect private developers to carry substantial upfront risk, with sovereign buyers purchasing outcomes only upon delivery.

Outside clearly defined channels such as CORSIA, evidence of material non-government demand for Article 6–aligned units remains limited. Where private actors engage, it is largely through the positioning of corresponding adjustment (CA) units as higher-integrity instruments aligned with national accounting. Yet the close linkage between project-level outcomes and NDC accounting—reflected in authorization procedures and biennial transparency reporting cycles—adds regulatory density and reduces fungibility.

As a result, Article 6.2 increasingly resembles a market in practice, while Article 6.4 was market-oriented from the outset. For private actors, however, participation remains embedded within a sovereign accounting architecture. Revenues are shaped not only by project performance, but by authorization decisions, reporting alignment, and corresponding adjustment issuance. A technically sound project may remain unbankable if authorization processes are opaque, conditional, or slow.

This transition—from an intergovernmental cooperation mechanism to one that seeks meaningful private participation—helps explain why questions of risk allocation and regulatory design now sit at the center of the Article 6 debate.

The New Risk Stack Facing Private Investors

Despite its intergovernmental origins, Article 6 depends on private sector participation to translate cooperation frameworks into mitigation outcomes. Governments define the rules and authorize transfers; private actors design, finance, and implement projects.

Under Article 6.2, early movers established pragmatic pathways for private engagement within bilateral agreements. However, most sovereign buyers purchase mitigation outcomes upon delivery. This creates a structural financing gap: developers must absorb development costs and commit capital expenditure well before revenues materialize. While mitigation outcome purchase agreements (MOPAs) provide forward revenue visibility, their conditionality and bespoke structures often limit securitization and increase financing costs.

The Paris Agreement Crediting Mechanism (PACM) under Article 6.4 offers a more centralized architecture, yet similar challenges persist, including layered governance requirements and evolving reporting expectations.

Several risk categories converge under Article 6:

Authorization risk

Authorization risk remains central. Letters of authorization, their conditions, and the application and timing of corresponding adjustments—reflected in national reporting cycles—are sovereign acts. Delays or uncertainty can directly affect revenue certainty and financing structures.

Policy and regulatory risk

Policy and regulatory risk extends beyond stability. Emerging national frameworks increasingly seek to capture greater economic value for the state through fees, shares of proceeds, or profit-based contributions. While such measures may be domestically justified, they can materially affect project economics if not transparently and predictably structured.

Delivery and performance risks

Delivery and performance risks are compounded by regulatory heterogeneity. Differences in domestic project approval rules, export conditions, and reporting processes increase transaction costs on both supply and demand sides. These frictions—often as consequential as pure risk—constrain liquidity and scalability.

Demand-side risk

Demand-side risk reflects limited non-sovereign demand and additional compliance layering that frequently exceeds Article 6 requirements. Claim-related standards and bespoke conditions further segment the market, reducing fungibility.

Taken together, these factors create not only risk, but complexity. The challenge for Article 6 is therefore as much about reducing transaction friction and enhancing standardization as it is about mitigating financial exposure.

De-Risking as the Real Enabler of Scale

If Article 6 is to mobilize private finance meaningfully, de-risking must begin upstream. Financial instruments cannot compensate for structural ambiguity or regulatory fragmentation.

Several solutions lie in regulatory design and harmonization:

Anchoring carbon market rules at appropriate legal levels.
Introducing time-bound and legally enforceable pre-authorization stages.
Clarifying export procedures as distinct from domestic project approval processes.
Standardizing documentation and reporting templates across jurisdictions.

The closer Article 6 frameworks resemble other internationally traded commodities—where domestic production approvals are clearly separated from export authorizations—the more scalable they become. Cross-jurisdictional comparability would enable companies to develop portfolios across multiple countries and allocate mitigation outcomes more efficiently.

Blended finance and insurance remain important, but complementary. Political risk insurance presumes that core structural risks have already been contained. Experience suggests that where authorizations remain discretionary or registry governance unclear, insurance cannot substitute for sound institutional design.

Importantly, not all bottlenecks reflect inherent risk. Early Article 6-linked financing structures demonstrate that private capital can be mobilized. Yet bringing such transactions to market has required significant time and bespoke structuring. Bureaucratic intensity and limited standardization can slow deployment even where risk itself is manageable.

De-risking, therefore, encompasses both risk mitigation and simplification.

Long-Term Offtake as Financial Infrastructure

Mitigation Outcome Purchase Agreements (MOPAs) provide revenue visibility, but their effectiveness depends on institutional context. Long-term offtake can support financing only when the buyer—typically a sovereign entity, potentially supported or facilitated by development partners—has already worked extensively with the host country to clarify authorization, registry, and reporting arrangements.

It is this prior institutional engagement, rather than the contract alone, that enhances bankability. However, reliance on institutionally intensive processes raises legitimate questions about scalability. If each transaction requires bespoke negotiation and layered conditions precedent, liquidity will remain limited.

Scaling Article 6 will likely require more standardized offtake structures and clearer allocation of conditionality between sovereign cooperation and project-level risk.

Insurance and the Rise of Carbon-Specific Risk Management

Carbon-specific insurance products seek to address non-delivery or regulatory failure. They can enhance confidence and signal due diligence. However, insurance functions best within predictable governance frameworks. Where authorizations are revocable or reporting alignment uncertain, insurers may be reluctant to assume exposure.

Insurance strengthens markets; it does not create them.

What This Means for Scaling Private Sector Finance

Early experience under Article 6 suggests that integrity is necessary but not sufficient. Participation depends on how risks, responsibilities, and economic value are allocated—and on whether regulatory frameworks are coherent and proportionate.

For host countries, this means balancing sovereign oversight with market functionality. Excessive layering of fees, profit-sharing mechanisms, and conditional approvals may unintentionally deter investment. For buyer countries, pay-on-delivery structures shift substantial upfront risk to private developers, potentially limiting participation to well-capitalized actors.

Development partners can enhance credibility, but institutional processes must evolve toward greater market-readiness if they are to support scale rather than slow deployment.

Public finance alone cannot deliver the scale, speed, or replication required to meet mitigation targets. Private capital brings operational capacity, portfolio diversification, and balance-sheet depth. Yet if carbon finance itself requires substantial de-risking before it becomes investable, scale will remain elusive.

From Climate Commitments to Investable Assets

Article 6 has the potential to reshape carbon finance by aligning national mitigation goals with private capital. That potential will only be realized if mitigation outcomes are treated as investable assets within credible, streamlined, and standardized governance frameworks.

If policy clarity, authorization stability, reporting alignment, and regulatory proportionality are addressed upfront, private finance can move from the margins to the center of Article 6 implementation. If not, Article 6 will remain technically robust but economically constrained.

The path to scale lies not in reducing environmental integrity, but in designing cooperation frameworks that are predictable, proportionate, and sufficiently standardized to function as markets rather than purely administrative schemes. The difference between those futures will be determined less by ambition than by the willingness to treat carbon finance as a serious investment domain—one that demands the same institutional rigor as any other market expected to operate at scale.

Acknowledgments

Neyen would like to thank the following individuals for their valuable contributions to this article:

Alexandra Soezer, Director, Climate Action Center of Excellence (CACE);

Ash Sharma, Fund Manager, Article 6 Climate Cooperation Facility, Global Green Growth Institute; and

Chris Leeds, Head of Carbon Markets Development, Standard Chartered Bank

Any remaining errors or omissions are the sole responsibility of Neyen.

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From Woodcutter to General: Executive Leaders Train for Adaptive Strategy at inFUSE Workshop 2

Oliver Green — Wed, 26 Nov 2025 11:06:17 +0000

From Woodcutter to General: Executive Leaders Train for Adaptive Strategy at inFUSE Workshop 2

JAKARTA, November 26, 2024

inFUSE Nusantara, a corporate network initiated by Neyen Consulting, successfully concluded its Executive Workshop 2 themed “The Adaptive Leader: Navigating Sustainability, Crisis, and Opportunity” on Tuesday, November 25. The event, held in partnership with BKI (PT Biro Klasifikasi Indonesia), brought together executives and industry leaders to discuss a framework for decision-making amidst global volatility and uncertainty.

The main speaker, Professor Ricardo Barcelona (Fellow of the Energy Institute UK and Adjunct Professor at AIM), presented a transformative framework on Adaptive Leadership. He emphasized that in an inherently uncertain world, a leader must act as ‘The General,’ not merely ‘The Woodcutter.’

“A Woodcutter focuses only on executing repeatable tasks and efficiency, assuming the market will always exist. Meanwhile, a General is an Adaptive Leader who is capable of viewing the battlefield, changing tactics, and regrouping when the situation demands it. This is the difference between traditional management and adaptive leadership,” explained Professor Ricardo.

Three crucial questions

The framework also challenged executives with three crucial questions for the future of their businesses:

What will you do today that is likely to become obsolete tomorrow?
How much of your company’s revenue in five to ten years will be generated by activities that we haven’t even imagined today?
Who will disrupt your business?

The discussion sessions also highlighted macroeconomic challenges and the national energy sector. Luky A. Yusgiantoro (Secretary of the Special Task Force for Upstream Oil and Gas Business Activities of the Republic of Indonesia, SKK Migas), provided deep insights into Indonesia’s focus on energy self-sufficiency. He stressed that the two biggest disruptions—Energy Transition and Digitalization—must be accommodated to achieve an 8% growth by 2028-2029.

“One of the central topics we are pushing is CCUS (Carbon Capture, Utilization, and Storage). This is how we combine the goal of energy self-sufficiency with the global agenda of reducing CO2 emissions,” said Luky.

Meanwhile, Miguel Rescalvo (Managing Partner, Neyen Consulting) opened the event by highlighting three historical cycles of change and how shifts like the end of free trade and the Artificial Intelligence (AI) revolution demand a new way of leading.

Sustainable event

The event also underscored a strong commitment to sustainability practices and discussion integrity:

Carbon-Neutral Event and Local Project Support: R. Agus Doddy Dwisagita (Director of Finance, Risk Management, and Business Support at BKI) stated that BKI is proud to be a green business enabler. As a tangible commitment, emissions generated from transportation, catering, and venue energy were measured and will be offset through the purchase of verified carbon credits from sustainability projects located in Indonesia, affirming support for national climate initiatives.
Chatham House Rule: The workshop was conducted under the Chatham House Rule, ensuring an intimate, open, and safe atmosphere for industry leaders to exchange ideas and challenges without the risk of attribution.

To deepen the application of the strategic framework discussed during the workshop, a series of Complimentary 1:1 Strategic Consultations were held exclusively for selected companies on Wednesday, November 26. These bespoke sessions took place at the BKI (PT Biro Klasifikasi Indonesia) offices, allowing executives to directly engage with Professor Ricardo Barcelona and Neyen Consulting experts to translate the Adaptive Leadership models into specific organizational strategies, particularly concerning sustainability and risk mitigation.

Neyen Consulting and its partners are committed to continuously providing a platform for leaders of large corporations to forge adaptive strategies that are not only financially sustainable but also socially and environmentally responsible.

About inFUSE

inFUSE is a regional sustainability network established by Neyen to enhance cross-border collaboration across Asia. By leveraging research, capacity development, and global partnerships, inFUSE empowers companies and governments to accelerate their transition toward a low-carbon economy and to strengthen their leadership in global sustainability action.

About Neyen

Neyen is a sustainability consulting firm dedicated to delivering strategic solutions that enable organizations to transition toward low-carbon business models. Combining technical expertise with practical implementation, Neyen partners with corporations, governments, and institutions to advance measurable sustainability outcomes and long-term value creation.

Press contact:

Selsa Evani

Sustainability Solution Specialist, inFUSE Indonesia

+62 896-2258-0177

The post From Woodcutter to General: Executive Leaders Train for Adaptive Strategy at inFUSE Workshop 2 appeared first on NEYEN.

From Indonesia to the World: inFUSE Nusantara Connects Corporate Leaders for Sustainable Future

Oliver Green — Wed, 24 Sep 2025 13:16:21 +0000

From Indonesia to the World: inFUSE Nusantara Connects Corporate Leaders for Sustainable Future

September 24, 2025

JAKARTA, INDONESIA – September 24, 2025 – inFUSE, the regional sustainability network initiated by Neyen, organized its first inFUSE Nusantara Executive Workshop at the Shangri-La Jakarta. This first leadership workshop was co-hosted by Neyen and BKI, with opening remarks delivered by R. Benny Susanto, President Director of BKI and Miguel Rescalvo, Managing Partner of Neyen

The high-level forum brought together C-level executives from State-Owned Enterprises (SOEs) and prominent private companies to foster collaboration and advance corporate sustainability practices in Indonesia. It provided an exclusive environment for candid dialogue on Indonesia’s unique position to lead in sustainable transformation, with a focus on energy transition, digital innovation, and natural resource management.

“inFUSE Nusantara leadership series is designed to be a trusted forum where senior leaders can exchange insights and forge partnerships that will drive measurable impact,” said Miguel Rescalvo, Managing Partner of Neyen. “inFUSE Sustainability Network started here in Indonesia one year ago, and it has more than 800 individual members. Today, we are launching the Nusantara leadership series. This move solidifies the foundation for this exclusive network, demonstrating the strong commitment from Indonesia’s corporate sector to lead on a global stage.”

Guest speakers

The event featured a keynote address from Erik Teguh Primiantoro, Senior Advisor to the Minister of Environment for International Relations. Oesha Thakoerdin, Director at WEnergy Global and Neyen Singapore, delivered an interactive session on Leadership in Sustainability and Resiliency. This was followed by a panel discussion titled “Empowering Indonesia’s Corporate Leaders for Global Sustainability Action” moderated by Y.E. Putranta, Head of Carbon Crediting, Recoolit.

Esteemed panelists included, Arisudono Soerono, CEO of IDSurvey, who reflected on the company’s commitment as a green business enabler. From the corporate sector, Agung Wicaksono, Director of Transformation & Sustainability Business at PT Pertamina, emphasized the importance of energy transition and corporate innovation, while ⁠Gandung Anggoro Murdani, Director of Human Resources, Technology and Information of Peruri, underlined the value of sustainability in driving institutional transformation. Lucia Karina, VP PACS at Coca-Cola Europacific Partners Indonesia, spoke on the role of multinational corporations in accelerating sustainability across value chains.

Low emissions event

The event was designed as a low-emission event from beginning to end. Neyen partnered with the venue to implement strict protocols on waste and packaging to ensure that event aligned with its carbon-neutral commitment.

Furthermore, emissions that could not be eliminated were calculated and offset by means of a forward purchase agreement for verified carbon credits in an agreement with Recoolit. Neyen also dedicated an additional 356 kg of CO2 offset to speakers and panelists, symbolizing the collective commitment to implementing corporate sustainability principles.

This event marks Neyen’s increased commitment to supporting Indonesia’s corporate sector on its net-zero pathway. It comes on the back of years of presence in the market and over a year since launching the inFUSE Sustainability Network in the region.

About inFUSE

About PT Biro Klasifikasi Indonesia (Persero)

BKI is a state-owned enterprise under the holding company of Indonesia’s survey services industry, namely “IDSurvey”, together with PT Sucofindo and PT Surveyor Indonesia. As a leader in classification, statutory, testing, inspection, and certification services, BKI plays a pivotal role in supporting Indonesia’s maritime and industrial sectors, and is committed to advancing the government’s goals of achieving net carbon neutrality through green economy services.

About Neyen

Press contact

Selsa Evani

Sustainability Solution Specialist, inFUSE Indonesia

+62 896-2258-0177

selsa.evani@neyen.io

The post From Indonesia to the World: inFUSE Nusantara Connects Corporate Leaders for Sustainable Future appeared first on NEYEN.

PT Biro Klasifikasi Indonesia and Neyen Consulting Sign MoU to Advance Carbon Consulting Services in Indonesia

Oliver Green — Fri, 09 May 2025 13:43:12 +0000

PT Biro Klasifikasi Indonesia and Neyen Consulting Sign MoU to Advance Carbon Consulting Services in Indonesia

May 9, 2025

Jakarta, Indonesia / Madrid, Spain – May 9, 2025 – PT Biro Klasifikasi Indonesia (Persero) (BKI), Indonesia’s leading state-owned enterprise in Testing, Inspection, Certification, Classification & Statutory (TICCS) Services, and Neyen Consulting SL, an international sustainability advisory firm based in Spain, have signed a Memorandum of Understanding (MoU) to collaborate on the development, marketing, and delivery of carbon consulting services in the Indonesian market, with a focus on State Owned Enterprises (SOEs).

The MoU signing took place on Friday, May 9, at PT Biro Klasifikasi Indonesia (Persero).

Strategic Partnership

Under this partnership, BKI and Neyen Consulting will combine their expertise, resources, and market knowledge to enhance the quality and reach of carbon consulting services. The collaboration aims to support Indonesia’s national decarbonization agenda and accelerate the transition of SOEs towards sustainable and low-carbon operations.

BKI and Neyen Consulting are joining forces to develop customized carbon consulting services, combining BKI’s local network and regulatory expertise with Neyen’s global sustainability practices. The partnership also focuses on building local capacity through knowledge exchange and training in carbon management. Together, the two companies aim to expand their reach across Indonesia’s industrial and public sectors, with a special focus on empowering SOEs to lead the national decarbonization movements.

Alongside the signing of the MoU, a workshop was held attended by BKI clients and key stakeholders. The workshop, titled “Knowledge Sharing Session on Blue Carbon Development & IMO Net Zero Emission,” served as a platform to share knowledge on corporate sustainability development opportunities in Indonesia, with a particular focus on forestry and blue carbon projects.

Representatives from the Spanish Embassy’s diplomatic mission attended the ceremony and workshop, highlighting the importance of international collaboration. The event highlighted best practices, the latest regulatory developments, and the significant potential for Indonesian companies—particularly SOEs—to lead in sustainable land and coastal management while contributing to national and global emission reduction targets.

Executive Quotes:

“This collaboration marks a significant milestone for BKI as we expand our commitment to sustainability and decarbonization. By joining forces with Neyen Consulting, we are poised to deliver world-class carbon consulting services that will help Indonesian SOEs lead the way towards a greener future,” said R. Benny Susanto, as Operations Director of PT Biro Klasifikasi Indonesia.

Miguel Rescalvo, Managing Partner of Neyen Consulting SL, added, “We are honored to partner with BKI and contribute our global sustainability expertise to Indonesia’s ambitious climate goals. Together, we will empower organizations to measure, manage, and reduce their carbon footprint.”

Deputy Director of Commercial Business Management at IDSurvey, Erwin Ernanto Hoesin (center left), and Managing Partner of Neyen Consulting SL, Miguel Rescalvo (center right), pose for a photo after signing a Memorandum of Understanding on a partnership to develop carbon consulting services in Jakarta on Friday (9/5/2025). Also present are the Assistant Deputy for Food Production and Climate Change at the Coordinating Ministry for Food, Fajar Nuradi (back right), and Trade Attaché of the Spanish Embassy, José Ángel Molero González (back left).

A panel discussion marked the signing of a Memorandum of Understanding (MoU) on the development of carbon consulting services between PT Biro Klasifikasi Indonesia (BKI) Persero and Neyen Consulting SL in Jakarta, Friday (9/5/2025). Themed “Sharing Session for Blue Carbon Development & IMO Net Zero Emission”, the discussion featured (from left to right): Assistant Deputy for Food Production and Climate Change at the Coordinating Ministry for Food, Fajar Nuradi; Andreas Hutahean, Principal Consultant at Neyen Consulting SL; Fredhi Agung Prasetyo, Research and Development at PT Biro Klasifikasi Indonesia; and Annisa Ayu Soraya, Coordinator of Green Business at IDSurvey (moderator).

For Media Inquiries:

Corporate Secretary PT Biro

Klasifikasi Indonesia (Persero)

crc@bki.co.id

Neyen Consulting SL

Ms Fitri Wulandari

Press Officer fitri.wulandari@neyen.io

+62 811-865-142

About PT Biro Klasifikasi Indonesia (Persero)

BKI is a state-owned enterprise and the holding company of Indonesia’s survey services industry, The Leading Holding Company for State-Owned Survey Services, namely “IDSurvey”, which includes PT Superintending Company of Indonesia and PT Surveyor Indonesia. As a leader in classification, statutory, testing, inspection, and certification services, BKI plays a pivotal role in supporting Indonesia’s maritime and industrial sectors, and is committed to advancing the government’s goals of achieving net carbon neutrality through green economy services.

About Neyen Consulting SL

Neyen Consulting is an international advisory firm incorporated in Spain, specializing in sustainability consulting services, carbon markets, carbon pricing instruments and the energy transition. The company provides strategic guidance and technical expertise to governments and organizations worldwide, supporting their transition to a low carbon future.

The post PT Biro Klasifikasi Indonesia and Neyen Consulting Sign MoU to Advance Carbon Consulting Services in Indonesia appeared first on NEYEN.

Innovative financing for Accelerating Coal Transition (ACT) in the Dominican Republic with Chadia Abreu

Oliver Green — Wed, 30 Apr 2025 17:14:04 +0000

Introduction

Chadia is an attorney and energy specialist with over nine years of experience in best practices of clean energy transitions, market development, and investment in infrastructure projects in the Dominican Republic, Argentina, and the USA. She is currently an Advisor for Clean Energy and Climate Solutions for the Ministry of Energy and Mines of the Dominican Republic where she leads several initiatives aligned with the country’s agenda for sustainable development and the insertion of emerging technologies and policies that will allow the country to accelerate its just energy transition.

We had the opportunity to hear from her about the recently approved Investment Plan for the Dominican Republic under the Climate Investment Fund’s Accelerating Coal Transition (ACT) Program. The plan aims to support the country’s transition from coal-fired power generation to renewable energy sources in a just and inclusive manner.

Background and Objectives

Question: Can you provide an overview of the Dominican Republic's ACT Investment Plan and its primary objectives in terms of transitioning away from coal and promoting renewable energy?

The country’s journey began in 2021 with participation in the CIF-ACT Program, where we submitted an Expression of Interest (EoI) to advance our energy transition. In 2023, the CTF Trust Fund Committee recognized the Dominican Republic as an eligible country to develop an Investment Plan, reaffirming our leadership in sustainable development.

The Investment Plan marks a historic step in our commitment to sustainable energy and long-term decarbonization. With $85 million in financing, the plan aims to replace 312 MW of coal energy with renewables and storage. It fosters regulatory and institutional framework improvements, market mechanisms, and stakeholder participation to support a just and inclusive transition for affected workers and communities. Through these initiatives, the Dominican Republic is dedicated to ensuring a sustainable and secure energy future for all its citizens.

However, the Dominican Republic faces unique challenges in its electrical system, characterized by an isolated island network and limited water resources, which impact the stability and security of the energy supply. As the economy experiences rapid growth, electricity demand has surged at a rate exceeding GDP growth. The aforementioned requires robust infrastructure and diversification of energy sources to ensure a stable and affordable supply for all sectors and citizens.

Thus, the Investment Plan implementation will be gradual, orderly, and voluntary. It will focus on encouraging private sector involvement to ensure an equitable transition that maintains economic viability and energy security.

Challenges and Opportunities

Q: What are some of the key challenges the Dominican Republic faces in implementing the ACT Investment Plan, and how do you see these challenges being addressed?

The implementation of Investment Plan faces several key challenges, each requiring strategic approaches to ensure a successful transition and energy security. Many of these challenges have been successfully addressed in other jurisdictions, presenting a valuable opportunity for the Dominican Republic.

It is important to note that the plan aims to retire coal plants by 2030-2035, with enabling activities beginning in 2025. Pillars 1 and 2 focus on maintaining energy reliability while creating favorable market conditions for this transition. The plan has been designed with flexibility and resilience to adapt to changes in market dynamics, institutional, technological, environmental, social, and financial risks, as well as other emerging realities.

The challenges can be grouped into three main categories:

Technical: Ensuring energy security while integrating variable renewable sources is a top priority. We have conducted in-depth analyses to model the impact of various options, ensuring the system can absorb changes without compromising reliability. The replacement of coal-fired generation facilities presents challenges since renewables cannot always be integrated on-site. Addressing transmission constraints will be vital to effectively utilize renewable energy. Significant efforts are being made to enhance data collection, allowing for more accurate assessments of the impacts related to the early retirement of generation facilities.
Financial: The Investment Plan aims to pilot Coal Transition Credits as a new asset class, blending finance with carbon markets to create a sustainable funding framework. However, establishing a reliable carbon market mechanism presents numerous challenges itself. While this could provide an opportunity to develop the market in the Dominican Republic, the plan remains flexible, recognizing that such development may not occur. As a result, fallback mechanisms involving concessional funding are in place.
Social: The plan adopts a programmatic approach, linking projects to achieve broader goals and ensuring cohesive and strategically aligned efforts for a more efficient transition. It promotes voluntary participation and ongoing stakeholder dialogue to maintain long-term consistency with decarbonization goals. Flexible financial instruments will ensure resilience during the implementation period from 2025 to 2035.

By addressing these challenges through collaboration, robust financial mechanisms, and a focus on data-driven decision-making, the Dominican Republic can successfully navigate the complexities of the ACT Investment Plan and achieve its energy transition objectives.

Implementation Strategies

Q: How does the plan intend to balance the retirement of coal-fired power plants with the integration of renewable energy sources, ensuring energy security and reliability?

The plan proposes several strategies to address the technical challenges associated with balancing the retirement of coal-fired power plants with the integration of renewable energy sources, all while ensuring energy security and reliability. To achieve this, the plan emphasizes a phased approach, allowing time for the gradual integration of renewable energy and storage into the energy mix that helps maintain a stable supply while reducing reliance on coal.

Additionally, the plan includes comprehensive assessments of the existing energy infrastructure to identify necessary upgrades and enhance the grid’s capacity to handle variable renewable energy. It also promotes investments in energy storage and demand response technologies, which are crucial for managing fluctuations in energy supply and demand.

Moreover, decision-making will be the result of consensus through the Public-Private Working Group focused on ensuring diverse stakeholder collaboration while encouraging private sector involvement and active participation.

Q: How do you see the role of carbon markets in the plan?

Carbon markets offer significant opportunities for financing Component III through various financial instruments, including a price guarantee mechanism for Coal Transition Credits, contingent upon market conditions at the time operations become executable. The proposed support mechanisms for Coal Transition Credits aim to provide financial incentives for plant owners to monetize the CO2eq avoided resulting from the early retirement of coal plants and their replacement with high-quality renewable energy sources. These high-integrity Coal Transition Credits will ensure transparency and accountability in the market by following robust eligibility criteria and methodologies. The ACT program could serve as a firm price guarantee, facilitating decision-making and optimizing the negotiating position of stakeholders in potential carbon credit transactions.

The Investment Plan assesses the Dominican Republic’s readiness to engage in carbon transaction mechanisms within the energy sector, concluding that the country faces challenges in integrating into both regulated (Article 6 of the Paris Agreement) and voluntary carbon markets due to gaps in policy frameworks and technical implementation readiness. Therefore, the plan focuses on preparing the country for participation in carbon market mechanisms through mitigation initiatives within the energy sector and the necessary processes to operationalize them.

I believe the Investment Plan presents an opportunity to develop a sectoral strategy for the energy sector’s involvement in carbon markets, which is essential for piloting Coal Transition Credits as an asset class in the country. As outlined in the Investment Plan, a thorough analysis will be conducted for each asset. This process begins with an additionality test to evaluate whether it is feasible to proceed. However, it also recognizes that the internal institutional structure for the execution of the process above requires substantial capacity building, and policy and institutional framework at a national level to meet the enabling conditions corresponding to the legal frameworks.

Stakeholder Engagement

Q: How does the Ministry of Energy and Mines engage with various stakeholders, including communities impacted by the transition and private sector entities, to ensure a just and inclusive transition?

The Investment Plan proposes a Public-Private Working Group to ensure diverse stakeholder collaboration for a holistic transition. It follows Chile’s Decarbonization Roundtable model and includes a Gender and Inclusion Roundtable to promote equality.

It also includes structured retraining and job transition programs under Pillar 2: People and Communities to ensure a just transition for workers affected by the coal plant closures.

Key elements include:

Job Retention & Redeployment: Most employees and contractors are expected to be repositioned within their corporate groups or affiliated companies
Upskilling & Reskilling Programs: Workers will have access to training in Industry 4.0 technologies, entrepreneurship, financial literacy, and soft skills to help them transition into new jobs
Targeted Support for Indirect Workers: The plan acknowledges that up to 1,300 workers (180 direct, 320 outsourced, and 800 indirect workers) could be affected and includes initiatives to support their transition
Social Inclusion & Gender Considerations: Training programs will include mechanisms to increase female participation and protect vulnerable groups

Role of women in the energy transition

Q: How does the Dominican Republic's energy transition plan, particularly the ACT Investment Plan, address gender equity and the role of women in decision-making processes, and what specific initiatives or policies are in place to ensure their participation and empowerment in the transition to a more sustainable energy sector?

The Investment Plan places a strong emphasis on gender equity and the inclusion of women in decision-making processes. Recognizing that women’s participation is crucial for the success of a sustainable energy sector, the plan incorporates several initiatives and policies designed to empower women and ensure their active involvement.

Findings

Gender Disparity in Employment: Women are significantly underrepresented in both plants (10% in ITABO, 14% in Barahona Carbón), highlighting persistent gender gaps in the energy sector.
Infrastructure Limitations: Facilities still reflect gender biases, with bathrooms in control rooms primarily designed for men, limiting inclusivity for women workers.
Education and Job Access: Although there are technical universities nearby, women’s participation in STEM careers remains low, reinforcing employment barriers.
Community Relations and Economic Linkages: The plants have direct community interactions, with local suppliers providing goods and services.
Empowering Women Entrepreneurs: While women suppliers are already engaged, their role can be further strengthened by promoting women-led businesses within the energy supply chain, fostering economic inclusion, job creation, and local business growth.

Plan

Inclusive Decision-Making: The Investment Plan promotes the inclusion of women in energy sector decision-making bodies. This involves creating platforms where women can voice their concerns and contribute to policy discussions, ensuring that their perspectives are considered in the transition process.
Capacity Building and Training: Specific initiatives focus on building women’s capacities in the energy sector. Training programs are being developed to enhance their technical skills and knowledge, enabling them to take on leadership roles within the industry and participate effectively in the transition to renewable energy.
Access to Resources: The plan aims to improve women’s access to financial resources and support mechanisms. By facilitating access to funding for women-led projects in renewable energy, the initiative encourages entrepreneurship and innovation, helping women to establish and grow their own businesses in this sector.
Stakeholder Engagement: Ongoing stakeholder dialogues focus on gender issues, fostering collaboration among government, civil society, and women’s organizations. This engagement helps ensure that the unique needs and challenges faced by women are addressed throughout the energy transition.
Monitoring and Evaluation: The Investment Plan includes mechanisms for monitoring and evaluating gender equity outcomes. By assessing the impact of initiatives on women’s participation and empowerment, the plan can adapt and improve its strategies over time, ensuring that gender equity remains a priority.

Future Outlook and Impact

Q: What are your expectations for the long-term impact of the ACT Investment Plan on the Dominican Republic's energy sector, and how do you see this plan contributing to a broader energy transition in the country, including potential economic, environmental, and social benefits?

The ACT Investment Plan is an ambitious initiative that presents numerous opportunities to enhance our energy sector and transform our systems. By focusing on a programmatic and holistic approach, the plan aims to integrate various components that can significantly contribute to a broader energy transition in the Dominican Republic.

In the long term, I expect the Investment Plan to deliver substantial economic benefits, including job creation in the renewable energy sector and increased energy independence. Environmentally, it will contribute to reduced greenhouse gas emissions and promote sustainability, aligning with global climate goals.

However, it is crucial to recognize that this plan involves many moving pieces that must be carefully considered. Effective coordination among stakeholders, strategic investments, and ongoing monitoring will be necessary to ensure that the plan achieves its intended outcomes. By addressing these complexities, the Investment Plan can successfully drive the Dominican Republic toward a more sustainable, secure, and resilient energy future.

The post Innovative financing for Accelerating Coal Transition (ACT) in the Dominican Republic with Chadia Abreu appeared first on NEYEN.

Powering down to power up: Unlocking the potential of Transition Credits

Karol Morillo — Mon, 31 Mar 2025 08:56:04 +0000

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The global effort to decarbonize the energy sector faces a major hurdle: the early retirement of coal-fired power plants (CFPPs). Transition credits—carbon credits generated by replacing coal with clean energy—are being explored as a financial mechanism to support this transition.

A number of international initiatives are developing greenhouse gas (GHG) accounting methodologies to support the coal-to-renewable shift. These include the Coal-to-Clean Credit Initiative (CCCI) led by the Rockefeller Foundation and the Global Energy Alliance for People and Planet (GEAPP), and the Transition Credits Coalition (TRACTION). Other programs, such as the Energy Transition Accelerator (ETA) and the World Bank’s SCALE initiative, could also integrate the use of carbon finance to accelerate coal retirements in their sectoral approaches.

Purpose of carbon finance in CFPP retirement

The goal of using carbon finance is to provide financial incentives for CFPP owners to retire their plants ahead of schedule—before the end of their technical lifetime or operational permit. Most initiatives also seek to encourage reinvestment in renewable energy generation.

Methodological developments

Transition credit methodologies are still under development. Leading carbon standards such as Verra and Gold Standard are currently advancing project-based methodologies. Other initiatives include those by the Asia Carbon Institute (ACI), Asian Development Bank (ADB), and Inter-American Development Bank (IDB). The IDB’s approach has already been piloted in Chile to retire coal plants and replace them with renewable generation.

Key challenges and considerations

Risk of reversal

All methodologies seek to prevent the risk of reversal—where retired CFPPs resume operation. This includes:

Prohibiting mothballing or fossil-fuel repurposing of retired plants.
Mandating the disposal of key equipment to prevent reuse (except under ADB’s approach, which treats reinstalled equipment as leakage).
IDB’s methodology, which uniquely allows for standby status.

These provisions, while essential for ensuring environmental integrity, can raise concerns around energy security—especially in countries where electricity demand may outpace renewable deployment.

Permanence

Additionally, to ensure permanence, Verra and Gold Standard require project developers to commit to not building new CFPPs. Verra and ACI also require host country commitments, which can be particularly challenging in countries like China and India where coal remains a central part of the power strategy and is largely state-owned.

Leakage

Leakage refers to unintended increases in emissions that may occur outside project boundaries due to the project’s activities. In the case of early CFPP retirement, leakage can occur if:

The transition from coal to renewable energy sources causes a capacity supply-demand gap that leads to the use of energy generated by other fossil fuel sources or less efficient power plants connected to the grid.
Coal that is no longer used by CFPPs is redirected to other uses or regions that still operate coal plants, thereby undermining the benefits of the early retirement.

Gold Standard is the only draft methodology that considers leakage due to the diversion of coal to other uses. It is crucial to highlight the environmental integrity risk posed by leakage when coal, no longer used by a CFPP, is redirected to other markets. In a hypothetical scenario of declining global coal demand, retiring a CFPP would result in the coal remaining unextracted, contributing to the gradual phase-out of coal from the global energy mix. However, global coal demand has risen in recent years, driven by various geopolitical factors, making a coal-free electricity sector a distant prospect. In this context, there is a risk that carbon finance used to retire a CFPP could lead to the coal being utilized in other plants, even less efficient plants, ultimately increasing global emissions.

The risk is further amplified if the CFPP is part of an economic group with interests in the coal supply chain—such as mining—or is owned by a state-owned enterprise (SoE) in a coal-exporting country, both common scenarios in Southeast Asia. In such cases, the same economic group or the government through the SoE could benefit financially from the diverted coal through higher export prices compared to domestic use, export taxes, or continued mining profits, while global emissions still rise.

Project-based methodologies

Most project-based methodologies currently exclude off-grid and captive CFPPs—significant in countries like China, India, and Indonesia.
The methodologies vary in how they address replacement generation:

Verra and IDB offer flexibility and do not require 100% renewable substitution.
Gold Standard and ACI require full replacement with renewable energy, which may limit feasibility.

Additionality—ensuring the project would not happen without carbon finance—is assessed through financial, regulatory, and technical barriers, and informs the baseline retirement date for each plant.

Sectoral approaches

Sectoral methodologies, such as the one under development by the Energy Transition Accelerator (ETA), focus on emissions reductions across the entire energy sector rather than individual CFPPs. This broader approach allows inclusion of off-grid and captive coal, and combines early retirements with measures like renewable energy acceleration, grid modernization, and energy efficiency. However, sectoral approaches require strong national policies to ensure carbon revenues are directed toward a just and effective energy transition.

Social and environmental impacts

Most methodologies emphasize the importance of addressing social impacts to support a fair transition. Gold Standard, Verra, and ACI include requirements such as:

Just transition plans.
Human rights, gender, and labor safeguards.
Allocation of carbon revenue toward social programs.
Environmental remediation, such as coal ash cleanup.

Conclusion

Transition credits represent a promising tool to finance the early retirement of CFPPs and support renewable energy deployment. While the methodologies are still evolving, progress to date shows significant potential.
For transition credits to be credible and effective, they must address:

Reversal and leakage risks.
Additionality and baseline integrity.
Social and environmental safeguards.
Broader energy system dynamics.

If designed and implemented well, transition credits could play a key role in accelerating the energy transition and achieving the Paris Agreement’s climate goals—while ensuring that the shift is both just and inclusive.

The post Powering down to power up: Unlocking the potential of Transition Credits appeared first on NEYEN.

Bottom-up will not take ASEAN Carbon Markets to the top

Johan Nylander — Fri, 31 Jan 2025 00:42:38 +0000

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Heightened expectation of forthcoming carbon pricing schemes in several ASEAN countries, has led to governments and the private sector taking initiatives to boost carbon market trade. Whether this push is the result of more elaborated international guidance is difficult to know.

In any case, it coincides with the conclusion of the rulebook for carbon trade under Article 6 of the Paris Agreement. This “conclusion” does not mean that there will be no more discussion, but it does mean that some of the outstanding issues from years of negotiations have been solved. An immediate impact is that countries can finalize their regulations, decrees, by-laws, and guidelines for operationalizing Article 6. This will prepare them to export ITMOs; carbon credits that are accounted for in the Paris Agreement scheme. The supply of ITMOs will facilitate countries purchasing them to achieve national mitigation targets (such as Japan, the Republic of Korea, Singapore, Sweden, and Switzerland), CORSIA (the international reduction and offsetting program for international aviation), and actors wanting to use ITMOs towards voluntary targets.

In the voluntary market space, the Integrity Council for the Voluntary Carbon Market (ICVCM) has established core carbon principles to guide independent carbon programs, project developers, and carbon credit buyers. The voluntary carbon market works with carbon credits not accounted for under the Paris Agreement, and with carbon credits that are accounted under the Paris Agreement. Sometimes, ITMOs are referred to as “adjusted units” since selling countries must adjust their emissions levels to reflect the export, and carbon credits outside this scheme are referred to as non-adjusted units.

The current demand for ITMOs from purchasing countries is limited and will likely remain so for some time ahead. However, a (future) demand from CORSIA has been announced, and there is a shortfall of ITMOs to match this demand.[1]

The trend in voluntary trade shows solid demand. After a peak in 2021, retirements in 2021 were 162 million tons, in 2022 160 million tons, and in 2023 160 million tons.[2] However, the annual issuance of carbon credits is much higher than the retirement.

In sum, international rules and guidance exist, ITMO demand is limited, and the VCM trade may not grow to the extent predicted a few years ago. How does this relate to what is currently happening in the ASEAN?

Carbon Markets in ASEAN

ASEAN could become a center for carbon markets. Several ASEAN countries have been active in CDM and the voluntary carbon market, the latter generating 233 million tons of CO₂ equivalent (MtCO2e) in carbon credits from 2009 to 2024.

Abatable has modeled ASEAN’s potential carbon market opportunities, showing that ASEAN could generate more than 1.1 gigatons of carbon removals or reductions per annum, resulting in up to $267 billion annual carbon revenue and 13 million jobs created by 2050. This would make a cumulative revenue of up to $3 trillion between 2025 and 2050. [3]

To realize this revenue, several of the larger ASEAN countries have established carbon exchanges to facilitate trade. These exchanges have recently been established or are under development. How the trade will develop in Malaysia, Viet Nam, and other countries is yet to be seen. However, some observations regarding the demand versus the substantial supply mentioned above can be made. Let us look at a couple of examples.

The Thailand Greenhouse Gas Organization issued about 22 million T-VERs from 379 projects between 2015 and 2025.[4] The T-VERs retired for the Thai carbon offsetting program have been around 200,000 annually.[5] The supply outnumbers the demand by far.

Indonesia had its first auctioning of ITMOs from six energy sector projects on the 20^th of January 2025. A total of 2.48 million tons of carbon are stated to be ready for international trade. On the first day of trade (January 20), 48,788 tons of CO₂were traded through 19 transactions involving 14 buyers. The price ranges between IDR 96,000 (USD 5.9) and IDR 144,000 (USD 8.8) per ton, a low price for a carbon credit that has received host country authorization as ITMO.[6]

The low demand could reflect a heightened level of scrutiny of voluntary carbon market buyers with concerns about environmental integrity including additionality. The type of projects that generate the carbon credits is also a determining factor for buyers. Renewable energy projects have become less popular (and are together with project types that increase fossil fuel extraction largely ruled out in the ICVCM’s Core Carbon Principles). However, the main point of this example is that the supply outpaces the demand.

From a focus on supply to a market with demand and supply

Carbon markets are carbon pricing instruments. More precisely, they are cap-and-trade markets that rely on caps limiting the amount of greenhouse gases emitted. Establishing national carbon crediting standards and trading platforms are reasonable steps in preparing for vibrant carbon markets. However, without significant demand, these carbon markets will not grow, provide the right price signals, or result in a shift to low-carbon development.

On the positive side, legislation (Viet Nam, Thailand, Malaysia, the Philippines) is on the way to establishing carbon pricing schemes that can establish demand. At the same time, it must be noted that establishing a scheme with a substantial price signal takes time (see the emissions trading schemes of the European Union and the People’s Republic of China).

Therefore, the current situation may result in disappointment, with supply outpacing demand. Another barrier could be complicated host country processes for authorizing ITMOs. In several countries (not all), sector ministries tend to be included in clearing projects for ITMO transfers. This may be well founded, given their responsibility for implementing the NDC, but it can also lead to unduly complicated authorization processes.

If countries’ approaches to the Article 6 market constitute barriers, the international demand from CORSIA and sovereign purchasers will not capture the supply. If there is no national compliance demand, e.g., through allowing offsetting for parts of the compliance quota in an ETS, the supply will be in abundance.

Another trend that speaks to a supply-driven market is that several countries in the region get international support to identify project pipelines. If there were strong international or national demand, with strong price signals, the private sector would identify suitable projects, identify the mitigation opportunities, discover the prices, and develop these projects.

Focusing on supply will not boost the carbon markets in ASEAN. Carbon pricing instruments with caps and costs for polluters must be introduced to boost investment in low-carbon technologies and practices. This is on the radar in several large ASEAN countries; let’s see how it works out. The current focus on establishing exchanges and boosting supply may be at risk of leading to disappointment.

The developments in ASEAN point to a situation where strong promotion of supply and trade is taking place, while the key factor is lagging—setting the caps, creating the demand, and creating the price signals.

Distributional impacts and industrial competition are challenging to manage in this context for fast-growing economies such as the middle-income ASEAN countries. Still, there is no way around it. Moving the ASEAN carbon markets to a balanced supply and demand situation is challenging, but a necessity.

References

[1] “Voluntary Carbon Market: CORSIA Carbon Credit Demand Expected to Outstrip Supply by 2030.” 2024. Abatable Blog, accessed January 31, 2025. https://abatable.com/blog/corsia-carbon-credit-demand-expected-to-outstrip-supply-by-2030/.

[2] Forest Trends’ Ecosystem Marketplace. 2024. State of the Voluntary Carbon Market 2024. Washington, DC: Forest Trends Association.

[3] Abatable, ASEAN Alliance on Carbon Markets, and Equatorise. 2024. The Opportunity for Carbon Markets in ASEAN: National and Regional Policy Considerations to Aid Development and Increase Interconnectivity. December 2024.

[4] Thailand Greenhouse Gas Management Organization (TGO). n.d. “Carbon Credit Category Budget.” Accessed January 31, 2025. https://tver.tgo.or.th/database/summary/creditcategorybudget/1?lang=en.

[5] Thailand Greenhouse Gas Management Organization (TGO). n.d. “Thailand Carbon Label Program.” Accessed January 31, 2025. https://thaicarbonlabel.tgo.or.th/.

[6] “International Carbon Trading Officially Opens, Transactions Reach 48,788 Tons.” 2025. Hijau Bisnis, January 20, 2025. Accessed January 31, 2025. https://hijau.bisnis.com/read/20250120/653/1833078/perdagangan-karbon-internasional-resmi-dibuka-transaksi-tembus-48788-ton.

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Blue Carbon & Nature Based Solutions

Oliver Green — Thu, 30 Jan 2025 20:31:16 +0000

In-depth Q&A with Andreas A. Hutahaean, Ph.D.

Principal Consultant Blue Carbon & AFOLU, Neyen
Co-Founder, Blue Carbon Indonesia

Andreas is a seasoned coastal-marine environmentalist, specializing in transformative coastal-ocean governance focusing on blue carbon, regenerative blue economies, and large-scale coastal ecosystem restoration.

His journey led him co-found Blue Carbon Indonesia where he led large research initiatives, secured grants and established a trust fund in collaboration with the World Bank. Andreas recently joined the team at Neyen in Jakarta as Principal Consultant.

In this Q&A he shares his thoughts on the challenges and opportunities for blue carbon and Nature-Based Solutions in Indonesia and beyond.

Question 1: Your career has been deeply rooted in coastal and marine environmentalism, with notable contributions to blue carbon initiatives and large-scale ecosystem restoration. Could you share the journey that led you to specialize in this field, and what inspired you to co-found Blue Carbon Indonesia?

I grew up in Indonesia, which has one of the world’s largest and most biodiverse coastal habitats. Indonesia’s beaches are rich in mangroves and coral reefs. Growing up among these habitats taught me how important they are for biodiversity and coastal community resiliency. I became passionate about environmental conservation after seeing how these ecosystems support nature and people.

As I started my profession, I saw mangrove deforestation, coastal degradation, and marine biodiversity loss as threats to these ecosystems. These concerns released carbon and hurt local livelihoods, worsening climate change. Lost habitats meant lost carbon sinks and diminished community resilience to flooding and coastal erosion. This revelation motivated me to discover solutions to these interconnected issues.

The more I learned about ecosystems like mangroves, seagrasses, and coral reef, the more I became inspired by their role as carbon sinks. These blue carbon ecosystems act as natural solutions for mitigating climate change by sequestering carbon. This growing recognition of the potential of blue carbon to combat climate change while also helping vulnerable coastal communities adapt to its impacts led me to specialize in this field. I saw it as an innovative, nature-based solution that could be a game-changer for both the environment and the people who depend on these ecosystems.

Faced with these environmental challenges, I co-founded Blue Carbon Indonesia in 2012. Our aim was to raise awareness about the importance of blue carbon ecosystems and push scale restoration projects that could help address carbon emissions while also improving the livelihoods of local communities. Research initiatives were crucial to quantify the carbon sequestration potential of these ecosystems and demonstrate their value in mitigating climate change. Through our efforts, we focused on large-scale coastal restoration and integrating blue carbon into national and global climate policies.

Blue Carbon Indonesia quickly became a key player in the Indonesian and Southeast Asian environmental scene. We secured grants and funding, including collaborations with global institutions like the GEF- World Bank, JICA-JSP, GIZ and the government of Indonesia to support our initiatives.

Question 2: Indonesia is home to some of the world’s richest coastal ecosystems, yet blue carbon remains an underutilized asset. What do you see as the main challenges in scaling blue carbon initiatives across the country, and where do the greatest opportunities lie?

Indonesia has the world’s richest coastal habitats, making it a blue carbon hotspot. Despite the significance of these ecosystems, blue carbon is underutilized. Scaling blue carbon efforts nationwide presents various obstacles and opportunities, in my opinion.

One major difficulty is the lack of awareness about the full potential of blue carbon ecosystems. Many people value trees and terrestrial carbon sinks, while mangroves and seagrasses are less well-known. Policymakers, businesses, and communities need more education and outreach to realize how important these ecosystems are for climate mitigation and coastal resilience.
In Indonesia, coastal and marine ecosystem governance is fragmented across many government levels and organizations. This might cause legislative gaps and make integrated, large-scale restoration efforts challenging. Progress has been made, but a lack of strategy and collaboration can delay blue carbon project growth. Blue carbon projects need clearer policies, greater governance, and improved cooperation between national and local players to succeed.
Indonesian coastal habitats face pressure from unsustainable development, including land reclamation, mangrove destruction for aquaculture, and pollution. Degradation of ecosystems releases large amounts of carbon. Restoring these ecosystems and preventing additional degradation requires overcoming enormous economic interests and developing sustainable, local development-aligned alternatives.
Blue carbon’s promise is recognized, but gaining funds and investment remains problematic. Many blue carbon projects struggle to raise funds to restore large-scale coastal ecosystems. International funding and carbon markets are important, but carbon credit markets and trust funds are needed to sustain these projects.

When it comes to opportunities, there are several things I'd like to call out.

Leveraging carbon markets is a key opportunity for Indonesia to scale blue carbon. Indonesia might capitalize on the blue carbon credit market as worldwide demand for carbon offsets rises. Indonesia can become a worldwide carbon offset leader by estimating and confirming coastal ecosystems like mangroves’ carbon sequestration capacity. Carbon credit sales would lower emissions and fund local communities.
Successful blue carbon initiatives require community engagement. Many Indonesian coastal communities depend on coastal ecosystems for fishing and ecotourism. We can assure sustainable coastal restoration programs that benefit people by including local communities. This community-driven strategy may help increase long-term ecological protection.
The potential for international collaboration and partnerships in growing blue carbon programs is significant. Indonesia can get technical expertise, money, and worldwide awareness through partnerships with the World Bank, UN agencies and NGOs. Collaboration with Southeast Asian countries and business sector collaborations could encourage innovation and share blue carbon restoration best practices.
Blue Carbon Integration into National Climate Goals/NDCs: Indonesia is dedicated to attaining its Paris Agreement climate goals, and blue carbon programs can help. Blue carbon can be formalized into national climate policies and strategies to guarantee that these ecosystems are considered crucial to the climate action strategy. Blue carbon projects may receive greater national and international funding.

While the challenges for scaling blue carbon initiatives in Indonesia are significant, the opportunities are even more excellent. By focusing on policy reform, community engagement, market-based solutions, and sustainable development models, we can unlock the full potential of Indonesia’s blue carbon ecosystems. The road ahead will require strong collaboration among all stakeholders including government, private sector, NGOs and local communities, but the benefits of doing so could be transformative for Indonesia’s environment and people.

Question 3: Nature-Based Solutions (NbS) are increasingly recognized as vital to addressing climate change and restoring coastal ecosystems. How do you envision NbS contributing to Indonesia’s fight against climate change, and what role can these solutions play in driving sustainable development?

Nature-Based Solutions (NbS) have emerged as a powerful tool in addressing climate change, and I firmly believe they hold significant potential for Indonesia’s climate strategy. As one of the most biodiverse countries in the world, Indonesia has a wealth of natural ecosystems such as mangroves, seagrasses, coral reefs, and forests that can help mitigate climate change and enhance resilience to its impacts.

This is how NbS can contribute to Climate Change Mitigation and Adaptation

The most compelling roles that NbS can play in Indonesia’s fight against climate change is through carbon sequestration. Coastal ecosystems, particularly mangroves and seagrasses, are among the most efficient carbon sinks on the planet. Indonesia’s vast mangrove forests are critical in sequestering blue carbon and carbon stored in coastal ecosystems. These ecosystems can absorb more carbon per hectare than terrestrial forests, which is crucial given Indonesia’s target to reduce greenhouse gas emissions. By protecting and restoring these ecosystems, we can significantly contribute to the country’s climate mitigation goals.
Indonesia’s coastlines are increasingly vulnerable to the impacts of climate change, including rising sea levels, coastal erosion, and intensified storms. NbS can enhance coastal resilience by restoring and preserving vital ecosystems that act as natural barriers. For example, mangroves provide a protective buffer against storm surges and coastal flooding, while coral reefs help reduce the impact of wave energy. Restoring these ecosystems directly contributes to the adaptation strategies needed for local communities to cope with climate impacts. When properly managed, NbS acts as a dual solution for mitigating climate change while enhancing climate resilience.
Biodiversity Conservation, NbS also plays a vital role in protecting Indonesia’s biodiversity, which is increasingly threatened by deforestation, illegal logging, and unsustainable land-use practices. Healthy ecosystems are essential for carbon storage and sustaining biodiversity, which, in turn, supports local livelihoods. Restoring degraded ecosystems like peatlands and mangrove forests can also support biodiversity recovery by creating habitats for wildlife, including species of commercial and ecological importance. This contributes to ecosystem services that are foundational to local economies.

Driving Sustainable Development through NbS

The most promising aspects of NbS is its potential to drive sustainable development by creating green jobs and providing long-term economic benefits to local communities. In many coastal areas, communities rely on ecosystems for fishing, eco-tourism, and agriculture. Restoring and protecting blue carbon ecosystems can help secure livelihoods through sustainable activities supporting the environment and people. Eco-tourism, in particular, has excellent potential, as Indonesia is already a popular destination for nature lovers. Establishing sustainable, eco-friendly tourism around mangroves and coral reefs can generate significant revenue while incentivizing local communities to protect these ecosystems.
NbS provides an opportunity to integrate local knowledge and traditional practices into climate adaptation strategies. Indigenous and coastal communities have long relied on the health of their local ecosystems for survival. By incorporating their expertise into NbS projects, we can ensure that solutions are culturally appropriate and build on existing practices. Moreover, NbS can empower communities to become stewards of their environment, ensuring that restoration and protection efforts are sustainable in the long term.
Attracting Investments and International Support: There’s growing international recognition of the value of NbS for climate action. The UN climate negotiations, the Paris Agreement, and various global environmental frameworks now acknowledge the importance of integrating NbS into national climate plans. By demonstrating the viability of blue carbon ecosystems and other NbS, Indonesia can attract international funding and climate finance to scale these efforts. Initiatives such as the Green Climate Fund and the Global Environment Facility provide financial support to developing countries for implementing NbS. Indonesia is well-positioned to leverage these funds, especially in coastal and marine ecosystems where its restoration can have a significant global impact.

As I have elaborated above, Nature-Based Solutions are a critical tool in Indonesia’s climate action arsenal, offering both mitigation and adaptation benefits. By protecting and restoring coastal ecosystems, Indonesia can contribute to global climate goals while also improving the resilience of its communities. NbS has the potential to drive sustainable economic development by creating green jobs, supporting livelihoods, and attracting investment. However, scaling these solutions will require strong policy support, community engagement, and global partnerships.

Incorporating NbS into Indonesia’s climate and development strategies is not only an investment in the environment but also in the future of its people. With the proper focus on sustainability and collaboration, we can unlock the full potential of these nature-based solutions and ensure a more resilient, sustainable future for Indonesia.

Question 4: As businesses increasingly seek sustainable ways to meet their decarbonization goals, how can Nature-Based Solutions, particularly blue carbon initiatives, play a role in corporate climate strategies? What steps should companies take to integrate these solutions effectively while ensuring measurable impact and long-term sustainability?

As businesses prioritize sustainability in their decarbonization ambitions, Nature-Based Solutions (NbS) especially blue carbon projects are an effective approach to reduce emissions, improve climate resilience, and maintain biodiversity. Companies can improve their sustainability and sequester carbon by using blue carbon ecosystems like mangroves and seagrasses. These ecosystems trap carbon faster than terrestrial forests. Blue carbon can be crucial to business climate strategies in the following ways:

1. Carbon Credits and Offsets

Companies can offset emissions by investing in coastal ecosystem restoration or protection programs that trap carbon. Businesses can offset their emissions by buying carbon credits from verified blue carbon initiatives, a key technique for net-zero or carbon-neutral goals.

2. Corporate ESG Goal Support

Investing in blue carbon programs supports a company’s Environmental, Social, and Governance (ESG) goals by improving environmental sustainability and creating jobs and community resilience. Many customers, investors, and stakeholders now prioritize organizations with strong ESG commitments, making blue carbon projects an attractive alternative for corporate reputation.

3. Climate Risk and Resilience Improvement.

Blue carbon investments sequester carbon and increase coastal communities’ climate resilience. Companies can reduce climate change-related supply chain interruptions and infrastructure damage by restoring mangroves and seagrasses. As climate change consequences mount, businesses need this proactive resilience approach.

To summarize, blue carbon initiatives offer businesses a compelling way to contribute to global climate goals, enhance resilience to climate impacts, and drive sustainable development. By integrating these solutions effectively, companies can leverage carbon offsetting, market-based mechanisms, and community engagement to ensure measurable, long-term impact while positioning themselves as leaders in climate action and sustainable business practices.

Question 5: As someone with experience collaborating at national and global levels, how do you see Indonesia’s blue carbon initiatives influencing or aligning with broader regional and international efforts to address climate change and ocean governance?

I consider Indonesia’s blue carbon initiative program as having a big impact and being in line with larger regional and global efforts to address climate change and ocean governance, having worked at both the national and international levels. Due to its extensive and biodiverse coastal habitats, which are among the world’s most effective carbon sinks, Indonesia plays a crucial role in the conservation of blue carbon. In this regard, I see Indonesia’s initiatives as follows:

1. Compliance with Ocean Governance and Regional Climate Initiatives

Indonesia’s blue carbon programs, in my opinion, are highly compatible with regional efforts to improve coastal resilience and mitigate the effects of climate change in Southeast Asia and the larger ASEAN area. Indonesia regularly participates in regional frameworks, such as

The ASEAN Blue Economy Framework: The regional push to include nature-based solutions into climate change adaptation plans aligns with Indonesia’s mangrove protection initiatives and focus on blue carbon.
Coral Triangle Initiative (CTI-CFF): Under the CTI, Indonesia is taking the lead in preserving marine biodiversity and promoting the sustainable use of coastal ecosystems, all the while highlighting the value of blue carbon in reducing the effects of climate change.

I see Indonesia as a model for other countries in the area because of my participation in these regional initiatives, demonstrating that blue carbon ecosystems can be an essential component of both national and regional climate strategies.

2. Support for Blue Carbon Governance and Global Climate Action

In my opinion, Indonesia’s blue carbon efforts are a crucial component of larger global climate action. Being the nation with the greatest area of mangroves and a vast seagrass meadow network, Indonesia’s efforts directly support international goals for biodiversity preservation and carbon sequestration.

As part of Indonesia’s effort to reduce greenhouse gas emissions, I have worked to integrate blue carbon habitats into the country’s Nationally Determined Contributions (NDCs), which are in line with the Paris Agreement.
The UN Ocean Conference: Indonesia is establishing itself as a global leader in scaling up blue carbon solutions and showcasing their potential to fulfill global climate targets through programs like the UN Decade on Ecosystem Restoration (2021–2030). I’ve taken part in international discussions where blue carbon is being viewed as an increasingly important component of ocean governance.

Working with these frameworks has demonstrated to me the growing importance of blue carbon solutions in both marine ecosystem protection and global climate plans.

3. International Preeminence in Marine Spatial Planning and Blue Carbon

Global attempts at marine spatial planning are being significantly impacted by Indonesia’s leadership in blue carbon. I have observed the nation’s active participation in international processes, including:

As a participant in the High-Level Panel for a Sustainable Ocean Economy (Ocean Panel), Indonesia is promoting sustainable ocean governance, where blue carbon is acknowledged as a key climate change mitigation strategy.
UN Conferences on Climate Change (COP): I have added to conversations about how blue carbon ecosystems may be included in international carbon markets and climate finance systems through Indonesia’s climate policy advocacy.

In addition to advancing regional and global climate goals, Indonesia is demonstrating how national initiatives can spur international collaboration in ocean and climate governance by aligning with these global processes.

Question 6: In your new role as Principal Consultant at Neyen Consulting, what will be your primary focus, and how do you hope to contribute to addressing the pressing environmental challenges of our time? What unique strengths do you bring to Neyen’s mission to drive sustainable solutions in the Asia Pacific region and beyond?

In my new role as Principal Consultant in the Blue Carbon and AFOLU (Agriculture, Forestry, and Other Land Use) sectors at Neyen Consulting, my primary focus will be to help clients integrate blue carbon and AFOLU-based solutions into their climate strategies and sustainable development plans. This role allows me to work across sectors and regions, driving both climate mitigation and adaptation through nature-based solutions (NbS). See below for a summary of the key areas of focus and the unique strengths I bring to Neyen Consulting.

Besides that, I will focus on advancing carbon credit systems and market-based mechanisms to mobilize financing for restoration projects, ensuring the long-term viability and scaling of blue carbon and AFOLU initiatives. These efforts will aim to create sustainable financing and blue economy models for nature-based solutions. I will also be assisting governments and businesses in developing resilience strategies for coastal communities and the agricultural sector to adapt to climate change. My focus will be on building resilience in the Asia Pacific region, which is highly vulnerable to climate impacts such as rising sea levels, extreme weather, and ecosystem degradation.

These are the unique Strengths I Bring to Neyen’s Mission:

1. Deep Expertise in Blue Carbon and AFOLU

With extensive experience in blue carbon and AFOLU, I bring a strong technical understanding of these ecosystems and their critical role in climate mitigation and adaptation. I am passionate about working at the intersection of science, policy, and finance, enabling the effective implementation of blue carbon solutions at scale.

2. Policy Advocacy and International Collaboration

I have a proven track record of advocating for blue carbon solutions at international platforms like COP and regional forums such as ASEAN. I will help integrate blue carbon and AFOLU into global climate frameworks, such as the Paris Agreement and UN Climate Change Conferences, strengthening Neyen Consulting’s position in shaping sustainable policies and international collaboration.

3. Strategic Partnerships and Stakeholder Engagement

I excel at building cross-sectoral partnerships with government bodies, NGOs, private sector entities and indigenous communities. These partnerships will strengthen Neyen’s efforts in scaling nature-based solutions across the Asia Pacific region. My understanding of local ecosystems, political landscapes and economic realities will allow me to tailor solutions that are both globally relevant and locally adaptable.

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Article 6 Rulebook Finalized: Implications for ASEAN Member States

Johan Nylander — Thu, 28 Nov 2024 15:52:01 +0000

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The ASEAN Member States (AMS) are at different stages of preparing to participate in international carbon markets under Article 6 of the Paris Agreement. This article will briefly summarize the status of AMS Article 6 readiness, examine what was decided at COP29 and then appraise whether these decisions will now unleash emissions reduction investment across the region.

As a “purchasing” country, Singapore has advanced its engagement through several bilateral agreements. Among expected host countries, Thailand is the only country that has issued ITMOs, and based on that, it could be regarded as the most prepared country in terms of Article 6 participation readiness. However, after the first issuance and transfer, Thailand decided to revise its approach, and a new decree (the Carbon Crediting Managing Guideline Mechanism) is coming.

Like Thailand several countries have drafted carbon market regulations (Viet Nam, Lao PDR). Indonesia has a new government that may give a new push for the international carbon market. Cambodia has an Operations Manual, but the mitigation activities pipeline seems quite limited. Malaysia has focused on promoting the voluntary carbon market and establishing a trading exchange.

Meanwhile, several countries in Africa have established national frameworks for international carbon markets: Ghana, Rwanda, Senegal, Zambia, and Cote d’Ivoire, to name a few. In comparison, ASEAN countries have been slow in preparing for Article 6, which has its causes (which may be the topic of another brief). A question that comes to mind is whether, given the finalization of the Article 6 Rulebook, AMS will now gear up for Article 6. Before answering, let’s examine what was decided.[1] The Article 6.2 decision focuses on authorization, first transfer, reporting, and the international registry.

Authorization of ITMOs

The text clarifies what authorization of ITMOs is, how it should be given, and under what conditions it can be revoked.

Authorization of ITMOs is a critical element of Article 6.2 guidance since it is the step where the selling country gives the purchasing country or entity the right to claim emission reductions. The host country cannot then use those emission reductions for its NDC targets.

For the carbon market actors, standard provisions on what the authorization should contain and when it should be made, as well as determining under what circumstances it can be revoked, reduce the risk of investment.

Project developers have been concerned about the prospect of a host country revoking the authorization. The agreed text rules out the possibility of revoking authorization for ITMOs that have already been first transferred unless specified in a bilateral agreement under Article 6.2 (by the Parties participating in the cooperative approach).

First Transfer

“First transfer” is a concept that was introduced to clarify when NDC accounting (corresponding adjustments) should be done. When a country exports an ITMO to another country, the first transfer is the actual transfer of the unit “out of the country.” When a country exports an ITMO for other use, e.g., for compliance with CORSIA or cancellation of the unit for achieving voluntary targets, then the host country has a choice of how to define the first transfer: at authorization, at the issuance of the unit, or the cancellation of the unit.

This flexible definition of “first transfer” arose because, for example, when a company uses an ITMO for offsetting, it can do so by canceling the ITMO unit, effectively indicating that no transfer has occurred. For the host country, knowing when to do the accounting (corresponding adjustment), makes compliance with Article 6 reporting and accounting requirements easier.

The agreed text clarifies that the first transfer can only occur once authorization has been made. It emphasizes that the host country must have a robust system to make its definition of first transfer transparent, ensuring that the host country gets notified about the action that constitutes the first transfer, and that corresponding adjustments be made accordingly.

Reporting and Inconsistencies

Participating Parties are requested to include additional information in their initial reports, not only on accounting technologies but also, for example, on how mitigation outcomes are shared between the selling and buying countries. The text clarifies how annual reporting should be made through the (revised) agreed electronic format and the biennial transparency reports. It also highlights that the initial report (where the country shows how it meets the participation requirements of Article 6.2) must be submitted before any annual reporting can be made.

Furthermore, the agreed text clarifies how to reconcile inconsistencies in countries’ Article 6 reporting. Inconsistencies in reporting can be identified through two different processes: the automated check by the UNFCCC Secretariat through the Article 6 database and the Technical Expert Review (TER) check. In the first case, the check uses the information that the Parties submit annually to the Article 6 database and alerts the Parties and the technical expert review teams about lacking or inconsistent data. Inconsistencies can also be identified in the TER when Article 6 information submitted as part of the Biennial Transparency Report is reviewed.

Under Article 6.2, where there is limited international oversight, reporting, transparency, and checking for inconsistencies is one way of creating public confidence in the carbon market.

The International Registry

A controversy concerned the functionality of the international registry, which is set up to support countries that lack the resources or will to establish national carbon registries. It has now been agreed that Article 6.4 Emission Reductions issued by the Supervisory Body in the Mechanism Registry can be transferred to the international registry if authorized for international transfer (as ITMOs). Some Parties objected to this and argued that these registries should be used only for pulling information and not making transfers.

Furthermore, Parties will be able to use the international registry for issuing units for countries planning to authorize the units as ITMOs or, if already authorized, as ITMOs. It is noted that the issuance of units in the international registry by no means has any endorsement from other Parties or the UNFCCC Secretariat. This is an alternative to countries doing the same thing in national registries.

The Paris Agreement Crediting Mechanism

Earlier at COP, the Parties had already approved the adoption of standards and methodologies by the PACM Supervisory Body. However, Parties will continue to make recommendations to the Supervisory Body, and we can expect negotiations on some issues over the next year, including the methodologies for emission removals. In its further work with developing standards, the Supervisory Body was requested to consult with local communities, and include the knowledge, science and practices of Indigenous Peoples.

The decision allows for the ex-post authorization of Mitigation Contribution Article 6.4 Emission Reductions (MCA6.4ERs). In an earlier decision, the Parties to the Paris Agreement introduced MCA6.4ERs as an alternative to authorized units, allowing the emission reductions to be counted toward the host country NDC while still being verified and registered in compliance with PACM rules. The decision enables the host country to authorize already issued MCA6.4ERs as ITMOs, thus coming with corresponding adjustments.

The Importance or a Finalized Article 6 Rulebook

These seemingly unremarkable provisions are expected to unleash “billions in investment into emission reductions and removals around the world.”[2] While that could indeed be a sincere hope, adopting the outstanding parts of the Article 6 rulebook does not provide a magic formula for boosting the international carbon market. Host countries still need to establish national procedures for authorizing ITMOs and reporting, establish national registries or define plans to use the international registry, and prepare for accounting through corresponding adjustments.

That said, the decision does reduce some of the risks relating to authorization and accounting, ensuring that authorization cannot easily be revoked and that countries will be checked to ensure that they do their accounting (corresponding adjustments) correctly. This, together with the adopted PACM standards, may boost the carbon market for the remainder of this decade.

Will ASEAN Carbon Markets now flourish?

What does it mean in practice for the AMS? Some countries have argued that the decision from COP26 in Glasgow is sufficient regulation of the international carbon market, and there has been quite some action in the absence of the finalized rulebook. However, for those who have waited for more clarity and more comprehensive international guidance, the COP29 decision provides an opportunity to finalize acts, regulations, decrees, and by-laws related to the carbon market. This may, for instance, help Thailand to finalize its CCMGM, and Viet Nam and Lao PDR to finalize their carbon market regulations.

However, for several AMS, finalizing acts, regulations, decrees, and by-laws involves more political issues. Integrating international carbon market mechanisms with emerging domestic carbon pricing schemes is one key issue. This relates to the more overarching issue of how to use carbon markets, domestic or international, for the achievement of the NDC. Particularly, this could mean looking at whether companies under compliance should be able to use domestic or international offsets. As an example, Singapore – due to the limited possibility of emission reductions inside the country – has allowed the import of ITMOs so that companies can comply with the carbon tax.

Only after these overarching decisions have been made will finalizing the authorization procedure or defining “first transfer” matter. This likely explains the relatively slow start of AMS compared to some African countries in preparing for Article 6. Thus, the absence of a final Article 6 Rulebook is only a minor part of the explanation. Nevertheless, the decision is important because the possibility of integrating international carbon market mechanisms with domestic carbon pricing schemes (and thus compliance demand) will definitely “unleash billions” of investments. Hopefully, the COP29 decision will facilitate this integration.

[1] Article 6.2 Decision Text, COP29, Baku, November 2024

[2] COP 29 Summary Report, IETA, November 2024

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