Maintaining Carbon Sovereignty, Government Prepares Smart Book and Emission Limits

Emission Limits Are the Foundation of carbon trading

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Apart from increasing the understanding of the apparatus, the government is preparing technical regulations to operate the domestic carbon market.

Jumhur said that setting a maximum emission limit or cap is the main foundation in the emissions trading mechanism. Without clear boundaries, carbon trading has no benchmark and is difficult to implement effectively.

In the cap and trade scheme, the government sets a limit on the emissions that each company can produce. Companies that produce emissions exceeding the limit are required to purchase carbon quotas or units from other companies that are able to reduce their emissions below the limit.

As an illustration, if a company gets an emissions quota of 100 units, but produces 150 to 200 units, the excess emissions must be compensated. The company is obliged to buy carbon units from other entities that have a surplus because its emissions are below the quota.

“Emissions trading is cap and trade. We set limits, then companies whose emissions exceed the limits buy from companies that are below the limits. "If it's not specified, it can't work," he said. explained Jumhur.