Building a robust international carbon crediting framework: insights from Indonesia’s Joint Crediting Mechanism

Abstract This research explores the Joint Crediting Mechanism (JCM) implementation and effectiveness in Indonesia, a program adopted by Japan for carbon emissions reduction and climate change mitigation. Using a quantitative case study methodology, we combine primary and secondary resources to gain insights into the mechanism’s impact on low-carbon development. Findings reveal challenges in government commitment to green energy promotion and financial losses in the solar power sector. Future agreements must consider past implementation and develop a clear framework for Internationally Transferred Mitigation Outcomes (ITMOs) to yield mutual benefits. The JCM has implemented 50 industrial projects in Indonesia, primarily in renewable energy and energy efficiency sectors. It stands out as a leading pilot mechanism under Article 6.2 of the Paris Agreement and has reached full implementation, involving the collaboration of host and partner countries in line with international standards. Various funding models support JCM projects, but while some achieve impressive emissions reductions, the overall impact on Indonesia’s emissions remains relatively modest, emphasizing the need for more comprehensive strategies at the national level. The paper also compares the JCM with other carbon crediting mechanisms, highlighting differences and similarities. Challenges in constructing international carbon crediting mechanisms in Indonesia are discussed, and lessons learned from the JCM are outlined, offering valuable insights for the development of a global carbon crediting framework.