Dear IEEFA Asia Community,
This month’s research examines core issues influencing Asia’s energy transition and offers viable recommendations to accelerate progress. Highlights include anticipated reforms to China’s emissions trading system, options for early retirement of Pakistan’s coal-based assets, and strategies to strengthen Indonesia’s carbon market.
Key takeaways include:
- China’s emissions trading system (ETS) is expected to introduce absolute caps and include additional major emitting industrial sectors by 2027, aligning with international best practices. Robust enforcement, higher carbon prices, improved market design, and greater transparency and stability would bolster the country’s regional influence in shaping Asia’s carbon markets.
- A clear, bankable case is presented for the early retirement of Pakistan’s imported coal-fired assets using the 1,320-megawatt (MW) Sahiwal Coal-Fired Power Plant (CFPP) as a case study. A comprehensive valuation framework is outlined, with multiple scenarios and retirement pathways to enable an early retirement transaction.
- Indonesia’s carbon market, IDX Carbon, has stagnated due to a complex hybrid carbon pricing strategy that combines cap-and-trade with a fallback carbon tax, compounded by unclear trading and certification procedures. An updated Presidential Regulation provides a more integrated, accountable, and internationally aligned framework. Its success depends on effective implementation and monitoring.
We are also pleased to welcome Randi Bachtiar (Energy Finance Analyst, Indonesia) to IEEFA. As our local team in Indonesia grows, led by Mutya Yustika (IEEFA's Research & Engagement Lead, Indonesia Energy Transition), we look forward to deepening our research and stakeholder network to shape the country's green energy future.
Warm regards,
Paige Nguyen
Director, Asia
Institute for Energy Economics and Financial Analysis
