Abstract for: The Dynamics of Carbon Trading Policy Implementation in Indonesia

Carbon trading acts as an effort to balance the environmental and global economic impacts. Implementation of carbon trading regulated through Presidential Regulation Number 98 of 2021 is crucial for Indonesia as it contributes to market-based mitigation of climate change at the global level towards sustainable economic recovery. Carbon exchange activity only showed its performance on the first day of launch and continued to show a declining activity afterward due to the unavailability of carbon units. Driven by a regulated market, carbon trading performance is determined by regulatory instruments, especially the implementation of the economic value of carbon at the Ministries/Institutions level as regulated in Indonesia's Nationally Determined Contribution (NDC). This research aims to analyze the dynamics of carbon trading policy implementation in Indonesia and what reinforcement can be done to encourage carbon trading performance. Through qualitative descriptive research methods and drifting goals system archetype analysis techniques, the results show that the dynamics of carbon trading policy implementation are caused by resistance from business actors and conflicts of interest between Ministries/Institutions, resulting in declining national targets. To encourage the achievement of national targets, reinforcement needs to be carried out as a corrective action through soft steering governance innovations and the role of legislative support.