Indonesia is developing its own emissions trading system (ETS) in conjunction with the EU ahead of the introduction of Europe's carbon-border adjustment mechanism (CBAM), delegates at the inaugural Argus Nickel Indonesia conference heard today.
The country is working closely with the European Commission to develop an ETS to offset any potential tariffs and duties imposed under the new CBAM, which will be introduced in 2026, Head of Centre for Green Industry at Indonesia's Ministry of Industry, Apit Pria Nugraha, told delegates.
"We are now working hand in hand with the commission to establish a mandatory carbon market," Nugraha said. "One of the motivations is to use carbon credits to offset the CBAM tariff."
He added that the country is working to decarbonise its stainless steel industry by switching to new furnace types and upgrading facilities ahead of the CBAM. While Indonesia's main buyer is China, the country has ambitions to be a global supplier of stainless steel, as well as nickel and cobalt to the battery industry. Nickel is not yet directly impacted by the CBAM, but is indirectly impacted owing to the inclusion of stainless steel in the mechanism.
"We are also exploring mechanisms such as preferential treatment for certified green products, export benefits linked to sustainability metrics and finance solutions to de-risk innovations," Nugraha said. "Companies which meet CBAM and ESG standards early will be rewarded with pricing premiums and strategic partnerships. Indonesia must move fast to lead on quality and sustainability."
Nickel industry prepares for increased scrutiny
Indonesia's rapidly growing nickel industry is preparing for increased scrutiny that will come with the CBAM, and carmakers increasing ESG demands as they transition to electric vehicles.
"ESG is one of the top priorities for the global mining and metal companies — we can no longer ignore it," Head of Sustainability at Nickel Industries, M. Muchtazar, told delegates. "Those who have strong ESG policies and implementation will prevail against the competition."
Muchtazar explained that the new generation of high-pressure acid leaching operations planned by Nickel Industries will significantly reduce the carbon footprint of its nickel mines, with a shift towards solar power and re-usable heat from its sulphide plants — averaging 6.97t of CO2 per tonne of nickel produced, lower than the estimated 13t average — into Class 1 nickel, according to a report by CarbonChain.
CBAM is likely to become an "effective import tariff" on high-emission producers of products going into steel and could be extended out to new products in the future, including Class 1 nickel, Carboneer managing director Simon Goess told delegates.
He estimated that an importer of 85,000 t/yr of pig iron, ferro-nickel and crude steel could face charges of €20mn-40mn ($22.8mn-45.5mn) by 2034, assuming indirect emissions become targeted by the CBAM by 2030, a significant proportion of the value of those imports.
"Green nickel is more than just a buzzword, it is a competitive imperative," Nugraha said. "We must act now to advance sustainability into our nickel industry, not just for compliance but for resilience, profitability and also global leadership."
