Pertamina has again shown its serious commitment in decarbonization within its business by signing a carbon trading cooperation agreement between Pertamina New & Renewable Energy (Pertamina NRE) with Pertamina Patra Niaga and Pertamina NRE with Pertamina Geothermal Energy (PGE, IDX: PGEO) on Wednesday, April, 12, 2023.
The agreement was signed by the Director of Strategic Planning and Business Development of Pertamina NRE Fadli Rahman, the Director of Marketing Center and Commerce of Pertamina Patra Niaga Riva Siahaan, and the President Director of Pertamina Geothermal Energy Tbk. Ahmad Yuniarto. The signing was witnessed by Senior Vice President Strategy & Investment Daniel Syahputra Purba, Chief Executive Officer of Pertamina NRE Dannif Danusaputro, and Chief Executive Officer of Pertamina Patra Niaga Alfian Nasution.
"Today marks a very significant turning point in Pertamina's journey in energy transition. This is an extraordinary achievement, especially in decarbonization initiatives. This is very challenging for all of us and we are hopeful that Pertamina NRE will become proficient in developing a carbon business for the Pertamina Group. When we have a high level of competencies, we will be able to compete not only on the domestic market but also on the international market in the future," said SVP Strategy & Investment, Daniel S. Purba in his speech.
Pertamina has aspiration to achieve net zero emissions by 2060, which is in line with the government's goal. This aspiration is accomplished through two pillars: decarbonizing emissions from Pertamina's business activities and developing new green businesses. Carbon trading is one of the initiatives undertaken to realize this aspiration. In the cooperation agreement, Pertamina Patra Niaga will purchase carbon credits from Pertamina NRE with a volume of 1.8 million tons of equivalent carbon emissions for a one-year period. The carbon credit will offset the carbon produced by Pertamina Patra Niaga from its business.
"Pertamina Patra Niaga is proud to be able to collaborate on carbon trading initiatives. Pertamina Patra Niaga has a concept called B2B (business-to-business) One Solution, which means that we don't only sell fuel to our industrial consumers, we also offer solutions for them, one of which being the need to decarbonize emissions from their businesses. This carbon trading agreement with Pertamina NRE is not only for our internal purposes, it will also provide us with a possibility to offer them in sectors like as mining and energy. These carbon credits could also be supplied to export-oriented industrial consumers," said the Chief Executive Officer of Pertamina Patra Niaga Alfian Nasution.
"Pertamina is committed to support achieving Indonesia's net zero emission target by 2060. In this case, Pertamina NRE serves as the Pertamina Group's carbon trading aggregator. We also hope that it can be implemented within the SOE environment. We are confident that Pertamina NRE can provide added value. This is a new business for Pertamina, but I believe that this has the potential of great value business in the future. We expect that demand will be high in the future, especially if there is a policy related to carbon taxes,“ said Chief Executive Officer of Pertamina NRE Dannif Danusaputro in his remarks.
The source designated for carbon offsets is the Lahendong geothermal power plant units 5 and 6, which have a combined capacity of 2x220 MW managed by PGE. Located in North Sulawesi, the plant is one of PGE's Clean Development Mechanism (CDM) projects and has held Verra's Verified Carbon Standard (VCS) since 2018.
"PGE has entered the carbon credit market since 2011. We are very excited about this carbon trading initiative, both for the Pertamina group and for the carbon market in Indonesia. Hopefully today marks the beginning of future success," said Ahmad Yuniarto.
Pertamina is strongly committed to running a responsible and sustainable business through the implementation of environmental, social, and governance (ESG) aspects. The Pertamina Group's decarbonization plan is still being implemented internally. Furthermore, Pertamina NRE as one of its subholdings, implements decarbonization initiatives through collaboration with external strategic partners, one of which is Nature-Based Solutions (NBS).