Abstract :

This study investigates the barriers faced by businesses in participating in carbon trading through the Indonesia Carbon Exchange (IDXCarbon). Although Indonesia has committed to reduce greenhouse gas emissions by 31.89% with national efforts and 43.20% with international assistance, participation in IDXCarbon is still limited. Using the Analytical Hierarchy Process (AHP) method, this study identifies and ranks barriers based on expert evaluation in four main criteria:  Impact on Risk Management and Uncertainty; Impact on Business Operation and Strategy; Impact on Financial and Profitability, and Impact on Regulatory Compliance and Stakeholder Engagement. The main barriers identified were Concern Over Loss of Sustained Revenue; Lack of Company Understanding and Capability; Additional Explicit Costs; Bureaucratic Complexity; Low Level of Transparency; and Limited Trading Volume. The results of this study are expected to guide policymakers and business leaders in improving their effectiveness and participation in carbon trading, thereby contributing to Indonesia’s ambitious emissions reduction targets.

---

Keywords :

analytical hierarchy process, Carbon trading, Indonesian Carbon Exchange

---

References :

1. Ashley, M. J., & Johnson, M. S. (2018). Establishing a secure, transparent, and autonomous blockchain of custody for renewable energy credits and carbon credits. IEEE Engineering Management Review, 46(4), 100-102. https://doi.org/10.1109/EMR.2018.2874967
2. Biedenkopf, K., Van Eynde, S., & Walker, H. (2017). Policy infusion through capacity building and project interaction: Greenhouse gas emissions trading in China. Global Environmental Politics, 17(3), 91–114. https://doi.org/10.1162/GLEP_a_00417
3. Bohanec, M., Messéan, A., Scatasta, S., Angevin, F., Griffiths, B., Krogh, P. H., Žnidaršič, M., & Džeroski, S. (2008). A qualitative multi-attribute model for economic and ecological assessment of genetically modified crops. Ecological Modelling, 215(1-3), 247-261. https://doi.org/10.1016/j.ecolmodel.2008.02.016
4. Brazilian Initiative for the Voluntary Carbon Market (n.d.). Home. Retrieved March 28, 2024, from https://www.brvcm.org/en
5. California Air Resources Board (n.d) Home. Retrieved April 13, 2024, from https://ww2.arb.ca.gov
6. Dyer, J.S. (1990) Remarks on the Analytic Hierarchy Process. Management Science, 36, 249-258. https://doi.org/10.1287/mnsc.36.3.249
7. Ellis, Jane & Kamel, Sami. (2007). Overcoming Barriers to Clean Development Mechanism Projects. OECD Papers. 7. 3-3. 10.1787/oecd_papers-v7-art3-en.
8. Ellerman, A.D., and B. Buchner (2007): The European Union Emissions Trading Scheme: Origins, Allocation, and 2005 Results. Review of Environmental Economics and Policy, I: 1 (April) (http://dx.doi.org/10.1093/reep/rem003)
9. Gittell, J. H., & Douglass, A. (2012). Relational bureaucracy: Structuring reciprocal relationships into roles. The Academy of Management Review, 37(4), 709–733. https://doi.org/10.5465/amr.2010.0438
10. Gold Standard from (2021). Home. Retrieved March 28, 2024, https://www.goldstandard.org
11. Governors’ Climate & Forests Task Force (n.d.). Home. Retrieved March 28, 2024, from https://www.gcftf.org
12. Guo, F., Foropon, C., & Ma, X. (2020). Reducing carbon emissions in humanitarian supply chain: The role of decision making and coordination. Annals of Operations Research. https://doi.org/10.1007/s10479-020-03671-z
13. Hadadian, A. (2017). Using Analytic Hierarchy Process (AHP) for Selecting the Appropriate Country for Economic Integration (Case of Iran’s Foreign Trade with OIC Countries).
14. Hernandez, R. J. (2019). Sustainable product-service systems and circular economies. Sustainability, 11(19), 5383. https://doi.org/10.3390/su11195383
15. Ichihara, Jun & Uchida, Toshihiro. (2014). Prioritizing Barriers to Implementing More CDM Projects in Indonesia: An Application of AHP. Asian Social Science. 10. 10.5539/ass.v10n18p191.
16. Ichihara, Jun & UCHIDA, Toshihiro. (2016). Evaluating Barriers to Implementing Joint Crediting Mechanism in Indonesia. Journal of Environmental Information Science. 1-10. 10.11492/ceispapersen.44.5.0_1.
17. Ishizaka, A., & Labib, A. (2009). Analytic hierarchy process and expert choice: benefits and limitations. OR Insight, 22(4), 201-220. https://doi.org/10.1057/ori.2009.10
18. Jalaliyoon, N., & Taherdoost, H. (2012). Performance evaluation of higher education; A necessity. Procedia – Social and Behavioral Sciences, 46, 5682-5686. https://doi.org/10.1016/j.sbspro.2012.06.497
19. Jarek, S. (2016). Removing Inconsistency in Pairwise Comparisons Matrix in the AHP. Multiple Criteria Decision Making, (11), 63–76.
20. Lin, J., Wei, W., Zhang, Q., & Wei, Y. (2023). Operation Effect of a Regional Carbon Market Based on Analytic Hierarchy Process-Fuzzy Comprehensive Evaluation: A Case Study of the Environmental and Energy Exchange in Fujian Province. Polish Journal of Environmental Studies, 32(4), 3185-3194. https://doi.org/10.15244/pjoes/163340
21. Lovell, H. (2010). Governing the carbon offset market. Wiley Interdisciplinary Reviews: Climate Change, 1(3), 353-362. https://doi.org/10.1002/wcc.43
22. Luthra, S., Mangla, S. K., Xu, L., & Diabat, A. (2016). Using AHP to evaluate barriers in adopting sustainable consumption and production initiatives in a supply chain. International Journal of Production Economics, 181(PB), 342-349.
23. Mora, C., Spirandelli, D., Franklin, E. C., et al. (2018). Broad threat to humanity from cumulative climate hazards intensified by greenhouse gas emissions. Nature Climate Change, 8, 1062–1071. https://doi.org/10.1038/s41558-018-0315-6
24. Morton, S., Pencheon, D., & Squires, N. (2017). Sustainable Development Goals (SDGs), and their implementation: A national global framework for health, development, and equity needs a systems approach at every level. British Medical Bulletin, 124(1), 81-90. https://doi.org/10.1093/bmb/ldx031
25. Moxey, A., Smyth, M.-A., Taylor, E., & Williams, A. P. (2021). Barriers and opportunities facing the UK Peatland Code: A case-study of blended green finance. Land Use Policy, 108, 105594. https://doi.org/10.1016/j.landusepol.2021.105594.
26. Plambeck, E. L. (2012). Reducing greenhouse gas emissions through operations and supply chain management. Energy Economics, 34(Supplement 1), S64-S74. https://doi.org/10.1016/j.eneco.2012.08.031.
27. Purwienanti, E. N. F., & Purwanto. (2023). Carbon tax policy toward net zero emission. In Proceedings of the International Conference on Energy, Environment and Information System (ICENIS) 2023 (E3S Web of Conferences, Vol. 448, Article 01022). EDP Sciences. https://doi.org/10.1051/e3sconf/202344801022
28. Ramadhani, Muthia. (2022). Application of Subcontractor Selection Using Analytical Hierarchy Process Method in Ritz Garment. Jurnal Bisnis Manajemen.
29. Saaty, T.L. (1980) The Analytic Hierarchy Process: Planning, Priority Setting, Resources Allocation. Mcgraw-Hill, New York
30. Saaty, R. W. (1987). The analytic hierarchy process-what it is and how it is used. Mathematical Modelling, 9(3–5), 161-176. https://doi.org/10.1016/0270-0255(87)90473-8.
31. Saaty, T. (1996) Decision Making with Dependence and Feedback: The Analytic Network Process. RWS Publications, Pittsburgh.
32. Science Based Targets (n.d.). Home. Retrieved March 28, 2024, from https://sciencebasedtargets.org
33. Sunhee Suk, SangYeop Lee & Yu Shim Jeong (2017): The Korean emissions trading scheme: business perspectives on the early years of operations, Climate Policy, DOI: 10.1080/14693062.2017.1346499
34. Stavins, R. N. (2001). Experience with market-based environmental policy instruments. In K.-G. Mäler & J. Vincent (Eds.), The Handbook of Environmental Economics (pp. 1-70). North-Holland/Elsevier Science.
35. Taherdoost, Hamed. (2020). Different Types of Data Analysis; Data Analysis Methods and Techniques in Research Projects. 2296-1747.
36. Teng, S. G., & Jaramillo, H. (2005). A model for evaluation and selection of suppliers in global textile and apparel supply chains. International Journal of Physical Distribution & Logistics Management, 35(7), 503-523. https://doi.org/10.1108/09600030510615824
37. Xia, X., Li, C., & Zhu, Q. (2020). Game analysis for the impact of carbon trading on low-carbon supply chain. Journal of Cleaner Production, 276, 123220. https://doi.org/10.1016/j.jclepro.2020.123220.
38. Zha, D.-S., Feng, T., & Kong, J.-J. (2022). Effects of enterprise carbon trading mechanism design on willingness to participate—Evidence from China. Frontiers in Environmental Science. https://doi.org/10.3389/fenvs.2022.986862
39. Zhang, F., Fang, H., & Song, W. (2019). Carbon market maturity analysis with an integrated multi-criteria decision-making method: A case study of EU and China. Journal of Cleaner Production, 241, 118296. https://doi.org/10.1016/j.jclepro.2019.118296.
40. Zhao, X.-g., Wu, L., & Li, A. (2017). Research on the efficiency of carbon trading market in China. Renewable and Sustainable Energy Reviews, 79, 1-8. https://doi.org/10.1016/j.rser.2017.05.034.