Gunung Capital’s Kimin Tanoto: “China will lead in the fight to lower carbon emissions in the whole of Asia”

Kimin Tanoto, founder and CEO of Gunung Capital, a Singapore-based private investment company focused on ESG-related impact investments, shared that the ability of steel mills to be low-cost producers in the future will be impacted by new carbon tax regimes and no longer by access to cheap power or raw materials, like they currently do. China which is currently home to low-cost steel producers is also preparing the industry for a low emission future. 

Gunung Capital is a subsidiary of Indonesian steel maker PT Gunung Raja Paksi (GRP).  Tanoto added that the investment required to support new production infrastructures to attain carbon neutrality in Indonesia’s steel industry is three to five times of existing equity.   And consumers will end up bearing the brunt of the increased costs. 

Meanwhile, the Indonesian government demonstrated its commitment to the international climate change agenda by joining over 100 countries to sign the global methane pledge at the Glasgow conference of parties (COP26). It aims to curb methane emissions by up to 30% by 2030. 

Kelvin Fu, managing partner of Gunung Capital, had first-hand interaction with like-minded business leaders at COP26 and witnessed corporates playing an active role to spearhead climate actions, alongside governments. He emphasised the action-oriented nature of conversations around impact and carbon neutrality. 

Despite massive commitments like the Glasgow Financial Alliance for Net Zero (GFANZ), most initiatives to mitigate climate change lack detail and direction to reach specific goals.  Tanoto attributes this to a lack of trained human resources, especially sustainability experts who can guide companies through this uncharted territory. Indonesia is gearing up to host the G-20 next year and Fu is confident of the Indonesian government’s desire to take the reins and emerge as a climate action leader in ASEAN. 

The following key points were discussed:

• Steel and cement are core businesses that attract majority of Gunung Capital’s portfolio investment.
• Southeast Asia can catch up in the carbon trade under the leadership of China.
• To produce green steel and achieve carbon neutrality in the production process, three to five times of existing capital investment is required.
• China removes tax rebates for steel exports unless producers adhere to net-zero carbon targets.
• Carbon tax will kick in Indonesia at $2.10 per tonne of carbon emission by 2022.
• Corporates are leading the conversation around climate action, not governments anymore.
• The timeline to attain carbon neutrality will depend on the implementation of carbon tax.
• Investors will benefit from the new opportunities with the opening up of carbon trading markets.
• Indonesian government is under pressure to perform as they are hosting the G-20 summit.

Below is the edited transcript:

Foo Boon Ping (FBP): Good morning Kimin and Kelvin, very happy to be speaking with both of you and especially on the back of what Gunung Capital is doing as I mentioned earlier, in the carbon credit market and carbon credit trading area as well as what Gunung Raja Paksi is doing in terms of green steel. To start the interview, perhaps you'd like to kind of fill us in on what's the journey in terms of building up Gunung Capital, in terms of its inception, what is the objective in this area of carbon credit, reforestation and so on?

Kelvin Fu (KF): Thanks for your time and appreciate the opportunity for the interview. We started Gunung Capital as a private investment manager to be focused on impact and ESG frameworks. Now, what that means is that there are many impact funds, but what makes us different is, we believe very strongly in supporting and developing carbon markets. And what this means also is that there are a few related things. One is, we are encouraging the adoption of decarbonisation technology and innovation. There's a tech component to it. The second part is we want to establish carbon credits as an emerging asset class, it is still in a nascent stage, but we believe this has the potential to go very big, and it is going to be a sustainable initiative because we can't run away from decarbonisation, especially with climate change happening. And then lastly, we are trying to funnel a lot of capital, responsible capital to support any projects that allow us to reduce the carbon footprint. This is a huge space for us. We are not only partnering with other global investors, but we also need to partner with NGOs. We need to partner with policymakers to make this shift happen. We believe in factoring in the carbon cost in all our investment decisions. That is one of the core tenets of why we are different from other investors, which normally only look at, putting financial return as the top priority.  That's how we started and through Gunung Capital, we are investing with our portfolio companies, which is steel and cement, but we also invest in renewable power, and also decarbonisation technology.

Kimin Tanoto (KT): Kelvin here mentioned all the positive steps towards sustainability. The other flip of the coin is also fear,  this year with COVID in full steam, we see a lot of fear. In the steel industry, we are closely linked to the power generation side because that's one of the biggest causes it's the second-largest biggest cause, last is power. And we see a lot of scrambling in the power industry and being in Indonesia, the majority of the power comes from coal power plants. We saw a lot of coal power plants now, this year especially being stranded. We do not wish to be in that group of stranded assets. One of the key drivers for us is fear as well.

FBP: Fear and managing that fear and managing the risk. Tell us more about Gunung Capital. Is it managing investments of the wider Gunung Raja Paksi. Does it serve other clients? Are you licensed to serve accredited investors as well?

KT: Gunung Capital started as a family office initiative. As we progressed along, we saw that there's a lot of interest and there's a lot of potential from other investors as well. And there are a lot of people in the industry who do not quite understand the trends and how do you pivot away from greenhouse gas (GHG) emissions towards sustainability. Gunung Capital has grown in a very short period from addressing only family needs to, we're going to seek funds from institutions and we're going to accept a lot of investment from other companies or individuals.

FBP: In terms of the size of your investment portfolio now in terms of asset under management (AUM).

Steel and cement  are core businesses that attract majority of  Gunung Capital’s portfolio investment

KF: Let me just add on. Our two core investments right now are in steel and cement, a few companies are listed companies with a market cap of $5 million. On top of that, we have our cement plant, which is the only cement facility in the new capital that Indonesia wants to build. While we did not disclose the actual AUM of the firm but that will give you some indication of the family's ability to invest in other projects, in terms of looking at new investments. What makes us different is that we are doing what we're saying we want to do, right now which means we are already deploying our capital to decarbonise our existing portfolio. Now, that is very different from other new fund managers that are trying to do this. They have not even dipped their toes in it.  We have the benefit of the track record that we are doing right now and that gives us a lot of credibility when we go out and say we want to invest in carbon credits because we have already done it. We participated in DBS’s Climate Impact X, which is Singapore's carbon credit marketplace, one of the only Asian focus investors in this space, that puts us in a different standing, not just in the way we think, but also in the actual execution. And that is already being done.

FBP: Your primary investment remains in the core business that you mentioned steel and cement.

KF: Right now, it accounts for a majority of the assets under management. We listed the family business in 2019. That was big liquidity generated, right. And then we are deploying the funds that we have, basically monetise the investments, and we are deployed into other areas that are going to be more sustainable in the longer term. Of course, we are not going away from steel and cement, because we believe those are two fundamental building blocks for sustainable infrastructure. And even the new renewable power plants that you need to build all the new, so-called green infrastructure, they all need steel, they all need cement. Right, right. We are in the best position to capture the entire value chain, we can provide the green building materials, we can generate carbon credits, and we understand how to operate in this world.

FBP: Currently, you are with the Climate Impact X transaction. You're buying offsets right from the exchange. Tell us about the carbon credit market in Asia, in terms of, as you mentioned, at some point, you want to be able to generate credit as well not just kind of buy and trade and the compliance kind of environment in Asia, in Indonesia, specifically, right now, your involvement is voluntarily in terms of going green by decarbonisation. What was the potential for creating projects around any of the three areas whether be them in the area of emission avoidance, reduction or removal?

Southeast Asia can catch up in the carbon trade under the leadership of China

KT: The policy in Southeast Asia is still being written. If you look at Indonesia, we are quite involved in the Ministry of Industry and Trade. I'm the vice-chairman of the steel association in Indonesia. Indonesia is trying to write the rules right now. Singapore is probably a bit more advanced but I believe in the whole of Asia-Pacific, China will have to be the leader. China is going to lead on the reduction of carbon emission through their market cost containment reserve (CCR).

FBP: Well, they have an emission trading scheme (ETS) or a system in place already.

KT: I believe it's about eight or nine ETS all over the major cities. And I believe next year, they are going to consolidate that into a national ETS. They have a company compliant carbon credit that is going on for their power plants. And next year, the rumour is that they're going to include steel, chemicals, cement into the mix. Indonesia is on the path, and it's on the same path as China and it is going to apply a carbon tax next year. Although the tax amount is a bit low at $2.10.

Okay, let's go to get back to the policy. Southeast Asia is lagging. And but I believe they will catch up quite fast under the leadership of the EU and China. Your next question is on the generation of carbon credit. There's a lot of opportunities to do that. The most obvious one, which is on reforestation, in Indonesia, right now it is a very big topic, even agriculture, CPO plantation is talking about deploying their unused land assets to reforestation. There are also forest protection programmes. And right now, a hydro project is also very hot in Indonesia. We're going to see a lot more of that. And now there is no lack of funding. We believe at Gunung Capital, we will be able to attract funds that are interested to invest in renewable energy, such as those that I just mentioned, and we will be able to deploy it on good assets, good operators. There's a lot of potential to generate carbon credit and ETS, it will be quite robust. Singapore has a great opportunity to be a platform because Singapore is non-biased. Singapore does not generate a lot of carbon credit, and neither does Singapore use a lot of carbon credit. It will be quite a neutral and a natural selection. Just like Singapore has done so on the banking industry. I believe Singapore has a good chance. We believe aviation shipping, will also have a lot of offsets. We can't possibly have a carbon-neutral industry in 10 years’ time span, the CAPEX requirement is too big. It does need some time, and therefore the voluntary carbon credit will be in play until we can achieve carbon neutrality.

FBP: If I were to ask for some specifics in terms of is there a desired size of your impact investment funds, so to speak, at some point you're inviting global investors, in terms of a target that you have kind of put in?

KT: In terms of the size, it has grown quite a bit in the last few months. The wish is for the funds to be as big as possible because our war doesn't have time. There's so much discussion on the Paris Agreement, the target of 1.5 degrees, we don't have a lot of time, we are quite behind. We do need to play a lot of catch up. If you ask me about the size, I'm more concerned about the deployment.

FBP: How much if we look at the size of a potential perspective in terms of the potential investment opportunity that you see in the short term?

To produce green steel and achieve carbon neutrality in the production process, three to five times of existing capital investment is required

KT: Let me give you something in perspective, for example, let's talk about steel production, which we know very well, say cement industry. To achieve carbon-neutral steel, the so-called green steel, we would need to invest maybe three to five times of our equity that is the size.  Let's say that our group asset is about $1 billion, we need to invest between $2 to $3 billion to create $5 billion. You bring them to the largest steel plant in the world which is valued at about $30 billion, they will have to invest between the $90 to $200 plus billion that is the size of the commitment you will need from just on one company. Then you spread it across all the cement industry, especially power which is the largest emitter, you go towards power generation, hydrogen generation which has a huge amount of CapEx. It is a bit difficult to pinpoint, what is the size of this because a lot of this technology does not exist, we will talk about green steel, there is no such thing as a green steel plant in the world as we speak right now. A lot of theories, but I see that we are going in the right direction. That's the most important thing because everyone believed in this. All the top companies and top regulators want to do this, when I talk to the ministers, they are committed, they want to do it. We are doing good. Let's hope that we can turn the wish into action and we will be living in a better place.

FBP: Talking about the steel and cement industry, which you are very familiar with, in terms of what needs to happen to make steel green, the demand for steel itself is kind of taking a knock from COVID. And you are up against a kind of very competitive producers in terms of cost from China and so on so forth. Is this whole kind of green climate change an opportunity to transform the industry and transform the basis of competition, meaning green steel going forward will be differentiating producers, not just on cost and quality, but how they are manufactured. Tell us in terms of what's happening along that line in the steel industry in Indonesia and how that creates new opportunities, new competitiveness.

Carbon tax will kick in Indonesia at $2.10 per tonne of carbon emission by 2022

KT: Mr. Foo, very good question. You talked about China actually, China has already taken the first step towards sustainability in steel, they have voluntarily taken their export market out of business. I believe it was in May 2021, China has removed their tax or was it tax rebate 13% from all steel products, that in essence took out all their steel. They send out a message to their steel production companies that they no longer will subsidise the export because they are net GHG emitted. And in fact, the rumour coming up next year was that they are going to impose a cap-and-trade ETS on steel products within China. The cost of Chinese steel production is due to go up and significantly but that will still depend on the carbon costs. So that's one. Because it’s cap-and-trade as you can see in the European, the compliance carbon credit on steel, what’s the final figure, I'm not quite sure, but I believe it's about $73 at the moment, that is hard. Right now, the definition of low-cost producer in my belief, in steel production or any other building materials is going to change, it is not going to be who has the cheapest power, who has the cheapest access to the raw material, it is going to have to welcome a new friend in their cost of goods (COG) sold, and that's called a carbon tax. And the higher the carbon tax, the more of the formulation of the COG as well and we will have to change. Now, the low-cost producer, who has the low-cost producer is debatable in the future, it depends on your national carbon tax. Right now Indonesia is going to impose $2.10 versus China, whatever carbon tax they are going to impose, depending on the carbon cap-and-trade, and also the cross border carbon tax, in Europe they call it the carbon border adjustment. That is all coming up. We are living in a world of flux, a lot of disruption and across multiple industries. It's not just heavy industry like you said, logistics is also going to be affected. But one thing for sure is we can see some inflation. Because of all of this capital expenditure (CAPEX), we will have to pass down the cost to somebody else. But I hope that answers your question.

FBP: In terms of the policy, there's a greater impetus, greater pressure as well to accelerate the imposition of a threat of a framework and the actual tax is likely to increase as long as the imperative to meet the zero-emission goal gets accelerated. There's already quite a lot of this kind of content from NGOs, and so on so forth in terms of what's coming out from COP26, in terms of whether the commitment means are enough, and especially with the commitment towards zero-emission, some countries like India, said it will comply to 2070, which is 20 years too late.

KT: I don’t think they will have a choice because South Asia, India, China, the whole of Southeast Asia are export-driven economies so if US and China impose a carbon border tax, you have no choice. India could say that, okay, I'm not going to impose myself and then tax, but the textile, the steel or the product that you export, you're going to be audited and when your product reaches the border, you're will be imposed carbon tax. We see this all the time. You can deny it, but when the time comes, you will have no choice but to comply if you want to do the export business.

Corporates are leading the conversation around climate action, not governments anymore

KF: Boon Ping let me give you one more point to add on. I just got back from COP26. One of the biggest conversations, let's put the announcement and pledges aside. One of the biggest drivers is that institutional investors around the world are demanding action from the corporates and the corporates are responding. Because if you don't respond, they will not get a voice going forward in any other conferences. All the CEOs that have attended COP, only one topic in mind which is sustainability and responding to this climate action. If you don't respond, you become irrelevant in this market. There's a personal driver for the CEOs to be held accountable. Now you talk about green steel. I was in a panel to hear about the views of people and they said right now the key driver of green steel is coming from the premium industry that can afford this green premium. This premium industry for green steel would be automotive and white goods, so for example, of course, all the automakers they want to claim they are green and they are doing electronic vehicles (EVs) they have to buy green steel, all these white good manufacturers like the washing machine and all that they want to claim that they are responsible to the environment, they cannot run away from green steel and then they will start to follow. Now green buildings, I was in a panel with the World Green Building Council CEO and she said, if you want to build a building, you have to use green steel and green sustainable materials. The legislation, in the request for proposals (RFPs), they are going to start putting and demanding that buildings be more energy efficient. More importantly, they say before you even build the building, make sure you source green steel. This trend I believe is coming. The conversations that are being mentioned by the CEOs are different. John Kerry who has attended the COP since day one, he's 77 years old, by the way. He said the biggest change that has happened in this COP was that corporates are the ones leading the conversation not the governments anymore. There's this sense of optimism that things will happen. Will it happen by the end of this week? Maybe not. But he said COP is not the be all end all. After you sign a COP, there are still many, many COPs to go. The scientists did have to cut 1.5 degrees Celsius by the end of this week. You have to reach it within 10 years. 10 years is a long time.

FBP: And then corporates have to respond and then put that into your corporate strategy as to how you run, especially for steel making business. As Kimin mentioned, you need three-times equity to make all those investments. But what's the impact ultimately? Who pays the bills? At the end of the day, is it consumers? Everyone wants this climate action but who is going to pay the bill? Is it the government?

KT: Do you speak Chinese?

FBP: Yes.

KT: Have you heard of the phrase “Chinese audio”.  The consumer will pay for it, for sure. And just like what Kelvin has said, the corporates are all excited, funds are excited, the government is excited because there is a lot of business to do here. The government will have a new revenue stream from taxes, from employment because there will be a demand for a lot of technology, a lot of buildings will have to be made carbon-neutral. New renewable energy, energy improvement, new factories. I believe ESG is going to be the main source of growth for the next 20 years.

FBP: There will be a lot of disruption and dislocation as well. Apart from that, there will be some existing companies that will be out of business. It will affect employment and so forth. But that's a kind of a long term impact.

KT: It may not be that long. Take a look at Tesla and take a look at the disruption that they have done and actually as a percentage of car sales Tesla is not that big. It's so small. But take a look at what Tesla has done to this industry. People talk about EVs being a novelty, that it will not work, it will just be a decoration but now everyone is adapting. Singapore is going to phase out petrol cars by 2040, Japan, the US, EU is on the same page, Chinese is also on the page. EV car is a fairly simple car with a battery and direct power. All the accessories will be gone. And in those companies, if they don't pivot going towards something else for EV they will be retired. It is going to be very fast. Denial is going to be the most dangerous thing to do when it comes to ESG. For Mother Earth, 2021 is a big victory.

FBP: Kimin, you wear two hats, right? On the one hand, you run Gunung Capital, there's looking at a kind of fundraising for the potential transformation of all the opportunities that we will be looking at in terms of the investment opportunities, but on the other end, you are running a steel and cement business that is going through this transformation, setting yourself maybe a timeline target where you have to do great, and also running a business, making it profitable. You have to wait. If you go green, who are the customers today, how you're going to turn a profit etc? And also as chair of the association setting the direction for the industry as well, is there a timeline, as mentioned about green steel in Indonesia?

The timeline to attain carbon neutrality will depend on the implementation of carbon tax

KT: Timeline to achieve carbon neutrality in Indonesia. There's a great question, I believe this timeline will be imposed by the government. What do I mean by that? If the government gave a lot of encouragement for us to pivot to go carbon neutral, the fastest we can achieve that goal. Now we are standing for the technology because the technology will catch up, people talk about technology being very expensive on hydrogen, so on and so forth because for steelmaking our fuel will be hydrogen, there is more or less consensus on that, hydrogen is going to replace coal. The cost of this will depend on how fast the government accelerates the carbon tax, I believe that the carbon tax if the government wants green steel, government should accelerate the price of carbon tax make it very expensive. The balance is for the businesses is about to cost and benefit. If we produce green steel in Indonesia, and our domestic market is the majority, will the consumer pay a premium on green deals? I know in the export markets certain markets will do it. But the domestic market, we need the government to regulate and the faster they accept this, the faster we can achieve green steel. But that being said, Indonesia, historically is always lagging, technology is always lagging. We are always importing technology. Europe, the EU, China and America is going to lead on the technology side.

FBP: How much of what you produce is for domestic and how much is for foreign markets?

KT: About 70% is domestic.

FBP: The domestic market plays a big part and the government's role is to kind of wheel the stick in terms of a carbon tax, are there carrots in terms of adherence?

KT: We have already taken the initiative. On the power front, we have talked to the national power. Just like Singapore, we have the national power and in Asia, there's only one company. We have reached out to them and said by 2030 we no longer want to buy any power that is from coal, that will come at a premium. But we are willing to pay the difference. We will only take power from geothermal and hydro.

FBP: This trend that we're seeing in terms of, inflation in terms of energy prices, even Singapore, retail, commercial, they're feeling the increase of cost of energy power, it is 60%, higher.

KT: There you go. That answers your question. Who pays the bill? They will pass it on to the consumer.

FBP: The consumers are already paying. As we pursue this path how much appetite there is really? And how that agenda might change as consumers feel the pinch.

The investors will benefit from the new opportunities with the opening up of carbon trading markets

KT: I don't see it that way, Mr. Foo. The consumer is also going to benefit from employment opportunities in Singapore. The quality of life, there will be a lot of new job creation on the technology front on the banking front. It will be a cycle, the consumer will benefit greatly from this as well.

FBP: Now, in terms of putting in place or looking at the investment opportunity and decarbonisation, and looking at the opportunities there, one key area of the investment part of it is measuring impact. What are your views on impact investment on the carbon front? There are many things in terms of auditing, in terms of measurement, especially globally that is happening. What needs to take place in Southeast Asia, Asia, specifically looking at the decarbonisation, carbon credits and measurement?

KT: That sounds like a question for the scholar.

KF: That's a sharp question. Because to assess the impact that is being made, we need to be able to have a very clear accounting, you may have heard of various standards by lots of associations coming up, with their standards, but the most significant thing that came out of COP26 was the international sustainability standards or ISSB that will be managed by IFRS. That is very significant because that means just like what IFRS did for the accounting, and all the corporates, this will be the same thing. You will now have a global standard to measure sustainability. Not only that, this issue is underpinned by a lot of climate disclosures, such as the TCFD, which a lot of people are still trying to understand and grasp. Within Asia, this concept of measuring sustainability is still quite new. But that is where we can be one of the champions for this standard. When we start to assess investments, we are already wearing the lens of this UN SDG 17. How does it matter? And then one of the problems with claiming to meet certain SDG goals is how do you verify, there are now lots of technologies that allow us to monitor reports and verify the standards. And this growing area, for example, S&P come up with their ESG ratings. We have other companies that are coming up with these matrices.  We are going to adopt these. Going forward, this recognition of the ESG standard being central to the investment thesis is only relatively recent, and measurement tools have caught up with us already. I believe that going forward, we will be able to have a very clear ability to measure impact. But I'll give you one more thing. It is not so much about impact investments anymore. It's really about impactful investments. When we do any impact investments, we also have to calculate the impact that it has made and it must be impactful to the society that we invest in. That mindset shift has already begun and at Gunung Capital, we already believe in it and we practice it.

FBP: An important part of that is, with the new standards in terms of measurement, and reporting, and it is ultimately putting a price on impact. So as you mentioned, that the new technologies that are coming up that will facilitate it, like distributed ledger technology, blockchain. Now, you have just come back from COP, among other pledges, the pledges around emission of methane gases and others tell us about your sense of what's been done by the Indonesian or broadly Asian governments at COP26?

Indonesian government is under pressure to perform as they are hosting the G-20 summit

KF: Oh, that's a very loaded question. Asking me to assess the commitment, because that's relatively new. But, but I'll give you some sense. And I take my reference from at least some of the leaders that I heard speak in person. The methane pledge is of course, very significant because we say, it traps more heat, various governments have signed it. But the Asian economies have signed the pledge with a big important caveat. And that caveat is, for us to transition our power from a fossil fuel one to a renewable one, we need a just transition. And what that means is don't force it on us, unless you give us the financing and support. That is why the developed countries have now committed lots of money, they're giving lots of blended financing to the emerging countries, and a lot of people are slamming China's lack of presence at COP26. But the US and China just signed an important commitment that they're going to work. And if you recall the Paris Agreement, China and US side agreement which was the one that allowed the Paris agreement to even happen. This is a very strong signal from China and also if you look closely at China's climate plan, which is called “1+N” it is very detailed in how they're going to decarbonise. But China's going to do it on its timeline, just as many other Asian countries will do it. And the world has shifted, despite the relatively slow progress from some Asian countries, and if you talk about Indonesia, don't forget Indonesia is leading the G20 next year. There's a lot of pressure for President Jokowi to perform and his ministers, and in 2023 Indonesia is leading the ASEAN forum. I believe Indonesia will take a more leadership position. But of course, the proof is in the pudding.

BP: It's a great conversation that we are having with you. Maybe one final question around the financial services industry response to climate action specifically on the Glasgow commitment for zero-emission, that Mark Carney, the former Bank of England governor is driving.  That’s a lot of commitment. I mean, $90 trillion, that’s a big amount but in terms of specificity that isn't a lot. Yet the industry is still in terms of financing some of these coal exports and so on. What do you think of that? Also, as a part of that wider industry that sponsors or do the financing for green initiative going forward.

KT: I mean, actually one of the most significant things we did at Gunung Capital was to sign on to a very important commitment which is through the AIGCC, the Asian Investor Group on Climate Change, that is also a group of one of the top asset managers in the world, covering trillions of assets under management.  Our commitment is to help our portfolio decarbonise and only invest in groups of companies that meet our SDG goals. Similarly, like Mark Carney's initiative, there's another one called the Glasgow Financial Alliance that was just launched. I wouldn't fault them for lack of details, because it is a massive issue to comprehend. But I can assure you that the conversations on the sidelines away from these pledges, all these managers that I've met, are all extremely serious. Everyone talks about their strong commitment. It's beyond those words, they're already doing it in their portfolio, it's just that a lot of the companies that they invest in are not ready. I'll give you one example like our steel company, we are one of the first to publicly say that we are buying offsets, we are committing to green steel. But if you look at other ASEAN steel mills, there are not many you can find. The reason is twofold, one, the mindset of the leaders has not changed, they cannot understand what is green? Why is green so important when things have always worked in the past. The second is the lack of human capital. You want to go sustainable, but you don't know how to. It took us a year and a half to figure this out. What does it mean to be sustainable? And we are still aggressively hiring sustainability experts, which is not easy to find in this world, especially in Asia, when all the big firms are trying to poach each other. This lack of human capital and lack of vision is something that is maybe lagging. But to the benefit of our leaders, our executive team, we managed to get everybody on the same purpose, a purpose-driven company which is to go sustainable.

FBP: And you are the sustainable engine for the bigger Gunung Raja Paksi Group. Kimin your final comments?

KT: My comment here is, the awareness that is achieved this year is amazing. It's beyond amazing, we talk about awareness of big corporations, even down to the small companies, everyone is aware of this issue. Everyone is aware that they have to do something across all industries and achieving that alone is not easy. For me that is a big achievement, and after awareness, all the research will come and the execution will follow, the funding will come in, this is going to happen very, very fast. It's going to happen because now thanks to COVID we have a widespread adaptation to digital communication, the social media.  We are also entering where the voting class are all the young people who demand a better environment. The governments around the world will have no choice but to comply. It's a perfect storm and this is going to happen very quickly.

FBP: You are stepping up to the plate with your recent announcement of the green credit purchase on the fourth of November, 10,000 creditswhat's the financial terms of that work? How much was that investment? And as a final question, what will be the next big milestone, the next big announcement that you'll be making that we'll have a chance to continue this conversation?

KT: Let me cover the price of the credit. This part because we have some tie-up where CIX we are supposed to announce it together. We best leave it at that time. And the future plans, I guess we're going to keep you guessing.

FBP: Thank you so much, Kimin and Kelvin.

Carbon tax will kick in Indonesia at $2.10 per tonne of carbon emission by 2022