Carbon Trading in Indonesia: A Comprehensive Legal Guide for Companies and Investors

1. Introduction

In recent decades, international businesses and investors have increasingly faced the regulatory pressure to improve their environmental sustainability and to reduce their carbon footprint. Carbon trading in this case has emerged as one of the main mechanisms to push companies to reduce their carbon footprint.

Indonesia’s vast tropical forests, peatlands, and mangroves make it one of the most significant sources of carbon credits in the world. For years, however, that potential sat alongside a regulatory framework that businesses and investors often found fragmented and difficult to navigate. Cross-border sales were effectively frozen, sector rules developed unevenly, and many market participants were unsure where they stood.

That picture has now changed. On 10 October 2025, President Prabowo Subianto signed Presidential Regulation No. 110 of 2025, replacing Presidential Regulation No. 98 of 2021 as the foundation of Indonesia’s carbon pricing regime. The new regulation formally recognises voluntary carbon market activities and accepts established international certification standards. It also reopens Indonesia’s market to foreign buyers after a four-year hiatus, allowing credits from Indonesian projects to be sold internationally again under stricter standards.

The implementing rules have followed quickly. In 2026 alone, the Ministry of Forestry issued a new regime for forestry carbon offsets, the Financial Services Authority (OJK) revised its rules on trading through the carbon exchange, and the Ministry of Environment established a new framework for carbon trading in the waste sector. At the same time, a new national carbon unit registry, SRUK, now sits at the centre of the system: every carbon trading activity must be recorded there.

For businesses, these developments bring both opportunity and obligation. Heavy industries face mandatory participation in emissions trading, project developers gain clearer pathways to generate and sell credits, and foreign investors can once again access Indonesian carbon assets. But the framework is still evolving, and the legal details, from licensing and registration to authorisation for international transfers, will determine whether a transaction creates value or exposes a company to risk.

This guide explains how Indonesia’s carbon market works under the new framework, what each sector’s rules require, how trading on and off the carbon exchange operates, and what companies and investors should consider before entering the market.

Key Takeaways of Carbon Trading in Indonesia

Presidential Regulation No. 110 of 2025 is now the core legal framework for carbon pricing and trading in Indonesia, replacing Presidential Regulation No. 98 of 2021.
International sales of Indonesian carbon credits are permitted again, subject to authorisation requirements and stricter integrity standards.
Sector-specific rules now govern forestry, waste, and exchange-based trading, with further implementing regulations expected.
All carbon trading activity must be recorded in the national carbon unit registry (SRUK).
Companies with existing projects or credits should review their position under the new rules, as some transition deadlines have already started running.

2. The Legal Architecture of Indonesia Carbon Trading at a Glance

Indonesia’s carbon market is not governed by a single statute. Instead, it rests on a layered framework: a handful of laws set the broad legal basis, a presidential regulation establishes the operating system for carbon pricing, and a growing body of ministerial and financial-sector regulations fills in the detail for each sector and trading venue. Understanding how these layers fit together is the first step in assessing any carbon-related obligation or transaction.

The statutory foundation

At the top of the hierarchy sit several laws that, taken together, give the government its mandate to regulate carbon. Law No. 16 of 2016 ratified the Paris Agreement, committing Indonesia to its Nationally Determined Contribution (NDC) and anchoring the market in international climate obligations. Law No. 32 of 2009 on Environmental Protection and Management provides the general environmental framework, including the government’s authority over emissions control. Law No. 7 of 2021 on the Harmonisation of Tax Regulations introduced the legal basis for a carbon tax, while Law No. 4 of 2023 on the Development and Strengthening of the Financial Sector brought carbon exchange trading within the supervisory perimeter of the Financial Services Authority (OJK).

Presidential Regulation No. 110 of 2025: the operating framework

Below these laws, Presidential Regulation No. 110 of 2025 (Perpres 110/2025) is the central instrument for anyone active in the market. It supersedes not only Perpres 98/2021 but also Perpres 61/2011 and Perpres 71/2011, bringing carbon market mechanisms into a single governance structure. It governs the implementation of carbon economic value (Nilai Ekonomi Karbon) instruments, including carbon trading, and sets the rules on registration, measurement, reporting and verification, and cross-border transfers.

Perpres 110/2025 also introduces new coordination tools. It provides for a national carbon trading roadmap, a development from the previous regime, under which roadmaps existed only for specific sectors such as forestry. It also establishes the National Carbon Unit Registry (Sistem Registri Unit Karbon, or SRUK), a dedicated system for managing data on carbon units.

Implementing regulations

Perpres 110/2025 sets the architecture, but the practical rules sit in implementing regulations issued by the relevant ministries and OJK. Recent examples include Minister of Forestry Regulation No. 6 of 2026 on forestry carbon offsets, POJK No. 10 of 2026 on trading through the carbon exchange, and Minister of Environment/BPLH Regulation No. 11 of 2026 on the waste sector. Implementing rules for other NDC sectors, such as energy and industrial processes, are at different stages, so companies should check the current position for their sector before relying on any assumption about how the rules apply.

Who regulates what

Because authority is divided among several institutions, it helps to know who is responsible for each part of the market. Coordination sits at the top: Perpres 110/2025 establishes a Steering Committee on carbon pricing and GHG emission control, chaired at the Coordinating Minister level. Below that, responsibilities are distributed as follows.

Institution	Role in the carbon market
Steering Committee (Coordinating Minister level)	Cross-sector policy coordination and strategic direction
Ministry of Environment / Environmental Control Agency (BPLH)	National GHG emissions control, MRV, and sector rules such as waste
Ministry of Forestry	Carbon trading and offsets in the forestry sector, including authorisation recommendations for international transfers
Ministry of Energy and Mineral Resources	Emissions trading for the energy sector, including power generation
Ministry of Finance	Carbon levies, carbon tax, and non-tax state revenue (PNBP)
Financial Services Authority (OJK)	Licensing and supervision of carbon exchange trading
Indonesia Stock Exchange (IDXCarbon)	Operation of the carbon exchange

A note on terminology: readers familiar with earlier guidance will remember the Ministry of Environment and Forestry (KLHK). That ministry was split into separate environment and forestry ministries in 2024, which is why older regulations issued by KLHK are now being replaced by regulations from each successor ministry.

Why the structure matters

For companies and investors, this layered structure has practical consequences. A single project may need to satisfy a sector ministry’s registration and authorisation rules, record its units in SRUK, and comply with OJK rules if units are traded on the exchange. Transitional provisions also matter: projects and credits created under the old framework may be subject to reporting or adjustment obligations under the new one. The sections that follow explain each of these layers in more detail.

3. Core Concepts Explained

Indonesia’s carbon regulations use a set of technical terms, many of them rooted in Indonesian legal drafting, that can be confusing for first-time market participants. This section explains the concepts that come up most often in practice.

Carbon Economic Value (Nilai Ekonomi Karbon)

The organising concept of the whole framework is carbon economic value, commonly abbreviated as NEK. In simple terms, it is the idea that each unit of greenhouse gas emissions has a value that can be priced and traded. Perpres 110/2025 defines it as the value attributed to each unit of greenhouse gas emissions from human and economic activities.

The regulation implements NEK through four instruments:

Carbon trading (Perdagangan Karbon), which covers both cap-and-trade and offset transactions
Carbon levy (Pungutan atas Karbon), the carbon tax framework administered by the Ministry of Finance
Results-based payments (Pembayaran Berbasis Kinerja), including REDD+ outcome-based finance
Other mechanisms, an open category allowing flexibility as policy and technology evolve

Most of this guide focuses on carbon trading, since that is where companies and investors have the most direct exposure.

Two routes to carbon trading: emissions trading and offsets

Carbon trading in Indonesia takes two forms, and the distinction matters because each has different participants and rules.

Emissions trading is the compliance route. The government sets an emission quota for regulated installations, meaning the permitted quantity of carbon dioxide equivalent emissions during a specified period. Heavy industries must register their regulated installations, obtain GHG emission quotas, and participate in mandatory carbon trading. An installation that emits less than its quota has a surplus it can sell, while one that exceeds its quota must buy allowances or offsets to cover the deficit.

Emissions offsetting is the project-based route. A business carries out an activity that reduces or removes emissions, such as protecting a forest, restoring mangroves, or capturing methane from waste, and the verified results are issued as carbon units that can be sold to buyers who want to offset their own emissions. Project developers can access voluntary carbon markets through offset mechanisms and performance-based climate finance.

Carbon units

A carbon unit is the tradable asset at the centre of the market. Under Perpres 110/2025, it is a certified emission reduction and/or sequestration result, obtained through domestic or international certification or through a GHG emission quota, expressed in tons of CO₂e. One unit generally represents one tonne of carbon dioxide equivalent.

Before a business can take part in carbon trading, it must first hold carbon units. This is an important practical point: an unregistered or uncertified reduction is not a tradable asset under Indonesian law.

SPE-GRK and non-SPE-GRK units

Carbon units generated through offsetting fall into two categories, depending on how they are certified.

SPE-GRK (Sertifikat Pengurangan Emisi Gas Rumah Kaca, or GHG Emission Reduction Certificate) units are certified under Indonesia’s national certification system.

Non-SPE-GRK units are certified under recognised international standards. For the forestry sector, Indonesia has accepted international standards such as Verra’s VCS, meaning Indonesian projects can access the global voluntary market while remaining compliant with national regulations. This acceptance is one of the most significant changes under the new framework, which abolished the earlier Mutual Recognition Agreement mechanism.

The choice between the two routes affects cost, timing, buyer appetite, and the requirements for international transfers, so it should be settled early in any project.

The two registries: SRN PPI and SRUK

Perpres 110/2025 splits the registry function into two systems, one for climate actions and one for carbon units.

SRN PPI (Sistem Registri Nasional Pengendalian Perubahan Iklim, or National Registry System for Climate Change Control) records climate change mitigation and adaptation actions, including the projects that generate carbon units.

SRUK (Sistem Registri Unit Karbon, or National Carbon Unit Registry) records the carbon units themselves. Every carbon trading activity must be recorded in SRUK, and carbon units generated from emission offsets must also be registered there. SRUK operates as a decentralised network system.

In practice, this means a project is registered in one system, while the units it produces, and every subsequent transfer of those units, are tracked in the other.

Measurement, reporting and verification (MRV)

Every carbon unit depends on credible evidence that the claimed reduction actually happened. MRV is the process that provides that evidence: emissions or reductions are measured, reported to the relevant authority, and verified by an independent party before units are issued. Weak MRV is one of the most common reasons carbon credits lose value or face integrity challenges, so it deserves close attention in due diligence.

Additionality and double counting

Two integrity concepts appear throughout the regulations. Additionality means the reduction would not have happened without the carbon project. Double counting occurs when the same reduction is claimed more than once, for example by both a project developer and a national government, or by two different buyers. The forestry regulation introduces a nesting approach designed to prevent double counting. For international transfers, the related concept of corresponding adjustments, under Article 6 of the Paris Agreement, determines whether a reduction sold abroad is subtracted from Indonesia’s own NDC accounting. Section 8 covers this in more detail.

Quick Reference Glossary

Indonesian term	English equivalent	Meaning
Nilai Ekonomi Karbon (NEK)	Carbon Economic Value	The value assigned to GHG emissions, implemented through trading, levies, and results-based payments
Perdagangan Karbon	Carbon Trading	Buying and selling carbon units, through emissions trading or offsets
Unit Karbon	Carbon Unit	A tradable certificate representing one tonne of CO₂e reduced or removed
SPE-GRK	GHG Emission Reduction Certificate	Carbon unit certified under Indonesia’s national system
SRN PPI	National Registry System for Climate Change Control	Registry of climate actions and projects
SRUK	National Carbon Unit Registry	Registry of carbon units and their transfers
Kuota Emisi GRK	GHG Emission Quota	The emissions cap set for a regulated installation
Pembayaran Berbasis Kinerja	Results-Based Payment	Payments for verified emission reductions, such as REDD+
Pungutan atas Karbon	Carbon Levy	The carbon tax framework under the Ministry of Finance

4. What Changed Under Perpres 110/2025?

Perpres 98/2021 was Indonesia’s first comprehensive attempt to put a price on carbon. It laid the groundwork for emissions trading, created a national registry, and paved the way for the launch of the carbon exchange. But by 2025, the framework had been overtaken by events: the IDXCarbon exchange had launched on 26 September 2023, and the market had moved on from the assumptions built into the original rules.

Perpres 110/2025 is the government’s response. The regulation contains 9 chapters and 103 articles, and it arrived at a time when global attention on the credibility of carbon markets was at a peak following COP 30, which focused on operationalising carbon markets under Article 6 of the Paris Agreement and emphasising high-integrity credits. The key changes for businesses and investors are set out below.

1. International trading is open again

The most commercially significant change is the reopening of cross-border sales. Perpres 110/2025 effectively lifted the moratorium on international voluntary carbon credit trading, reopening Indonesia’s market to foreign buyers after a four-year hiatus. It did so partly by decoupling voluntary carbon trading from the country’s NDC timeline, which had in effect restricted international voluntary credit sales since 2022.

This does not mean unrestricted trading. Credits from Indonesian projects can be sold internationally again, but under stricter standards, and sector rules add their own authorisation steps. In forestry, for example, unit holders must first apply to the Minister for a recommendation to obtain authorisation before trading internationally. Section 8 explains these requirements in detail.

2. The voluntary carbon market is formally recognised

Under the previous framework, the status of voluntary carbon market activity was uncertain. Perpres 110/2025 addresses this directly by recognising voluntary carbon market activities as part of the national framework. This gives project developers and buyers a clearer legal footing for transactions that fall outside the compliance market.

3. International standards are accepted directly

Perpres 110/2025 acknowledges established international standards and abolishes the earlier Mutual Recognition Agreement (MRA) mechanism. In practical terms, projects certified under recognised international programmes can now participate in the Indonesian framework without first navigating a separate government-to-standard recognition process. For many project developers, this removes a major bottleneck.

4. Private actors can own and trade carbon

The new regulation opens carbon ownership and trading to private actors. This clarifies that businesses, not just the state, can hold carbon units as assets and deal in them, which is a precondition for a functioning investment market and for structuring financing around carbon revenues.

5. The registry system is split in two

Where the old framework relied on a single national registry, Perpres 110/2025 splits the registry function into two separate systems, one for climate actions and one for carbon units. The new National Carbon Unit Registry (SRUK) is now the system of record for carbon units, and every carbon trading activity must be recorded there. For market participants, this creates a clearer chain of title for carbon units, but also a new compliance step for every transaction.

6. Governance is elevated and consolidated

The regulation establishes a high-level Steering Committee on carbon pricing and GHG emission control, chaired at the Coordinating Minister level to improve cross-sector coordination. It also consolidates the legal framework, superseding Perpres 98/2021, Perpres 61/2011, and Perpres 71/2011 and bringing carbon market mechanisms into a unified structure.

7. A national carbon trading roadmap

Perpres 110/2025 introduces a national carbon trading roadmap, which was not part of Perpres 98/2021. Previously, roadmaps existed only within specific sectors, particularly forestry. A national roadmap should give companies better visibility over which sectors will face mandatory trading and when, although its practical value will depend on how detailed and timely it proves to be.

What has not changed

It is worth stressing what the new regulation does not do. It does not, on its own, set out the detailed procedures for each sector. These continue to depend on implementing regulations, several of which were issued in 2026 and others of which are still pending. Nor does it erase obligations created under the previous regime: sector regulations generally allow legacy projects to continue, subject to transition requirements. In forestry, for instance, projects initiated under the old rules may continue if they meet reporting and adjustment obligations within six months of the new regulation’s entry into force.

Before and after at a glance

Issue	Under Perpres 98/2021	Under Perpres 110/2025
International voluntary sales	Effectively halted since 2022	Permitted again, subject to authorisation and stricter standards
Voluntary carbon market	Uncertain legal status	Formally recognised
International certification standards	Required a Mutual Recognition Agreement	Accepted directly; MRA mechanism abolished
Private ownership and trading of carbon	Unclear scope	Expressly opened to private actors
Registry	Single national registry (SRN PPI)	Two registries: SRN PPI for climate actions, SRUK for carbon units
Trading roadmap	Sector-level only	National roadmap required
Coordination	Ministerial coordination	Steering Committee at Coordinating Minister level
Legal consolidation	Multiple overlapping regulations	Supersedes Perpres 98/2021, 61/2011 and 71/2011

What this means for businesses

For companies and investors, the overall direction is positive: more market access, clearer rights, and greater alignment with international practice. But the framework now places more weight on process: registration, authorisation, and recording in SRUK. Businesses that treated carbon as an informal or peripheral activity under the old regime should review their existing projects, contracts, and holdings against the new requirements, particularly where transition deadlines apply.

5. Conclusion: A Market in Transition

Indonesia’s carbon market has entered a new phase. With Presidential Regulation No. 110 of 2025 now in place and implementing regulations arriving sector by sector, the legal foundations for a credible, internationally connected market are stronger than they have ever been. International sales are open again, international certification standards are recognised, private actors have clearer rights to own and trade carbon units, and a dedicated registry now tracks every unit and transaction.

For companies and investors, this creates real opportunity. Regulated emitters can manage compliance costs through trading, project developers have clearer routes to market, and foreign buyers and investors can once again access Indonesian carbon assets. But the same reforms also raise the bar. Registration, certification, authorisation, and recording in SRUK are now central to the value of any carbon asset, and a gap at any stage can leave a project unable to trade or a buyer holding units whose integrity is open to question.

The framework is also still evolving. Implementing rules for several sectors remain pending, transition deadlines for legacy projects are already running, and the national carbon trading roadmap has yet to take full shape. Businesses that monitor these developments closely and structure their activities with the new rules in mind will be best placed to benefit as the market matures.

In practice, three steps are worth taking now:

Review your existing position. If you hold carbon units, operate a carbon project, or have signed offtake agreements under the previous framework, check whether transition or reporting obligations apply.
Map your regulatory pathway. Identify which sector rules, registries, and authorisation requirements apply to your planned activities before committing capital.
Build integrity into your transactions. Due diligence, robust MRV, and well-drafted contractual protections are the best defence against regulatory, reputational, and commercial risk.

How We Can Help

Azra Law advises Indonesian and international clients on the legal aspects of carbon trading and wider ESG compliance. Our team helps clients navigate Indonesia’s evolving carbon framework with practical, commercially focused advice, including:

Regulatory advisory: assessing obligations under Perpres 110/2025 and the relevant sector regulations, and monitoring new implementing rules
Project structuring: advising on licensing, registration, certification routes, and investment structures for carbon projects
Transactions: drafting and negotiating carbon credit purchase agreements, offtake arrangements, and joint ventures
Due diligence: reviewing carbon projects and credits for title, regulatory compliance, and integrity risks
Cross-border advisory: supporting foreign investors and buyers on authorisation requirements and market entry

Whether you are an Indonesian company preparing for mandatory emissions trading or a foreign investor evaluating Indonesian carbon assets, we can help you move forward with confidence.

Contact us to discuss your carbon trading needs with our ESG and climate team.

This article is provided for general information only and does not constitute legal advice. The regulatory framework for carbon trading in Indonesia is developing rapidly, and specific advice should be sought for any particular situation.