Indonesia has introduced a new carbon trading framework through Presidential Regulation No. 110 of 2025, dated October 10, 2025, on the Implementation of Carbon Economic Value and National Greenhouse Gas Control (“PR 110/2025”). The Regulation sets out the basis for Indonesia’s updated carbon trading regime and reflects the government’s commitment to strengthening market-based mechanisms for emissions reduction.
PR 110/2025 replaces the earlier framework under Presidential Regulation No. 98 of 2021 on the Implementation of Carbon Economic Value for Achieving Nationally Determined Contribution (“NDC”) Targets and Greenhouse Gas Control in National Development (“PR 98/2021”).
Notably, Article 58(1) of PR 110/2025 expressly provides that carbon trading activities may be conducted prior to the achievement of Indonesia’s NDC targets. This provision signals Indonesia’s growing interest in accelerating the development of its carbon market and attracting broader participation from stakeholders.
Set out below is a summary of several key provisions introduced under PR 110/2025 that are key to understanding Indonesia’s current carbon trading regime.
Introduction of Dual-Registry System
In addition to the National Climate Change Control Registry System (Sistem Registri Nasional Pengendalian Perubahan Iklim or “SRN PPI”) developed under the previous regime, PR 110/2025 calls for the introduction of a new registry known as the Carbon Unit Registry System (Sistem Registri Unit Karbon or “SRUK”).
Under PR 110/2025, the SRN PPI and SRUK are intended to operate in parallel, with each registry maintaining distinct data and information within Indonesia’s carbon framework. The SRN PPI continues to serve as the central registry for climate change mitigation and adaptation actions and resources at the NDC level.
By contrast, the SRUK focuses on the registration and administration of carbon units at the carbon economic value (“CEV”) implementation level. Notably, carbon trading activities are required to be submitted to and maintained in the SRUK.
Distinction between Domestic and International Carbon Trading
PR 110/2025 introduces a clear distinction between domestic and international carbon trading activities, each with its own set of new procedures and compliance requirements.
With respect to domestic carbon trading, PR 110/2025 provides for two domestic carbon trading schemes: Greenhouse Gas (“GHG”) Emission Trading and GHG Emission Offsetting, which are elaborated as follows:
- GHG Emission Trading: This refers to the mandatory obligation imposed on certain entities, referred to as Regulated Installations, to comply with prescribed GHG emission quotas so that their business and/or activities do not exceed the applicable upper GHG emission threshold within a specified period.
To meet this obligation, Regulated Installations may undertake climate mitigation measures, purchase emission quotas from other Regulated Installations, and/or acquire GHG emission offsets. An entity that exceeds the applicable upper GHG emission threshold will be subject to the imposition of a carbon tax.
- GHG Emission Offset: This refers to the reduction of GHG emissions achieved through a business and/or activity in order to compensate for emissions generated elsewhere. Under this scheme, entities which are not designated as Regulated Installations may generate and sell carbon units derived from the implementation of climate change mitigation actions. To generate carbon credits, such entities are required to undergo the following procedures:
- Submission of Climate Change Mitigation Action Design Document (Dokumen Rancangan Aksi Mitigasi Perubahan Iklim or “DRAM”) or Project Planning Document (Dokumen Perencanaan Proyek or “DPP”) to the relevant sectoral minister. The information that must be contained therein is governed under Article 65(3) of PR 110/2025;
- Validation of the DRAM or DPP by an independent validation institution;
- Implementation of Climate Change Mitigation Action in accordance with the DRAM or DPP;
- Verification of Climate Change Mitigation Action output by an independent verification institution; and
- Report the outcome of the Climate Change Mitigation Action output verification to the relevant minister.
Upon completion of the foregoing procedures, carbon units generated under the domestic crediting standard, i.e., the Sertifikat Pengurangan Emisi Gas Rumah Kaca (“SPE-GRK”) scheme, or under foreign crediting standards will be issued, subject to the relevant sectoral minister’s recommendation or approval, as applicable. Once issued, all such carbon units must be recorded in the SRUK.
PR 110/2025 further differentiates among different types of international carbon trading activities based on how such transactions may be conducted. Internationally linked GHG emission trades, GHG emission offsets under Articles 6.2 and 6.4 of the Paris Agreement, and voluntary GHG emission offsets undertaken to fulfill other international obligations require the authorization of the Minister of Environment (“MOE”) and completion of a Corresponding Adjustment procedure prior to execution.
By contrast, GHG emission offset transactions that are not used to fulfill any NDC goals and/or other international obligations are not subject to these additional requirements.
Recognition of Domestic and Foreign Crediting Standards
Another interesting development introduced by PR 110/2025 is the removal of clauses requiring the execution of a Mutual Recognition Agreement (“MRA”) as a prerequisite for the utilization of international crediting standards. The current regime expressly recognizes that carbon units traded domestically or internationally under a GHG Emission Offset scheme shall be issued pursuant to national standards, United Nations Framework Convention on Climate Change standards, or other international standards.
Measurement, Reporting and Verification (“MRV”) Procedure
Similar to the previous regime, PR 110/2025 also contains provisions governing an MRV framework intended to ensure that efforts to achieve Indonesia’s NDC target are conducted in an accurate, consistent, transparent, continuous, and accountable manner. Relevant stakeholders, including governmental institutions and business actors, are required to measure and report the outcomes of climate change mitigation actions and CEV activities. Both general and technical data submitted through this process will form the basis for verification by the relevant authorities. In addition, the outcomes of climate change adaptation actions are also subject to reporting requirements.
PR 110/2025 further provides that validation and verification processes must be carried out to ensure the quality, integrity, and oversight of measurements relating to climate change mitigation actions and CEV activities. The MOE is responsible for such processes in relation to climate change mitigation actions, while the measurement and supervision of CEV activities shall be reviewed by an Independent Validation and Verification Institution, which must satisfy the following criteria:
- Incorporated as a legal entity;
- Employs validators and verifiers with demonstrated competence in relevant fields;
- Accredited by the National Accreditation Committee (for carbon units issued under the SRUK) and/or by an international accreditation institution (for carbon units issued under international crediting standards).
The outcome of such validation and verification exercises shall be recorded in the SRN PPI and SRUK, respectively.
Transition to the New Carbon Trading Regime
PR 110/2025 requires regulated stakeholders to undergo transitional adjustments within one year of its enactment to ensure compliance with the new carbon trading framework.
In the context of carbon trading, business actors holding carbon units that have not yet been transaction are required to comply with the current CEV provisions. Similarly, existing international agreements relating to CEV implementation must be adjusted to conform with the requirements of the new regime. (4 February 2026)
