As of 10 October 2025, the government of Indonesia has enacted Presidential Regulation (“PR”) No. 110 of 2025 (“PR 110/2025”) regarding the Implementation of Carbon Economic Value Instruments and the Control of National Greenhouse Gas Emissions which revoked the previous PR No. 98 of 2021 regarding the Implementation of Carbon Economic Value for Achieving Nationally Determined Contribution Targets and the Control of Greenhouse Gas Emissions in National Development (“PR 98/2021”).
In comparison with PR 98/2021, such regulation was established as the basic governance on carbon emissions instrument to implement the country's climate change commitments following the ratification of the Paris Agreement. While PR 110/2025 marks a significant shift by introducing Carbon Allocation as one of the newest implementation instruments to achieve Indonesia’s Nationally Determined Contribution (“NDC”) and to revise the carbon trading mechanism as well as documentation and verification.
Pursuant to Article 2(2) of PR 110/2025, the scope of instruments governing the implementation of Carbon Economic Value (“NEK”) and national greenhouse gas emission control to achieve NDC are as follows:
In relation thereto, Carbon Allocation is the newest implementation instruments introduced under PR 110/2025 serving as the foundation for planning, drafting, and achieving NDC. PR 110/2025 also emphasize that Carbon Allocation should be formulated by considering various factors, including regularly updated sectoral Green House Gas (“GHG”) inventory data, economic aspects, and climate change mitigation measures. The aforementioned Carbon Allocation will be set by the competent minister or head of the relevant government institution and may be subject to future revisions. Accordingly, the approved Carbon Allocation will form the foundation for Indonesia’s NDC planning, development, and implementation to fulfil its commitment.
PR 110/2025 also highlights on the carbon trading mechanism that such carbon trading may be conducted without the need to wait until the NDC targets are achieved. It also has distinguished between domestic and international carbon trading mechanisms. For domestic trading, the mechanisms include Emissions Trading and GHG Emission Offsets. Meanwhile, for international trading, PR 110/2025 outlines two categories: (i) trading that requires authorization from the relevant minister for the use of Carbon Units and corresponding adjustments (e.g., GHG emission offsets to meet Paris Agreement commitments or other international obligations); and (ii) trading that does not require authorization or corresponding adjustments (e.g., GHG emission offsets not intended to fulfil NDC or other international obligations). Hence, all carbon trading activities are required to be recorded in the Carbon Unit Registry System/ Sistem Registri Unit Karbon (“SRUK”) and carbon market exchange.
Further, to strengthen transparency, PR 110/2025 also introduces mandatory documentation for carbon-related projects to obtain GHG Emission Offset Carbon Unit, such as the Climate Change Mitigation Action Plan Document (“DRAM”) for domestic projects and the Project Planning Document (“DPP”) for international-standard projects. These documents shall include, among others, plans and proposed actions for climate change mitigation, application of national methodologies and standards under the United Nations Framework Convention on Climate Change (UNFCCC), environmental impact and sustainable development analysis, and role of public consultation and supporting data.
It is also important to note that PR 110/2025 has explicitly required all entities to be responsible for its Regulated Installations participating in GHG emissions trading to ensure that their GHG emissions do not exceed the maximum limit set under the Carbon Allocation. If exceeded, the responsible party shall pay the applicable carbon tax.
In relation to the transparency framework, the regulation has introduced new supporting instruments such as SRUK, Greenhouse Gas Emission Reduction Certificate (“SPE GRK”), and Non-SPE GRK units. These instruments complement the existing Measurement, Reporting, and Verification (“MRV”) mechanism and the National Registry System for Climate Change Control (“SRN PPI”), which serves as the main platform to record and ensure accountability for achieving Indonesia’s NDC targets through climate change mitigation, adaptation, and NEK activities.
Accordingly, with the newly established PR 110/2025, it presents opportunities for business stakeholders in the carbon sector to strengthen compliance and strategic planning in carbon management. Should this topic be relevant to your business interests and you wish to explore it further, please do reach out to us. We look forward to supporting your journey as you navigate your vision and business strategies in Indonesia.
