02 Jun 2026
Indonesia Regulates Forestry Carbon Trading Through Emission Offsets

Indonesia has taken a significant step in formalizing its forestry carbon market regime. On 6 April 2026, the Minister of Forestry (MoF) issued Regulation No. 6 of 2026 on Procedures for Carbon Trading through Greenhouse Gas (GHG) Emission Offsets in the Forestry Sector (“MoF Reg 6/2026”). This regulation replaces Minister of Environment and Forestry (MoEF) Regulation No. 7 of 2023 and introduces a more structured regime for forestry‑based carbon offset activities.

Background and Purpose

MoF Reg 6/2026 is issued as an implementing regulation of Presidential Regulation No. 110 of 2025 on the Organisation of Carbon Economic Instruments. Its primary objective is to regulate how carbon trading through GHG emission offsets may be conducted in the forestry sector, while ensuring alignment with Indonesia’s Nationally Determined Contribution (NDC) targets under the Paris Agreement.

The regulation also reflects the institutional restructuring, under which the duties and functions of the MoF and the Minister of Environment (MoE) were previously consolidated under a single ministry. As a result of this restructuring, authority over forestry‑based carbon projects now rests solely with the MoF. 

Scope of Carbon Trading in the Forestry Sector

The scope of eligible forestry areas under MoF Reg 6/2026 is broadly aligned with MoEF Reg 7/2023 as carbon trading through emission offsets may originate from mitigation activities carried out in various forestry areas, including:

1. production forests and protection forests,

2. conservation areas and hunting parks,

3. customary forests and privately owned forests, and

4. certain state forest areas not designated as forest zones.

Who May Participate in Carbon Trading?

MoEF Reg 7/2023 already allowed participation from: (i) holders of forest utilisation business licences (Perizinan Berusaha Pemanfaatan Hutan/ PBPH) and forest management rights; (ii) social forestry permit holders; (iii) recognised customary law communities managing customary forests; and (iv) registered holders of private forests. 

MoF Reg 6/2026 retains this inclusive approach while introducing two key improvements: (i) it formally recognises holders of carbon ecosystem services licences (Perizinan Berusaha Pemanfaatan Jasa Lingkungan Karbon/ PB‑PJL Karbon) as a distinct participant category; and (ii) it requires social forestry groups, customary communities, and private forest owners to work with registered partners or facilitators. Notably, MoF Reg 6/2026 does not define who may qualify as ’registered partners or facilitators,’ nor does it establish eligibility criteria for such entities. It has been reported, however, that this category is intended to cover entities with demonstrated qualifications in carbon measurement, project planning, and carbon market implementation. Further implementing regulations are expected to be issued to further formalize the qualifications of the relevant partners or facilitators.

Carbon Units: SPE and Non‑SPE

To engage in carbon trading, a business actor must have carbon units. Carbon units may be generated either through emission reductions or carbon sequestration, provided that the relevant mitigation actions are validated and verified in accordance with the regulation.

While MoEF Reg 7/2023 already recognised Sertifikat Pengurangan Emisi Gas Rumah Kaca (Certified Emission Reduction Certificate or SPE‑GRK) as domestically issued units recorded in the national registry (SRN PPI), MoF Reg 6/2026 explicitly distinguishes between:

• SPE-GRK, issued through Indonesia’s domestic system upon recommendation of the MoF and approval by the Minister of Environment; and

• Non-SPE GRK, issued under recognised international standards, subject to prior MoF approval.

Unlike the previous regime, which recognised SPE-GRK but drew no clear distinction from internationally issued credits, the new framework introduces a more explicit classification system. This enables more effective regulatory oversight while keeping both domestic and international carbon markets accessible.

Project Lifecycle: From Planning to Trading

MoEF Reg 7/2023 introduced the basic building blocks of the project lifecycle—baseline setting, Climate Change Mitigation Action Plan Document (Dokumen Rancangan Aksi Mitigasi Perubahan Iklim or DRAM) preparation, Measurement, Reporting and Verification (MRV) processes, and issuance of SPE-GRK. MoF Reg 6/2026 significantly strengthens this framework by establishing end-to-end procedural stages with defined timelines, institutional roles, and national registry system. The lifecycle may be summarised as follows:

1. Step 1 – Establishing Eligibility in Carbon Trading: Holding Carbon Units

Indonesia’s carbon trading framework starts from a fundamental requirement: a business must first hold Carbon Units before it can participate in the market. These units may be derived from:

• SPE GRK; or 

• Non-SPE GRK. 

As mentioned above, in both cases, the involvement of the MoF is central, as its issuance is subject to either a formal recommendation (for SPE GRK) or approval (for non-SPE GRK).

2. Step 2 – Registering the Mitigation Action

To generate Carbon Units, a business must first formalise its climate mitigation activity through registration in the national system (Sistem Registri Unit Karbon or SRUK). This is done by submitting:

• DRAM for domestic certification; or 

• a Project Design Document (DPP) for international certification.  

Both documents must set out the mitigation plan, applied methodologies (including alignment with national and international standards), environmental and social impact assessments, and key safeguards such as additionality, biodiversity protection, and community participation.

3. Step 3 – Initial Screening by the Government

   Once submitted, the MoF conducts a completeness check of the DRAM or DPP through an electronic system. This initial screening is relatively swift—completed within five working days.

   Where gaps are identified, the applicant is required to address them within the same timeframe, ensuring that only sufficiently documented projects proceed to the next stage.

4. Step 4 – From Plan to Proof: Validation and Verification

Mitigation activities must be independently assessed at three key stages:

• Validation of the project design; 

• Implementation of the mitigation measures; and 

• Verification of the resulting emission reductions. 

• in the form of a legal entity, including a Public Service Agency (Badan Layanan Umum / BLU);

• have validators and verifiers who meet competency requirements in the forestry sector in accordance with the prevailing laws and regulations;

• be accredited by:

  • the National Accreditation Committee (Komite Akreditasi Nasional) for schemes related to the issuance of SPE GRK; and/or

  • an accreditation body that is internationally recognised, for the issuance of Non-SPE GRK; and

• provide Indonesian professionals with internationally recognised qualifications.

These steps must be carried out by accredited independent bodies. In this regard, pursuant to MoF Reg 6/2026, the relevant accredited independent bodies must meet the following requirements:

5. Step 5 – Seeking Ministerial Endorsement

Following validation and verification, the business must formally apply for:

• a recommendation for the issuance of SPE GRK; or 

• an approval for the issuance of non-SPE GRK under international standards. 

At this stage, the MoF does not merely review documents—it also evaluates the applicant’s regulatory compliance history, including any prior administrative sanctions. The review process may take up to 14 working days.

6. Step 6 – Decision Point: Approval, Revision, or Rejection

The outcome of the MoF’s assessment will determine the project’s next steps:

• Where requirements are met, a recommendation or approval is granted; 

• Where deficiencies remain, the applicant is invited to revise and resubmit within a specified period; 

• Where the applicant is under administrative sanction or fails to meet key criteria, the application may be rejected, with reapplication restricted until the issues are resolved. 

7. Step 7 – Issuance of Carbon Units

Upon obtaining the necessary endorsement:

• SPE GRK is issued by the MoE; 

• Non-SPE GRK is issued by the respective international standard body, based on the MoF’s approval. 

Only at this point does the mitigation activity translate into tradable Carbon Units.

8. Step 8 – Entering the Carbon Market

With Carbon Units in hand, businesses may engage in carbon trading through emission offset mechanisms. Transactions may involve:

• entities that exceed their emission caps within one period; 

• participants in the voluntary carbon market; or 

• other eligible buyers, including individuals. 

This marks the transition from regulatory compliance to market participation.

9. Step 9 – Facilitating Cross-Border Transactions

   Businesses seeking to trade Carbon Units internationally must obtain an additional layer of approval. Where a transaction involves Authorization and Corresponding Adjustment, the business must obtain a further recommendation from the MoF.

   In assessing such requests, the Government considers not only the volume of Carbon Units to be transferred but also Indonesia’s broader commitment to achieving its Nationally Determined Contribution (NDC). A decision is typically issued within seven working days.

Carbon Trading by Government Authorities

MoEF Reg 7/2023 generally acknowledged the role of government-led mitigation programs, including performance-based payments and REDD+ initiatives. MoF Reg 6/2026 builds upon this by expressly authorising the MoF and provincial governors to undertake carbon trading through jurisdictional-based programs.

MoF Reg 6/2026 also introduces mandatory nesting arrangements to align national, provincial, and project-level accounting—an element only conceptually addressed under the previous regulation. Nesting refers to the integration of project-level carbon activities into national or jurisdictional (e.g., provincial) accounting frameworks. This ensures emission reductions are recorded in a single system and, importantly, prevents double counting, whereby the same carbon reduction could otherwise be claimed by both the project developer and the government.

Safeguards, Monitoring, and Reporting

Safeguards remain a core element under both regulations. MoEF Reg 7/2023 established ESG-oriented principles covering legal compliance, indigenous rights, biodiversity protection, and transparency. MoF Reg 6/2026 retains these principles but adds operational depth, notably by requiring risk management systems, periodic reporting, public disclosure, and the establishment of a structured public complaints mechanism.

MoF Reg 6/2026 further strengthens monitoring and evaluation obligations by detailing reporting pathways through national systems and clarifying sanctions for non-compliance—areas that were addressed more generally under MoEF Reg 7/2023.

State Revenue and Fees

Both regulations subject forestry carbon transactions to Non-Tax State Revenue (PNBP) in the form of forest utilisation fees related to carbon sequestration and storage. Substantively, MoF Reg 6/2026 maintains the same policy approach as MoEF Reg 7/2023, with payments made through the national PNBP system and tariffs determined under separate regulations.

The key difference lies in procedural certainty. MoF Reg 6/2026 streamlines the linkage between carbon trading activities and PNBP administration, reinforcing carbon revenue as part of the formal forestry utilisation framework.

Transitional Provisions and Entry into Force

MoF Reg 6/2026 entered into force on 13 April 2026, expressly revoking MoEF Reg 7/2023 and providing transitional arrangements to ensure regulatory continuity. Existing projects that were initiated under MoEF Reg 7/2023 may continue, subject to reporting and adjustment obligations within six months of the new regulation’s entry into force.

Until a new forestry carbon trading roadmap is issued (within one year), MoF Reg 6/2026 remains aligned with the existing roadmap previously adopted under the MoEF framework.

ABNR Commentary

MoF Reg 6/2026 represents a significant step in strengthening the implementation of Indonesia’s forestry‑based carbon market. While largely building on the earlier MoEF framework, the new regulation provides clearer procedures, stronger institutional oversight, and a more structured end‑to‑end process from project registration to carbon trading.

From a market perspective, the formal differentiation between domestic (SPE‑GRK) and internationally issued carbon units, together with clearer pathways for both domestic and cross‑border trading, is likely to enhance investor confidence and facilitate broader participation in voluntary and compliance‑driven markets.

That said, certain aspects remain to be clarified through implementing regulations, most notably the role and qualifications of registered partners or facilitators. How these gaps are addressed will be critical, particularly for social forestry groups, customary communities, and private forest owners that are now required to operate through such partners.

Nonetheless, MoF Reg 6/2026 lays a more robust foundation for a transparent, credible, and investable forestry carbon market in Indonesia, and is expected to support the continued growth of carbon trading activities. Notably,  full implementation of MoF Reg 6/2026 is expected to be completed by June 2026, according to publicly available reports.

By partners Serafina Muryanti (smuryanti@abnrlaw.com) and Maher Sasongko (msasongko@abnrlaw.com), associates Adya Sepasthika (asepasthika@abnrlaw.com), and Kenny Poltak Adrianus (kadrianus@abnrlaw.com).

This ABNR News and its contents are intended solely to provide a general overview, for informational purposes, of selected recent developments in Indonesian law. They do not constitute legal advice and should not be relied upon as such. Accordingly, ABNR accepts no liability of any kind in respect of any statement, opinion, view, error, or omission that may be contained in this legal update. In all circumstances, you are strongly advised to consult a licensed Indonesian legal practitioner before taking any action that could adversely affect your rights and obligations under Indonesian law.