Summary
Details
- Indonesia
The regulation is mandatory where implementing rules apply to sectors, companies, carbon market participants or projects.
Mandatory obligations may apply to:
Companies in regulated sectors.
Carbon trading participants.
Carbon project developers.
Power sector operators.
Forestry and land-use projects.
Entities seeking carbon unit issuance.
Companies using Indonesia-based carbon credits.
Businesses subject to sectoral emissions limits or carbon pricing rules.
Some carbon market participation may be voluntary where companies choose to develop or buy carbon credits, but registry, verification and authorization requirements may still apply.
Deep dive
- What’s Required
- 1. Carbon Economic Value framework
- 2. Greenhouse gas mitigation and NDC implementation
- 3. Carbon trading
- 4. National Registry System
- 5. Forestry and land-use relevance
- 6. Sectoral implementation
- Important Deadlines
- Current Status
- Penalties for Non-Compliance
- Examples of Known Violations / Failure Modes
- Resources
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What’s Required
1. Carbon Economic Value framework
The regulation establishes Indonesia’s Nilai Ekonomi Karbon, or Carbon Economic Value, framework. This is intended to support achievement of Indonesia’s NDC and control greenhouse gas emissions in national development.
The framework may include:
Carbon trading.
Performance-based payments.
Carbon levies or carbon-related charges.
Greenhouse gas mitigation actions.
Climate adaptation actions.
Sectoral implementation.
National registry systems.
Measurement, reporting and verification.
2. Greenhouse gas mitigation and NDC implementation
The regulation links carbon economic value to Indonesia’s NDC targets and greenhouse gas emissions control. Official legal records identify the regulation’s purpose as supporting achievement of nationally determined contribution targets and controlling GHG emissions in national development.
Relevant sectors may include:
Forestry and land use.
Energy.
Industry.
Waste.
Agriculture.
Marine and blue carbon.
Transport.
Buildings.
Power generation.
Natural resource industries.
3. Carbon trading
The regulation provides the legal basis for carbon trading mechanisms in Indonesia. Companies may need to monitor sectoral rules and implementing regulations that determine whether carbon trading is voluntary, mandatory or sector-specific.
Potential carbon trading activities include:
Emissions trading.
Offset crediting.
Domestic carbon market participation.
Cross-border carbon transactions, where permitted.
Project registration.
Verification and certification.
Use of carbon units.
Registry tracking.
4. National Registry System
The regulation supports national registry infrastructure for climate actions and carbon economic value. Companies involved in carbon projects or regulated sectors may need to ensure that emissions reductions, mitigation actions and carbon units are properly registered and traceable.
Practical requirements may include:
Project documentation.
Baseline setting.
Monitoring plans.
Verification reports.
Emission reduction calculations.
Avoidance of double counting.
Registry account management.
Approval from relevant authorities.
5. Forestry and land-use relevance
The regulation is especially important for forestry and land use. Indonesian legal text references greenhouse gas emission reductions supported by control of GHG emissions in the forestry sector toward a carbon net sink approach for forestry and other land use by 2030.
This matters for:
REDD+ projects.
Forest conservation.
Peatland restoration.
Land-use planning.
Plantation supply chains.
Nature-based carbon projects.
Blue carbon activities.
Agriculture and commodity sourcing.
6. Sectoral implementation
The regulation provides a framework, but practical company obligations depend on sectoral implementing rules. This is especially important for power generation, energy, forestry, and industries where Indonesia has begun applying carbon pricing or emissions trading mechanisms.
Companies should monitor:
Ministry-level implementing regulations.
Sectoral emissions caps.
Carbon market rules.
Carbon unit issuance rules.
International transfer rules.
Tax or levy rules.
Registry procedures.
Verification requirements.
Important Deadlines
Key timing points:
2021: Presidential Regulation No. 98/2021 was issued.
2030: The regulation is connected to Indonesia’s NDC achievement and greenhouse gas mitigation in national development.
2030: Indonesia’s forestry and other land-use strategy includes a carbon net sink approach referenced in the regulatory context.
Ongoing: Sectoral implementation depends on subsequent regulations, registry systems, carbon trading rules and ministry guidance.
Companies should monitor Indonesia’s Ministry of Environment and Forestry, Ministry of Energy and Mineral Resources, Ministry of Finance, sector regulators, and official legal databases for implementing rules.
Current Status
Presidential Regulation No. 98/2021 remains a core legal basis for Indonesia’s carbon pricing and carbon economic value framework. Official Indonesian legal databases continue to list it as the regulation governing carbon economic value for achieving NDC targets and controlling GHG emissions in national development.
Current status:
Active national regulation.
Provides the framework for carbon economic value.
Supports NDC implementation.
Covers mitigation and emissions control.
Relevant to carbon pricing and carbon trading.
Important for forestry, energy, power, industry and land-use sectors.
Requires sector-specific implementation for practical company obligations.
Penalties for Non-Compliance
Penalties depend on sectoral implementing rules and enforcement mechanisms.
Possible consequences include:
Refusal of carbon unit registration.
Rejection of carbon credit issuance.
Inability to trade or transfer carbon units.
Administrative sanctions under sector rules.
Tax or levy exposure where applicable.
Project approval delays.
Buyer rejection for weak verification or double-counting risk.
Reputational risk from disputed carbon projects.
Examples of Known Violations / Failure Modes
Typical failure modes include:
Selling carbon credits without proper registry approval.
Double-counting emissions reductions.
Poor baseline design.
Weak MRV documentation.
Unclear land rights for forestry projects.
Ignoring community consent and benefit-sharing issues.
Treating voluntary credits as equivalent to regulatory compliance.
Exporting carbon credits without checking authorization rules.
Misstating NDC alignment.
Using outdated sectoral carbon market rules.
Overclaiming climate benefits from avoided deforestation.
Confusing carbon tax, carbon trading and results-based payments.
Resources
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