All forests in Indonesia are under state control (Article 4(1)), however forests may have two distinct statuses: state forests and titled forests, with customary forests included as state forests (Article 5), and will be classified based on three distinct functions: conservation forests, preservation forests, and production forests (Article 6).

Preservation forest utilization can include use of the forest’s area, environmental services, and collection of non-timber products (Article 26). Production forest utilization can include use of the area, environmental services, and timber and non-timber products (Article 28). Utilization of preservation and production forest is regulated through licenses which may be granted to individuals, private companies, and government-owned companies.

Sets the legal basis for the 5 community forest specifications: community forests, village forests, community plantation forests, forestry partnerships, and customary forests. Under Law No. 41 of 1999, customary communities retain the right to manage and use forest under their customary laws given they are formally recognized by the state. In the case a community is not formally recognized or registered, the land defaults to state regulation. Under Article 68, communities are entitled to compensation from either damage or loss of access to their forest.

Law No. 32 of 2009 was enacted to address global warming, climate change, and domestic environmental degradation. The law requires the Indonesian government to regulate “high impact” activities and businesses. In Article 88, Law No. 32 uses the legal principle of Strict Liability which makes actors completely responsible for damages or injury caused by their actions regardless of intent or fault. Article 42 to 44 of Law No. 32 introduces the possible use of Economic Instruments and incentives like planning, funding and tradable waste permits. It also mandates the Indonesian government to provide environmental funding to regional governments that demonstrate strong environmental protection

Government Regulation No. 46 of 2017 introduces economic incentives rather than solely regulation. The three categories of instruments the law establishes are (1) development planning, (2) environmental funding and, (3) incentives and disincentives. Articles 4 and 5 require the national and regional governments to incorporate economic incentives in development planning and public finance that would encourage environmentally responsible behavior. The Law also introduces an environmentally adjusted Gross Domestic Product and Regional Gross Domestic Product which is used to measure economic output accounting for depletion of natural resources and requires environmental costs to be incorporated into economic activities. Government Regulation No. 46 of 2017 Chapter IV Article 31 requires the national and regional governments to create and monitor an emissions trading system.

Presidential Regulation No. 77/2018 created an Indonesian institution that manages money flowing into environmental projects. Under Articles 3-6, the Indonesian Environment Fund is authorized to collect funds from governments, international donors, grants and private entities. Under Article 2, the fund can distribute funds that support environmental protection with loans, subsidies and grants. The Indonesian Environment Fund handles only a portion of the government funding towards Carbon projects. The IEF is designated to manage the majority of the REDD+ payments and International funding from other countries. Presidential Regulation No. 77/2018 created the IEF which now supports carbon market activities under Presidential Regulation No. 98 of 2021.

Law No. 7 of 2021 builds on Law No. 32 of 2009 by introducing a new economic instrument to control carbon emissions. The majority of Law No. 7 of 2021 is standard Tax Law which defines tax brackets for different types of entities and earning levels. Chapter VI introduces a carbon tax which corporations have to pay on emissions over their permitted level. Prior to this, the mandated economic instruments Indonesia used were environmental funding and emissions permit trading. Law No. 7 of 2021 assigns a direct cost to corporations encouraging businesses to reduce emissions whenever doing so is less expensive than paying the tax. With the additional economics instrument corporations that over pollute can either purchase emissions permits from under-emitting companies or pay taxes on the emissions over produced.

PP No. 18/2021 was created to clearly define land management, use and registration of state owned land. In Chapter VI, the regulation requires clear registration of land and land transfers with the use of electronic registration. Chapter VI works to reduce ownership disputes and clarify rights of the lessor or owner. Chapter IV regulates the right to build, cultivate, and use land. The rights have time and entity restrictions, most are limited to 30 years and Indonesian citizens. To maintain the rights holders of the rights are also obligated to preserve the natural resources and environment of the land. Chapter III regulates the right to manage state owned land. The right to manage is the right to use or restrict the use or development of land on another party for a specific purpose. The right to manage also gives the holder, almost always a government entity or government owned entity, the power to split the land in parts including subsurface, surface and air. This law is fundamental for today's carbon market as it allows underground carbon capture and some permanence in conservation of a land for the agreed years of use. The law sets fundamental limits for the use of state-owned land. In Article 1, PP No. 18/2021 defines what state lands are. State land is considered any land that is not private, religious or communal land belonging to indigenous or traditional communities. A problem stems from indigenous communities not having been formally recognized or having registered land.

Presidential Regulation No. 98 of 2021 is the regulation that allowed for carbon trading to exist and introduced carbon credits. This law was made to build the framework for how Indonesia was going to achieve their climate targets. Article 1 defines Carbon Rights as controlled by the state, and Article 3 sets an unconditional Greenhouse Gas emission reductions as 29% and 41% conditioned on international support. Articles 7 and 15 assign government ministries to handle Greenhouse Gas accounting and regulation for each Nationally Determined Contribution sector. Chapter IV which covers Indonesia's carbon pricing framework, Article 47 regulates carbon trading, results based payments, carbon taxes and other economic instruments to reduce Greenhouse Gas emission. Under Article 69, all businesses are required to register and report their carbon emissions and mitigation actions through a national registry. As businesses have Greenhouse Gas emissions caps, Article 48-49 allow carbon trading through Emissions Trading for entities with an emissions cap and GHG emissions offsets for entities without an emissions cap or projects that reduce emissions beyond or below a baseline. Presidential Regulation No. 98 of 2021 established Indonesia’s carbon market by creating a legal framework for carbon trading, emissions accounting and carbon pricing.

This was replaced by Presidential Regulation No. 110 of 2025 on the Implementation of Carbon Economic Value Instruments and National Greenhouse Gas Emission Control (“PR 110/2025”). ^[31]

Building off of Presidential Regulation No. 98 of 2021, the Ministry of Energy and Mineral Resources set specific emission limits for coal fired power plants. Prior to this law power plants were only able to trade emissions given their caps and usages. Under MEMR Regulation No. 16 of 2022, power plants are now able to offset their excess emissions. Coal plants are first required to offset excess emissions using renewable energy plants to avoid emissions. Coal plants are then able to offset cross sector emissions such as forestry preservation or carbon capture. This regulation was created to prevent cheap offsets and encourage real transition to renewable energy. MEMR Regulation No. 16 of 2022 correctly puts pressure on the energy sector rather than allowing coal plants to export the cost on another sector.

MOEF Regulation 21 of 2022 covers the general provisions for implementing PR 98 of 2021 in the environment and forestry sector, including requiring that projects be recorded in the SRN-PPI registry, use approved methodologies, follow national MRV rules, and undergo validation and verification. The law also covers the implementation of GHG emissions caps for business actors – which allows for offsetting (Article 13) – and international offset trading for businesses without emissions caps which requires the development of a project design document (DRAM) (Article 15).

Regulation 21/2022 on Guidelines for Implementing the Carbon Economic Value remains in effect insofar as they do not contradict the new regulation.

Required by Article 3 of Presidential Regulation No. 98 of 2021, MOEF Decree 168/2022 sets a plan for the forestry and land-use sector to absorb more carbon than it emits by 2030. The plan sets out three land categories which are forest, peatlands and coastal with seven assigned mitigation actions, ranging from reducing forest degradation, rotational rehabilitation and biodiversity conservation. The plan assigns specific responsibilities to specific concessions and land-use license holders. Companies holding forest use licenses under Forestry Law 41 of 1999 are required to comply with the plan’s mitigation targets. Companies holding the right to cultivate licenses under Government Regulation Number 18 of 2021 are required to comply with the plans narrower obligations like water management. While taking actions required by the plan, companies are allowed to participate in carbon trading.

MoEF Decree SK.1027 establishes what counts as a carbon credit produced from Indonesia’s forestry sector. Credits must be produced by one of six mitigation activities: reducing deforestation, reducing forest degradation, forest development, forest management, increasing carbon stocks, and improving peatland water management. Baseline emissions are calculated to produce avoided emissions credits. For trading credits internationally, credits used for a country's NDC have to be authorized and adjusted under the Paris agreement. An authorization requires a country exporting a credit to give permission to the importing country to use the credit towards their NDC. An adjustment is to correct the carbon accounting to prevent double counting of a carbon credit produced. MoEF Decree SK.1027 allows for credits to be sold internationally without an authorization or adjustment. The nonauthorized and nonadjusted forestry credits are used in the voluntary market. Authorized and non adjusted can potentially be counted for two separate countries NDC’s. The legal opening for nonadjusted and nonauthorized forestry credits to be sold internationally allows for a market of carbon credits unrelated to the United Nations Paris Agreement. This incentivises major private companies to fund projects, claim net zero emissions and avoid additional cost or oversight. While this can lead to double counting and lack of verifications, from a policy standpoint, the additional investments from large corporations into conservation outweighs the drawbacks.

Law No. 4/2023 defines carbon credits as a legal financial security regulating carbon as a financial transaction. This law gives the Indonesian Financial Services Authority the power to regulate the flow of carbon credits domestically and internationally. However, the Ministry of the Environment and Forestry are still responsible for measuring, verifying and carbon reduction. The law also legalizes an exchange for carbon credits which is now the Indonesian Carbon Exchange.

These regulations primarily concern procedures for carbon trading in the forestry sector, in line with PR 98 of 2021 and Indonesia’s FOLU Net Sink 2030 Plan. The law stipulates that forestry mitigation activities can be carried out via carbon trading based on storing or absorbing forest carbon, with 22 specific mitigation activities outlined in the law itself (Article 3(1-3)). Following on PR 98 or 2021 and MOEF Regulation 21 of 2022, the law recognizes both domestic emissions trading (i.e. companies that have an emissions cap and can trade allowances amongst themselves) and emissions offsetting (companies that do not have an emissions cap, which establish an emissions baseline, and which participate in international trading). However, only projects in peat and mangrove areas are eligible for emissions trading whereas emissions offsetting can occur in other forest areas regulated in MoEF Reg7/2023, including permanent production forest areas, convertible production forest areas, protected forest areas, peat and mangrove areas, conservation forest areas, customary forests, rights forests, and state forests that are not forest areas (Article 6; Article 7(4-5)).

Holders of a Forest Utilization Business License, management permit holders, and forest owners must have a sustainable forest management certificate, a forest product legality certificate, or a forest product declaration. Indigenous Peoples and holders of social forestry management agreements must receive assistance from third parties with expertise in carbon measurement and carbon market access (Articles 7 and 8).

This law was replaced by MoF No. 6 of 2026.

OJK Regulation 14/2023 creates the framework to trade carbon as a financial security allowed by Law No. 4/2023. This regulation by the Financial Services Authority of Indonesia requires every carbon credit to be registered with the Ministry of Environment and Forestry and a licensed carbon exchange administrator, currently the Indonesian Stock Exchange. The law also allows for foreign carbon credits to enter Indonesia’s carbon market as long as they are registered and verified with an accredited international registry. The Indonesian carbon exchange launched in September 2023.

This amendment was promulgated on July 6, 2026. Its creation was necessary to amend the provisions in Financial Services Authority Regulation Number 14 of 2023 concerning Carbon Trading through the Carbon Exchange to align with Presidential Regulation Number 110 of 2025 concerning Implementation of Carbon Economic Value Instruments and Controlling National Greenhouse Gas Emissions.

This POJK regulates provisions that amend several provisions in POJK 14/2023, including: 1) Carbon Units traded on the Carbon Exchange must be registered in the Carbon Unit Registry System (SRUK) which replaces the National Climate Change Control Registry System (SRN PPI); 2) Trading of carbon units from abroad that are not registered in the SRUK; 3) Expansion of the scope of Carbon Units; 4) Determination of the submission of certain reports by Carbon Exchange Organizers to the relevant Ministry; 5) Provisions regarding relevant consumer protection principles as regulated in the POJK regarding consumer and community protection in the financial services sector apply to every Party involved in Carbon Trading through the Carbon Exchange; and 6) Facilitation of trading of Carbon Units recorded in the electronic-based system at the relevant ministry can be carried out until the SRUK is operational, no later than 3 (three) months after this Financial Services Authority Regulation is enacted.

Identifies carbon trading (both compliance and offsets), result-based payments, carbon levies, and other evolving approaches as “NEK instruments” governed under the NEK framework (Article 55).

Distributes substantial authority to sectoral ministries to oversee the application of offsetting regulations in their sector and then recommend the issuance of carbon units to the Minister of Environment.

In order to obtain carbon units from an offsetting project, businesses must (Article 65):

• Submit a Mitigation Action Design Document (DRAM, for application of national standards) or a Project Design Document (DPP, for international standards).
• Have the DRAM or DPP validated by an independent validator.
• Implement the climate change mitigation action in accordance with the validated DRAM or DPP.
• Have the achievement of the Climate change mitigation action verified by an independent verifier.
• Submit the verification report on the achievement of the climate change mitigation action to the relevant minister.

Previous requirements for a Mutual Recognition Agreement with international standards in order to trade carbon internationally have been removed (Article 68(3)).

While the previous law is fully replaced, implementing regulations under it remain in force except provisions contradicted by 110/2025. The government has one year to develop new sectoral implementing regulations and businesses have one year to fully comply with the new law.

MoF 6/2026 replaces MOEF Regulation No. 7 of 2023 and translates PR 110/2025 into implementation regulations for the forestry sector.

The law restricts entities that can participate in forest carbon trading to (Article 6(1)):

• Holders of a Forest Utilization Business License (PBPH)
• Holders of social forestry approvals.
• Customary law communities with recognized forest status.
• Holders of private forest rights.
• Holders of Carbon Environmental Services Utilization Business License (PB-PJL Karbon).

The law establishes eligible areas for forest carbon projects (Article 9):

• Production forests already subject to necessary licenses and management rights.
• Utilization zones of Nature Conservation Area and game reserves where management rights do not already exist.
• Customary forests.
• Private forests.
• State land outside designated forest areas.

Responsibility and liability lies with permit holders (specifically holders of PBPH or PB-PJL Karbon) even when third party investors or proponents are involved (Article 8). On the other hand, when communities are involved through social forestry, customary forests, or private rights, third party partners must be involved who will be subject to these requirements (Article 6(2)).

As stipulated by 110/2025, all project developers must submit a DRAM or DPP and be recorded in the SRUK system (Article 11).

Integrated into DRAM requirements are social safeguards, including (Article 12(2)):

• Identification of a project propone
• Demonstration of additionality.
• Community engagement plan.
• Benefit-sharing agreement.
• Identification of biodiversity impacts and reversal risks plus a management plan for them.
• “Plans and achievements” for FPIC.

The law further stipulates that the protection of the rights of Indigenous Peoples and local communities, as well as meaningful stakeholder participation throughout the implementation and operation stages are also necessary (Article 28).

Projects must receive a recommendation from the Minister of Forestry to receive carbon units, following the process outlined in Article 65 of 110/2025 (Article 15); the MoF must also conduct a screening of a developer’s previous compliance history (Article 16).

The new framework will continue using the roadmap under SK.1027/MENLHK/PHL/KUM.1/9/2023 until a new one is adopted; this must happen within a year after the passage of this law (Article 63).

This regulation focuses on the procedures for organizing carbon trading through the carbon exchange

As an implementing regulation, this OJK PADK substantially regulates provisions regarding: (1) Carbon Units Traded on Carbon Exchange Organizers; (2) Capitalization of Carbon Exchange Organizers; (3) Shareholder Requirements; (4) Members of the Board of Directors and Members of the Board of Commissioners of Carbon Exchange Organizers; (5) Fit and Proper Assessment of Shareholders, Members of the Board of Directors, and Members of the Board of Commissioners of Carbon Exchange Organizers; (6) Operations and Internal Control; (7) Procedures for Applying for Licensing of Carbon Exchange Organizers; (8) Regulations and Articles of Association of Carbon Exchange Organizers; (9) Annual Work Plan and Budget of Carbon Exchange Organizers; and (10) Reports of Carbon Exchange Organizers.

When this Regulation of the Members of the Board of Commissioners of the Financial Services Authority comes into effect, the Circular Letter of the Financial Services Authority Number 12/SEOJK.04/2023 concerning Procedures for Organizing Carbon Trading through the Carbon Exchange is revoked and declared invalid.