What Carbon Economic Value Instruments Exist Under PERPRES 110/2025?
1.0 Regulatory Foundation: Indonesia's NEK Framework
PERPRES 110/2025 ("Penyelenggaraan Instrumen Nilai Ekonomi Karbon dan Pengendalian Emisi Gas Rumah Kaca Nasional") establishes Indonesia's comprehensive Carbon Economic Value (NEK) framework to implement the country's Nationally Determined Contribution (NDC) under the Paris Agreement. The regulation supersedes PERPRES 98/2021, PERPRES 61/2011, and PERPRES 71/2011, consolidating all carbon market mechanisms into a unified governance structure.
Matrix 1.1: Key Definitions Under PERPRES 110/2025
| No. | Term | Indonesian Term | Definition | Article Reference |
|---|---|---|---|---|
| 1 | Nationally Determined Contribution | NDC | National commitment for global climate change mitigation updated periodically to achieve Paris Agreement objectives | Pasal 1(1) |
| 2 | Carbon Economic Value | NEK (Nilai Ekonomi Karbon) | Value attributed to each unit of greenhouse gas emissions from human and economic activities | Pasal 1(3) |
| 3 | Carbon Allocation | Alokasi Karbon | Permitted quantity of carbon dioxide equivalent (CO₂e) emissions during a specified period according to national capacity | Pasal 1(2) |
| 4 | Greenhouse Gas | GRK (Gas Rumah Kaca) | Atmospheric gases (natural or anthropogenic) that absorb and re-emit infrared radiation | Pasal 1(4) |
| 5 | Carbon Unit | Unit Karbon | Certified emission reduction and/or sequestration result through domestic/international certification or GHG Emission Quota, expressed in tons CO₂e | Pasal 1(18) |
| 6 | Carbon Trading | Perdagangan Karbon | Market-based mechanism to reduce GHG emissions through buying and selling Carbon Units | Pasal 1(22) |
| 7 | Carbon Exchange | Bursa Karbon | System regulating Carbon Trading records and Carbon Unit ownership status | Pasal 1(29) |
| 8 | Carbon Levy | Pungutan Atas Karbon | State levy (central/regional) imposed on goods/services/activities with carbon potential or emissions causing negative environmental impacts | Pasal 1(30) |
As defined in Pasal 1(3), Nilai Ekonomi Karbon (NEK) represents "nilai terhadap setiap unit emisi gas rumah kaca yang dihasilkan dari kegiatan manusia dan kegiatan ekonomi" (value attributed to each unit of greenhouse gas emissions from human and economic activities). This pricing mechanism forms the economic foundation for Indonesia's climate mitigation strategy across six designated sectors.
2.0 NEK Instrument Categories: Four-Pillar Framework
Pasal 55 establishes four primary NEK instruments, creating a diversified approach to carbon pricing and climate finance.
Matrix 2.1: NEK Instruments and Mechanisms
| Instrument Type | Indonesian Term | Mechanism | Mandatory/Voluntary | Legal Basis | Implementation Chapter |
|---|---|---|---|---|---|
| 1. Carbon Trading | Perdagangan Karbon | Market-based buying/selling of Carbon Units | Mandatory for Regulated Installations; Voluntary for offset projects | Pasal 55(1)(a), 55(2) | BAB 3 Pasal 56-60 |
| 1a. GHG Emission Trading | Perdagangan Emisi GRK | Trading of GHG Emission Quotas among Business Actors | Mandatory for Regulated Installations | Pasal 55(2)(a), Pasal 56 | Pasal 56-57 |
| 1b. GHG Emission Offsetting | Offset Emisi GRK | Emission reductions to compensate for emissions elsewhere | Voluntary | Pasal 55(2)(b), Pasal 58 | Pasal 58-60 |
| 2. Performance-Based Payment | Pembayaran Berbasis Kinerja | Incentives for verified GHG emission reductions and co-benefits | Voluntary | Pasal 55(1)(b), Pasal 61 | Pasal 61 |
| 3. Carbon Levy | Pungutan Atas Karbon | State levy on carbon-intensive goods/services/activities | Mandatory per separate legislation | Pasal 55(1)(c), Pasal 62 | Pasal 62-64 |
| 4. Emerging Mechanisms | Mekanisme Lain | Technology-driven instruments aligned with scientific developments | TBD | Pasal 55(1)(d) | Future regulation |
Pasal 55(1) states: "Penyelenggaraan instrumen NEK dilakukan dengan menggunakan mekanisme: a. Perdagangan Karbon; b. Pembayaran Berbasis Kinerja; c. pungutan Atas Karbon; dan/atau d. mekanisme lain sesuai dengan perkembangan ilmu pengetahuan dan teknologi." This flexible framework allows Indonesia to adopt emerging carbon pricing tools as climate science and technology evolve.
3.0 Carbon Trading Framework: Mandatory and Voluntary Markets
Matrix 3.1: Carbon Trading Participant Obligations
| Participant Category | Indonesian Term | Obligation Type | Key Requirements | Compliance Mechanism | Article Reference |
|---|---|---|---|---|---|
| Business Actors with Regulated Installations | Pelaku Usaha dengan Instalasi yang Diatur | Mandatory | - Participate in GHG Emission Trading - Hold Carbon Exchange account - Possess GHG Emission Quota |
Cap-and-trade system | Pasal 56(2) |
| Offset Project Developers | Pelaku Usaha Offset | Voluntary | - May trade voluntarily - Must hold Carbon Exchange account for trading |
Project-based credits | Pasal 56(3) |
| All Carbon Traders | Semua Pelaku Perdagangan | Universal | - Account registration on Carbon Exchange (Bursa Karbon) - Transaction recording in SRUK - MRV compliance |
SRUK registration | Pasal 65, 67 |
According to Pasal 56(2), businesses with Regulated Installations must: "a. mengikuti Perdagangan Emisi GRK; b. memiliki akun pada Bursa Karbon; dan c. memiliki Kuota Emisi GRK" (participate in GHG Emission Trading, hold a Carbon Exchange account, and possess GHG Emission Quota). This creates a mandatory compliance market distinct from voluntary offset markets.
Matrix 3.2: Carbon Exchange Infrastructure
| Component | Function | Responsible Authority | Coverage | Article Reference |
|---|---|---|---|---|
| Bursa Karbon (Domestic SPE GRK) | Carbon Exchange for domestic SPE GRK Carbon Units (domestic buyers) | Minister of Environment | Domestic-to-domestic SPE GRK transactions | Pasal 65(2)(a) |
| Bursa Berjangka (All Carbon Units) | Futures exchange for SPE GRK and non-SPE GRK Carbon Units | Bursa Berjangka (Futures Exchange) | Domestic-to-domestic all Carbon Unit types | Pasal 65(2)(b) |
| Bursa Berjangka (GHG Quota) | Futures exchange for GHG Emission Quota trading | Bursa Berjangka | Inter-participant quota trading | Pasal 65(2)(c) |
| SRUK | Carbon Unit Registry System | Minister of Environment | All Carbon Unit registration, issuance, tracking, deactivation | Pasal 67 |
Pasal 65(2) establishes a two-tiered carbon exchange system: "Bursa Karbon sebagaimana dimaksud pada ayat (1) huruf a dikelola oleh: a. Menteri, untuk perdagangan Unit Karbon SPE GRK yang berasal dari dalam negeri dengan pembeli di dalam negeri; b. Bursa berjangka, untuk perdagangan Unit Karbon SPE GRK dan Unit Karbon non-SPE GRK yang berasal dari dalam negeri dengan pembeli di dalam negeri; dan c. Bursa berjangka, untuk perdagangan Kuota Emisi GRK antarpeserta." This dual structure separates government-managed domestic SPE GRK trading from broader futures market operations.
4.0 International Carbon Transfers: Authorization and Corresponding Adjustment
Matrix 4.1: Cross-Border Carbon Unit Transfer Requirements
| Transfer Element | Indonesian Term | Requirement | Authority | Rationale | Article Reference |
|---|---|---|---|---|---|
| Authorization | Otorisasi | Mandatory ministerial approval for international Carbon Unit transfers | Minister of Environment | Protect national NDC integrity | Pasal 70(1) |
| Authorized Purposes | Kepentingan yang Diperkenankan | - NDC fulfillment for other countries - International mitigation obligations - Other approved purposes |
Minister | Ensure legitimate climate finance | Pasal 70(2) |
| Corresponding Adjustment | Corresponding Adjustment | Accounting adjustment to Indonesia's NDC to prevent double counting | Government of Indonesia | Paris Agreement Article 6 compliance | Pasal 70(3) |
| Paris Standards | Standar Paris | Corresponding Adjustment must follow Paris Agreement standards | Per Paris Agreement | International accounting integrity | Pasal 70(4) |
Pasal 70(1) mandates: "Unit Karbon yang dialihkan kepada pihak lain di luar wilayah Indonesia wajib memperoleh Otorisasi dari Menteri" (Carbon Units transferred to parties outside Indonesia must obtain Authorization from the Minister). This gatekeeping mechanism ensures Indonesia retains control over Carbon Units that could be claimed toward other countries' NDCs.
Pasal 70(3) requires: "Dalam hal Unit Karbon dialihkan kepada pihak lain di luar wilayah Indonesia, Pemerintah melakukan Corresponding Adjustment pada NDC Indonesia" (When Carbon Units are transferred to parties outside Indonesia, the Government conducts Corresponding Adjustment to Indonesia's NDC). This implements Article 6.2 of the Paris Agreement, preventing the same emission reduction from being counted toward both Indonesia's and another country's NDC commitments.
5.0 Forward-Looking Implications: Sectoral Impact and Carbon Market Development
Matrix 5.1: Sectoral Application of NEK Instruments
| NDC Sector | Indonesian Term | Primary NEK Instrument | Business Impact | Regulatory Pathway |
|---|---|---|---|---|
| Energy | Energi | Carbon trading (mandatory for power plants), carbon levy | Power generation, oil & gas must comply with emission quotas or purchase Carbon Units | Sector-specific quotas under Pasal 56 |
| Waste | Limbah | Carbon trading (voluntary offset), performance-based payment | Waste-to-energy projects eligible for offset credits and climate finance | Offset mechanisms under Pasal 58-60 |
| Industrial Processes & Product Use | IPPU | Carbon trading (mandatory for regulated facilities), carbon levy | Industrial facilities subject to cap-and-trade, carbon tax on products | Quota allocation per Pasal 56 |
| Agriculture | Pertanian | Performance-based payment, carbon trading (voluntary offset) | Regenerative agriculture can generate offset credits, receive climate finance | Pasal 61 climate finance |
| Forestry | Kehutanan | Performance-based payment, carbon trading (voluntary offset), international transfers | REDD+ projects, mangrove restoration eligible for carbon credits and international buyers | Pasal 70 authorization for ITMOs |
| Marine & Fisheries | Kelautan dan Perikanan | Performance-based payment, carbon trading (voluntary offset) | Blue carbon projects (mangroves, seagrass) can access voluntary markets | Pasal 61, 70 |
PERPRES 110/2025 supersedes the previous NEK regulatory framework (PERPRES 98/2021) as stated in Pasal 100: "Pada saat Peraturan Presiden ini mulai berlaku: a. Peraturan Presiden Nomor 98 Tahun 2021 tentang Penyelenggaraan Nilai Ekonomi Karbon untuk Pencapaian Target Kontribusi yang Ditetapkan secara Nasional dan Pengendalian Emisi Gas Rumah Kaca dalam Pembangunan Nasional... dicabut dan dinyatakan tidak berlaku." This consolidation creates regulatory certainty for carbon market participants.
Stakeholder Implications:
- Heavy Industries: Must register Regulated Installations, obtain GHG Emission Quotas, and participate in mandatory carbon trading
- Project Developers: Can access voluntary carbon markets through offset mechanisms and performance-based climate finance
- Financial Institutions: Bursa Berjangka (Futures Exchange) gains authority to operate carbon trading platforms
- International Buyers: Must obtain ministerial Authorization for Indonesian Carbon Units, triggering Corresponding Adjustment
PERPRES 110/2025 positions Indonesia as a significant player in international carbon markets under Article 6 of the Paris Agreement, while maintaining sovereign control over emission reductions through the Otorisasi and Corresponding Adjustment framework. The regulation's four-pillar NEK framework provides multiple pathways for carbon pricing, accommodating both mandatory compliance markets and voluntary climate finance mechanisms.
Official Source
Peraturan Presiden Nomor 110 Tahun 2025 tentang Penyelenggaraan Instrumen Nilai Ekonomi Karbon dan Pengendalian Emisi Gas Rumah Kaca Nasional
Enacted: October 10, 2025
Lembaran Negara: 2025/172
https://peraturan.bpk.go.id/Details/TBD
Superseded Regulations:
- PERPRES 98/2021 (Penyelenggaraan Nilai Ekonomi Karbon)
- PERPRES 61/2011 (Rencana Aksi Nasional Penurunan Emisi GRK)
- PERPRES 71/2011 (Penyelenggaraan Inventarisasi GRK Nasional)
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