Indonesia Opens a New Chapter in Carbon Trading with Presidential Regulation No. 110 of 2025
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Indonesia has taken a major step forward in shaping its carbon market with the enactment if Presidential Regulation (PR) No. 110 of 2025, which replaces the earlier PR No. 98 of 2021. The new regulation marks a turning point for the country’s climate governance by allowing carbon trading to proceed independently of Nationally Determined Contribution (NDC) milestones and by formally recognizing international standards such as Verra, Gold Standard, and Plan Vivo Together, these reforms create one of Southeast Asia’s most open and flexible frameworks for carbon market participation.
Decoupling Carbon Trading from NDC Targets
Under the previous regime, carbon trading activities were effectively constrained until Indonesia achieved measurable progress towards its NDC goals. PR 110/2025 changes that. Article 58 (1) explicitly states that trading may commence even before full NDC fulfillment. This decupling gives the market a critical head start – enabling early-stage investment, private sector engagement, and financial inflows for mitigation project.
For developers and investors, this means they no longer must wait for government targets to be reached before projects can generate and sell credits. The move is widely seen as pragmatic recognition that climate finance itself accelerates emission reductions, and that delaying market activation would only postpone potential benefits.
Formal Recognition of International Standards and VCM
Perhaps the most transformative feature of PR 110/2025 is its recognition of international carbon standards and the Voluntary Carbon Market (VCM). Article 66 explicitly permits voluntary offset trading, giving companies and individuals the legal right to purchase carbon units to compensate for emissions outside of compliance obligations.
The regulation abolishes the earlier Mutual Recognition Agreement (MRA) mechanism and replaces it with direct acknowledgement of established international standards. This opens two clear issuance pathways:
SPE-GRK carbon units under Indonesia’s national frameworks, and
Non-SPE GRK carbon units derived from international standards
The latter category can be traded both domestically and internationally, offering project proponents access to global buyers. This alignment between domestic policy and international frameworks signals Indonesia’s readiness to participate as a credible partner in global carbon markets.
Corresponding Adjustment vs. Non-CA Transactions
PR 110/2025 also introduces long-awaited clarity on Corresponding Adjustment (CA) under article 6 of the Paris Agreement. In simple terms, CA transactions refer to carbon units authorized for international transfer – credits that will be deducted from Indonesia’s NDC accounting to prevent double counting. These typically command higher prices and can be used for compliance under international schemes.
In contrast, Non-CA units remain within Indonesia’s NDC boundary and are mostly used for voluntary purposes. By distinguishing the two mechanisms, the regulation provides transparency for both domestic and international buyers, allowing them to choose credits that align with their own compliance or sustainability strategies. This dual-track system balances integrity with flexibility – one track supporting Indonesia’s climate goals, the other inviting international finance through voluntary participation.
A New Carbon Registry: SRUK
At the heart of implementation lies the Sistem Registri Unit Karbon (SRUK), a centralized registry for all carbon unit data and transactions. All carbon trading must be recorded in SRUK, which is designed to interface with both international registries and Indonesia’s existing climate reporting system, the SRN-PPI.
However, the regulation acknowledges that SRUK’s readiness will determine how smoothly the new market can function. Until the system is fully operational, the government advises the use of established international registries for non-SPE GRK credits, with synchronization planed once integration is complete.
SRUK’s timely development is therefore a critical path item for implementation – without it, the issuance of national carbon units could face bottlenecks despite the new legal framework.
Implications for Market Participants
For project developers, the regulation provides unprecedented flexibility. They can apply either national or international standards, start trading before NDC milestones, and tap into both compliance and voluntary buyers. For investors, the regulation reduces policy risk and enhances transparency, while buyers benefit from access to credits benchmarked against globally recognized methodologies.
Nonetheless, several gray areas remain. Certain terms – like “voluntary offset trading to fulfill international obligations” require further clarification, particularly regarding whether schemes like CORSIA fall under voluntary or compliance categories. Moreover, the regulations still call for a National Carbon Trading Roadmap and detailed ministerial guidelines, which must be issued by October 2026 to ensure legal certainty and operational readiness.
Looking Ahead
PR 110/2025 represents Indonesia’s most comprehensive and investor-friendly carbon policy to date. By removing unnecessary barriers, embracing international standards, and clarifying trading pathways, the government has laid the groundwork for a robust, globally connected carbon market.
Implementation, however, will determine its success. The coming year will be critical as ministries finalize technical rules and bring the SRUK online. If executed effectively, Indonesia could position itself as a regional leader in carbon trading – channeling global climate finance into local mitigation projects while advancing its long-term decarbonization goals. Mt Stonegate ready to help organizations navigate these new carbon market opportunities, offering tailored insights and partnerships to turn regulatory change into measurable climate and investment outcomes.