Indonesia launches a new carbon economic value regulation under Presidential Regulation No. 110 of 2025, expanding carbon trading opportunities for government, business, and NGOs.
1. Background: Why Indonesia Needs a Carbon Economic Value (NEK)
Indonesia faces two major challenges: cutting greenhouse gas (GHG) emissions and expanding national income sources beyond tax and customs revenue.
The concept of Nilai Ekonomi Karbon (Carbon Economic Value — NEK) answers both. It monetizes emission reductions, turning environmental action into measurable financial gain.
Before the new regulation, Indonesia’s domestic carbon market remained small. As of September 2025, the total trading volume reached only 1.6 million tons of CO₂ equivalent, worth about Rp 78.46 billion. Analysts estimate that with stronger regulation, the market could grow to Rp 41 trillion – Rp 120 trillion per year.
In short, NEK isn’t just an environmental agenda — it’s a fiscal and economic strategy.
2. What Changes in Presidential Regulation No. 110 of 2025
President Prabowo Subianto signed the Presidential Regulation No. 110 of 2025 on October 10, 2025, replacing the previous Regulation No. 98 of 2021.
The new policy significantly restructures Indonesia’s carbon market framework.
Key Points:
- Expanded scope: NEK now covers both compliance and voluntary carbon markets. All verified carbon reduction schemes are recognized.
- Decentralized authority: Carbon trading is no longer limited to the Ministry of Environment and Forestry (MoEF). Other ministries — Industry, Agriculture, Energy — and even local governments can participate.
- New registry system: A dedicated Carbon Unit Registry System (SRUK) is introduced, separate from the National Registry for Climate Change Control (SRN PPI).
- Four instruments under NEK:
- Carbon trading
- Result-based payment
- Carbon levy or tax
- Other market-based mechanisms
This regulatory upgrade aims to make Indonesia’s carbon market more transparent, competitive, and globally integrated.
3. New Economic Opportunities: From Taxes to Carbon Trading
3.1. A Fresh Fiscal Source
By establishing a clear NEK framework, the government can generate new income streams beyond traditional taxes.
Forestry, agriculture, and industrial sectors that adopt emission-reduction practices can now issue carbon units for trade, adding measurable economic value to sustainability.
3.2. Opportunities for the Private Sector
Companies can create projects — such as mangrove restoration, reforestation, or energy efficiency — that generate carbon credits.
These credits can be traded domestically or internationally for profit.
3.3. Global Integration
Indonesia has signed Mutual Recognition Agreements (MRAs) with five major international voluntary markets — Verra, Gold Standard, Plan Vivo, GCC, and Pure Earth.
This enables international buyers to trust Indonesian carbon credits, enhancing market integrity and liquidity.
At an estimated price of US $5 per ton of CO₂, with potential annual emissions of 13.4 billion tons, Indonesia’s carbon market could reach Rp 120 trillion per year in economic value.
4. Challenges and Readiness of the Carbon Ecosystem
4.1. Regulatory Framework Still Evolving
Implementation requires detailed ministerial decrees (Permen). Without them, project-level execution remains limited.
4.2. Verification Integrity
A robust Measurement, Reporting, and Verification (MRV) system is critical. Risks include double counting and low-quality credits. Independent validation is mandatory to preserve market integrity.
4.3. Institutional Readiness
Sectors like forestry, agriculture, and energy must improve technical and administrative readiness to join NEK schemes.
Training and capacity building are crucial.
4.4. Market Confidence and Price Volatility
Low initial trading volume shows that investor confidence and price discovery are still developing.
With stronger regulation and sectoral involvement, market participation is expected to increase gradually.
5. Next Steps for Industries and Communities
- Businesses: Conduct emission audits and design carbon-reduction projects to produce carbon units.
- Regional governments: Identify local resources — forests, mangroves, or agricultural land — for carbon programs.
- Investors and financial institutions: Prepare green investment instruments linked to verified carbon credits.
- Civil society: Monitor implementation to ensure environmental and social integrity.
- All sectors: Upgrade understanding of NEK systems, registries, and compliance standards through certified training.
Join Mutu Institute’s Carbon Market Training
To help organizations adapt to the new Presidential Regulation No. 110 of 2025, Mutu Institute offers specialized training on Carbon Economic Value (NEK) and Carbon Market Implementation.
The program covers regulatory frameworks, project design, verification processes, and market strategies for both compliance and voluntary schemes.
Mutu Institute also operates a dedicated NGO — Carbon Nature — that focuses on conservation, emission-reduction projects, and carbon-credit facilitation.
Get trained. Build your carbon strategy. Join Mutu Institute and Carbon Nature today.
Conclusion
The issuance of Presidential Regulation No. 110 of 2025 marks Indonesia’s transition into a new carbon economy.
Opportunities are massive, but success depends on readiness, integrity, and collaboration between government, business, and civil society.
Regulation alone doesn’t generate revenue — action does.
Now is the time to build capacity, join the carbon market, and turn environmental responsibility into economic strength.
