Business Actors Propose Revision of Carbon Trading Regulations in Indonesia

Regulatory challenges have been a major concern for business actors involved in carbon trading in Indonesia. Erlinda Ekaputri, Indonesia Country Director of Wildlife Works, highlighted that the current regulations remain confusing and hinder the economic viability of carbon trading.

Erlinda highlighted the restriction on double registration, which only allows registration through the National Registry System (SRN) and the Greenhouse Gas Emission Reduction Certificate (Sertifikat Pengurangan Emisi Gas Rumah Kaca – “SPE-GRK”). This prevents international business actors from using global standards such as Verra or Gold Standard, which are commonly used in international markets.

“Regarding the current regulations in Indonesia, there are indeed some that are open to multiple interpretations and still confusing for business actors,” said Erlinda to Hukumonline.

The authority to approve carbon credits resting solely with the Minister poses another obstacle. Since the decision to sell or not lies at the Ministerial level, the number of applications that must be approved becomes very large, potentially slowing down the carbon trading process.

“That also makes things difficult,” said Erlinda. She also emphasized the need for a more transparent system in calculating the achievement of Nationally Determined Contribution (“NDC”).

Erlinda mentioned the need to revise several regulations, including Regulation of the President No. 98 of 2021 on the Implementation of Carbon Economic Value (Nilai Ekonomi Karbon – “NEK”) to Achieve Nationally Determined Contribution Targets and Control Over Greenhouse Gas (“GHG”) Emission in Relation to National Development (“Perpres 98/2021”), as well as its derivative regulations such as Regulation of the Minister of Environment and Forestry No. 21 of 2022 on Procedures for the Application of NEK (“Permen LHK 21/2022”) and Regulation of the Minister of Environment and Forestry No. 7 of 2023 on Procedures for Carbon Trading in the Forestry Sector (“Permen LHK 7/2023”).