Indonesia Moves from Carbon Policy to Practice with New Forestry Trading Rules
Indonesia has taken a significant step in developing its carbon market with the introduction of Minister of Forestry Regulation No. 6 of 2026. Building on the broader framework set out in Presidential Regulation No. 110 of 2025, the new rules translate policy ambition into a detailed operational system for forestry-based carbon offsets. The shift marks an important transition: from high-level climate commitments to the practical realities of project development, certification and trading.
The regulation establishes, for the first time, a comprehensive lifecycle for forestry carbon projects. Developers must now formalise their plans through structured documentation, either for domestic or international certification, and register them within Indonesia’s national carbon registry, the Sistem Registri Unit Karbon (SRUK). This system is expected to become the backbone of the country’s carbon market, ensuring transparency, traceability and accountability for carbon units generated from forest-based activities.
One of the most notable developments is the tightening of procedures around certification and approval. Carbon credits can only be issued after a multi-stage process that includes validation by independent bodies, implementation of mitigation activities and verification of emissions reductions. In addition, the government has introduced a new layer of administrative scrutiny, assessing the compliance history of project developers before granting approval. This adds a gatekeeping function to the system, aimed at improving credibility but also increasing regulatory complexity.
The regulation also clarifies who is allowed to participate in forestry carbon trading. Rather than a broad and open-ended approach, eligibility is now limited to defined groups such as forest concession holders, social forestry actors, indigenous communities and private landowners. While this provides legal clarity, it also reinforces accountability by ensuring that primary permit holders remain responsible for compliance, even when projects involve external partners or investors. Community-based participation is encouraged, but typically requires support from registered facilitators, reflecting a balance between inclusivity and oversight.
In terms of geography, the rules simplify the categories of land that can be used for carbon projects. Eligible areas include production forests, conservation zones without existing licences, customary and private forests, and certain state lands. This more streamlined approach replaces earlier, more fragmented classifications and is intended to make project development easier to navigate while still maintaining environmental safeguards.
A key feature of the framework is its openness to international carbon markets. Developers are allowed to sell carbon credits abroad, but only with government authorisation and subject to “corresponding adjustments” to ensure that emissions reductions are not counted twice. This aligns Indonesia with global carbon market standards but also introduces an element of strategic control, as authorities retain the discretion to limit exports of carbon credits based on national climate priorities.
Another important shift is the formal integration of environmental, social and governance (ESG) safeguards into the regulatory system. These safeguards are no longer optional or driven solely by market standards; they are embedded as legal requirements. Project developers must demonstrate community engagement, fair benefit-sharing, biodiversity protection and respect for indigenous rights, including the principle of free, prior and informed consent. These obligations extend beyond project design into ongoing operations, with regular reporting and risk management requirements.
At the same time, the regulation introduces some flexibility, particularly for smaller or community-based projects. In certain cases, validation and verification can be carried out by qualified individual experts rather than large accredited institutions. This could lower barriers to entry, although it also raises questions about maintaining consistent standards across projects.
From a fiscal perspective, the government has refined how carbon activities contribute to public revenue. Charges now focus specifically on transactions involving emission offsets, signalling a more targeted approach that aligns with the core function of forestry carbon projects.
The regulation also reflects a broader shift towards a jurisdictional approach, where carbon trading is coordinated at national or provincial levels rather than treated as isolated projects. This is reinforced by a “nesting” requirement, ensuring that project-level activities align with wider climate strategies and do not result in overlapping or double-counted emissions reductions.
Despite its comprehensive scope, the framework is still evolving. Key elements such as the full implementation of the SRUK system and a detailed national carbon roadmap remain in progress. Existing projects are given a limited window to align with the new rules, creating a transitional phase that may prove challenging for some participants.
Overall, the new regulation represents a meaningful step forward in Indonesia’s efforts to build a credible and functional carbon market. It strengthens governance, improves transparency and aligns domestic rules with international expectations. However, it also introduces greater complexity and regulatory discretion, which could affect the pace of project development and investment.
What emerges is a more structured but also more controlled system—one that seeks to balance environmental integrity, economic opportunity and national climate priorities. Whether it succeeds will depend not only on the rules themselves, but on how effectively they are implemented in practice.
