Navigating Indonesia's Carbon Economy after Perpres 110/2025
Author: Sri Purnama & Mazaya Dhiya Haniifah
I. INTRODUCTION
Indonesia's commitment to achieve net-zero emissions by 2060 places carbon governance at the centre of its economic and fiscal transition. Emissions continue to rise, and climate-related fiscal risks, ranging from disaster spending to stranded asset exposure, are tightening their grip on the state budget. Against this backdrop, the evolution of the carbon pricing from Perpres 98/2021 to Perpres 110/2025 marks a deliberate shift from regulatory experimentation toward a more integrated, finance-linked carbon regime. This essay examines the structural, fiscal, and legal implications of Perpres 110/2025: the consolidation of carbon-pricing instruments, the introduction of dual registries (SRN-PPI and SRUK), the repositioning of KLHK, MOF, OJK, and Bappenas, and the challenges of aligning environmental integrity with market-based mechanisms. Ultimately, it argues that Indonesia's carbon policy must now shift from an architectural design to an enforceable, transparent, and socially just implementation.
II. AN OVERVIEW OF PERPRES 110/2025
Perpres 110/2025 does three things that Perpres 98/2021 did not: it widens the mandate, splits the registries, and formalises multi-agency steering. Substantively, the regime is reframed from "carbon pricing implementation" to "implementation of carbon pricing instruments and national GHG emissions control", while expressly revoking Perpres 98/2021. The old architecture is retained, but placed within a more transparent framework: carbon allocation, NDC planning, operation of NEK, transparency, financing, and strategic coordination through a steering committee.
The four NEK instruments are now consolidated in a single provision: carbon trading; results-based payments; carbon levies; and other instruments consistent with science, technology, and law. Fiscal and benefit-sharing hooks are then specified downstream, including the possibility of treating carbon levies as tax/customs/other levies, and of channelling certain revenues as non-tax state income through environmental funds. This gives MOF a more explicit role than under Perpres 98/2021.
The most important structural change is the move from a single registry to a dual-registry model. SRN-PPI remains the one-data environmental backbone, holding verified mitigation and adaptation actions and acting as the reference point for NDC accounting and double-counting control. SRUK is introduced as a separate carbon-unit registry for financial use: units must be verified, recorded in SRUK and then, in practice, can be listed and traded on IDXCarbon under OJK supervision. The same tonne of CO₂e is therefore both an environmental unit in SRN-PPI and, once admitted to the exchange, a financial asset subject to capital-market rules.
Governance follows this split. KLHK anchors climate policy, MRV and SRN-PPI. MOF designs and applies fiscal instruments, including carbon levies and budget treatment of NEK revenues. OJK regulates SRUK, the carbon exchange and financial intermediaries through POJK 14/2023 and 18/2023, while Bappenas links NEK to planning and climate budgeting. On paper, this multi-agency arrangement is more precise than in Perpres 98/2021 and its progeny (such as Permen LHK 21/2022), which left many gaps to be filled by KLHK alone.
Yet legal certainty remains partial. Coordination is mostly framed in general terms, and many crucial details, including ownership chains for carbon units, priority between SRN-PPI and SRUK in the event of diverging records, classification of state-related units and levies, and concrete data-sharing protocols, are deferred to future regulations. Alignment with higher-level statutes is also incomplete. Perpres 110/2025 is broadly consistent with the objectives of sustainable development and environmental justice outlined in UU 32/2009, and complements the investment-oriented reforms introduced in UU 6/2023. However, it does not yet specify how NEK outcomes will be integrated into environmental permits or business licensing. Nor does it fully address personal data protection duties under UU 27/2022 for registry operators, exchanges and verifiers. These gaps leave residual risk for investors, project developers and communities, especially in cross-border and community-based projects that sit at the intersection of environmental and financial law.
III. FISCAL, MARKET, AND DATA IMPLICATIONS
Perpres 110/2025 treats carbon not just as an environmental tool, but also as a fiscal and financial asset, and the tensions are evident.
On the fiscal side, the regulation confirms that Pungutan atas Karbon will be levied through existing tax, customs, and other state-levy channels, and that revenues from carbon trading, results-based payments, and levies may be channelled through an environmental fund or another appointed institution as PNBP. In principle, this allows MOF to integrate carbon revenues into the existing Climate Budget Tagging (CBT) framework, which has been tracking climate-related spending and now utilises auto-tagging and dashboards at both national and regional levels. The risk is that carbon cash flows simply disappear into general PNBP without being earmarked and tagged as climate-related items, thereby weakening the link between NEK performance and climate outcomes in the APBN/APBD.
Monetising carbon also creates fiscal and financial risk. Carbon prices on IDXCarbon have been shallow and volatile, with limited volumes and unsold supply. If the state starts to rely on levies or auction revenues for climate finance, revenue volatility and policy reversals become a genuine macro-fiscal risk. Classification questions (tax vs. PNBP vs. quasi-sovereign "environmental fund" income) will determine how far those revenues can be pledged, transferred to regions, or used to back green bonds and sukuk.
On the market side, Perpres 110/2025's dual-registry model is intended to be mirrored by IDXCarbon and OJK's capital market rules. POJK 14/2023 sets licensing, governance and supervision for the carbon exchange, while POJK 18/2023 and TKBI v2 anchor sustainable debt/sukuk and a national green taxonomy. For alignment, three things are essential: only units that exist and are unique in SRN-PPI/SRUK should be tradeable/financeable; disclosure templates under POJK 18/2023 should require a clear map to SRN-PPI, SRUK IDs and TKBI activity codes; and OJK supervision should treat misreporting of carbon attributes as a market-abuse / mis-selling issue, not just a technical MRV problem.
Safeguards against manipulation and double-counting, therefore, need to be legal, not just technical: priority rules if SRN-PPI and SRUK records diverge, automatic reconciliation between registries and IDXCarbon, position limits and transparency on who holds which units, and a transparent allocation of liability between project developers, verifiers, SRN/SRUK operators, and exchange intermediaries when an error is found.
On data and integrity, SRN-PPI and SRUK will contain granular project, transaction, and sometimes personal and financial data. Under UU 27/2022, much of this qualifies as identifiable data, triggering obligations of lawful basis, purpose limitation, minimisation, security, and breach notification. Perpres 110/2025 remains silent on the distinction between personal data protection and processors across KLHK, OJK, BEI/IDX Carbon, verifiers, and intermediaries. Without explicit PDP-compliant governance, transparent role allocation, DPIAs for registries, strict access controls, and separation between public transparency datasets and underlying personal/financial records, the shift from environmental registries to digital financial platforms will create avoidable legal and reputational risk.
While the issuance of Perpres 110/2025 should be appreciated, the devil lies in the details. The establishment of criteria for regulated installation, carbon trading mechanisms, and national MRV systems necessitates technical guidance and attentiveness to the myriad capacities that may require improvement. In particular, there is a pressing need to bolster technical expertise within government and regulatory agencies, as well as implementation bodies, regarding MRV processes. Moreover, without a robust MRV framework, there is a significant risk of issues such as inaccurate data, diminished accountability, and potential manipulation.
IV. SOCIAL AND COMMUNITY DIMENSION
Perpres 110/2025 recognises a broader carbon scheme and decentralises the NEK policy across various sectors, including forestry. This creates significant opportunities for local communities engaged in Nature-based Solutions (NbS) initiatives, such as reforestation and mangrove restoration, to participate actively in the carbon market. However, challenges remain, including high re-verification costs, data transparency issues leading to uneven benefit-sharing, and unclear community tenure rights, making this regulation a double-edged sword.
Projects previously in the carbon market must undergo re-validation to meet stricter requirements, which may impose high costs on community developers and local NGOs. Furthermore, the new regulation does not clarify community rights regarding carbon, as most projects are managed by large companies, leaving indigenous peoples and local communities with minimal economic benefits. The degree to which communities can engage in activities associated with the monetary value of carbon, such as trading, RBPs, and levies, must be achieved by issuing its own appropriate regulations. Moreover, integrating indigenous peoples and local communities into the carbon market poses risks without guarantees of tenure rights and the implementation of Free, Prior, and Informed Consent (FPIC). Many land-based carbon projects occur in indigenous areas lacking legal clarity on land rights, potentially threatening local livelihoods.
To leverage the opportunities presented by Perpres 110/2025, robust legal frameworks must affirm community rights, secure land tenure, and uphold FPIC principles. Organisations like Mahija Tribe can serve as a bridge for these communities to navigate the new regulations and provide them with capacity-building in preparing for entry into the carbon market, thereby encouraging engagement in climate change mitigation and environmental conservation. Nevertheless, the government should give financial support to alleviate re-verification costs, ensuring a fair sharing of ecological and economic benefits.
V. RECOMMENDATIONS
Perpres 110/2025 establishes the steering committee, but it must operate as a genuine inter-agency steering body. It should issue binding guidance on sequencing implementing regulations, SRN–SRUK interoperability and data standards, and fiscal treatment of NEK revenues. OJK's role—acknowledged while preserving its independence—should be coordinated through structured steering committee protocols, rather than informal coordination. Carbon revenues must be transparently managed. Carbon levies and NEK-related PNBP should be automatically integrated into the Climate Budget Tagging (CBT) framework so that all carbon-related receipts are earmarked, traceable, and directly connected to national climate outcomes.
To strengthen legal certainty, KLHK, OJK, and MOF should issue a joint regulation clarifying SRN–SRUK ID mapping, record priority, reconciliation rules, and clear PDP roles under UU 27/2022. Community safeguards also require standardisation. Benefit-sharing rules should be embedded in all NEK contracts, ensuring minimum community revenue shares, emissions-based payment criteria, grievance mechanisms, and alignment with the environmental justice mandate of UU 32/2009, as amended by UU 6/2023.
Indonesia's shift from Perpres 98/2021 to 110/2025 marks a move toward a more integrated, finance-linked carbon governance regime. Its success, however, hinges on effective coordination, transparent revenue management, and genuine community protection. With coherence, integrity, and justice, the NEK framework can become a durable foundation for Indonesia's low-carbon future.
