President Prabowo has signed Presidential Regulation (Peraturan Presiden/Perpres) No. 110/2025 on Nilai Ekonomi Karbon (NEK) and National Greenhouse Gas Emission Control on October 10, 2025. This new regulation replaces Perpres 98/2021 on the Implementation of NEK, marking a major shift in Indonesia’s carbon governance.
The regulation introduces significant changes for the national carbon market. It creates new compliance and opportunities for businesses, local governments, and investors. Perpres 110/2025 strengthens NEK’s position as both a climate mitigation tool and an economic driver.
Understanding Nilai Ekonomi Karbon (NEK)
NEK, or the Carbon Pricing mechanism, is designed to assign an economic value (or price) to greenhouse gas (GHG) emissions generated by emitters. Its goal is to incentivize emission reductions and promote a green economy. Implementation occurs through various mechanisms such as carbon markets, carbon taxes, results-based payments, and other innovative approaches.
The earlier Perpres 98/2021 established Indonesia’s initial framework for NEK. However, as markets evolved, climate targets expanded, and the need for international integration and transparency grew, the government deemed the previous regulation “no longer aligned with legal and societal needs.”
As a result, Perpres 110/2025 represents a more mature, integrated legal structure. It comprises nine chapters and 103 articles.
Key Changes in Perpres 110/2025
Below are the key shifts introduced by Perpres 110/2025 compared to its predecessor:
1. From Environmental Tool to National Economic Instrument
- Perpres 98/2021: Focused on emission control to meet Indonesia’s NDC targets.
- Perpres 110/2025: Establishes a national carbon economy system as a fiscal, trade, and green development instrument.
2. Diversifying Instruments and Encouraging Carbon-Backed Innovation
- Perpres 98/2021: Limited to carbon trading, results-based payments, and carbon levies.
- Perpres 110/2025: Expands to include offsets, carbon certification (SPE GRK), carbon allocation, and innovative mechanisms such as tokenization.
This shift opens the door for businesses and investors to participate earlier in the carbon market, either as project developers (sellers) or credit buyers.
3. Enhancing Transparency and Digitalization with Dual Registries
- Perpres 98/2021: Established only the SRN as a data center for mitigation actions.
- Perpres 110/2025: Introduces two registries:
- SRN PPI (National Registry System for Climate Change) – for mitigation and adaptation actions.
- SRUK (Carbon Unit Registry System) – for managing carbon units and NEK transactions.
The new SRUK adds a robust data management layer, enabling traceable, verifiable carbon transactions across the NEK ecosystem.
4. Strengthening Cross-Sector Governance and Fiscal-Energy-Climate Alignment
- Perpres 98/2021: Coordinated solely by the Ministry of Environment and Forestry (KLHK).
- Perpres 110/2025: Establishes a National Steering Committee on NEK & GHG, involving key ministries (KLHK, ESDM, Finance, Bappenas, Trade, and others).
5. Empowering Local Governments and Decentralizing Climate Action
- Perpres 98/2021: Local governments acted mainly as implementers.
- Perpres 110/2025: Local governments must plan, implement, and evaluate mitigation and adaptation actions. This enhancement promotes collaboration between national, provincial, and district levels.
6. Expanding Monetization Opportunities
- Perpres 98/2021: Private entities and communities could only conduct mitigation activities.
- Perpres 110/2025: They can now own, trade, and use carbon units and participate in official offset mechanisms.
7. Ensuring Credibility and Avoiding Double Counting
- Perpres 98/2021: Sectoral MRV (Monitoring, Reporting, Verification) systems were fragmented.
- Perpres 110/2025: Establishes an integrated MRV system across all NEK instruments and climate actions.
8. Encouraging Green Investment and Carbon Finance
- Perpres 98/2021: Funding relied on government budgets (APBN/APBD) and donations.
- Perpres 110/2025: Expands financing to include green finance, blended finance, carbon tax revenues, and carbon credit trading.
9. Legal Certainty and Transition Deadlines
- Perpres 98/2021: No transition timeline.
- Perpres 110/2025: Requires all existing systems to align within one year after enactment.
Implications of Perpres 110/2025 for Businesses, Investors, and Local Governments
1. For Businesses: Carbon Markets as Both Compliance and Opportunity
Companies can now own and trade carbon units and officially participate in offset mechanisms through SRUK.
Implications include:
- New opportunities in carbon offset projects, credit issuance, and trading platforms.
- Financial incentives for decarbonization.
- Stricter emission reporting and verification, where MRV becomes a key credibility pillar.
- Companies that act early gain reputational and financial advantages as carbon credit sellers.
2. For Local Governments: From Implementers to Active Planners
Perpres 110/2025 mandates regional governments to prepare Local Climate Mitigation Action Plans, monitor progress, and evaluate outcomes.
This opens the door to:
- Regional Carbon Markets between provinces or districts.
- New local revenue streams from offsets and carbon certification.
- A growing need for technical capacity in carbon accounting, verification, and reporting.
3. For Investors and Carbon Market Participants
With clearer legal foundations and transparent systems like SRUK, regulatory risks are reduced.
Investors can engage through:
- Green finance or blended finance schemes;
- Direct participation in verified carbon projects;
- Carbon credit trading under Article 6 of the Paris Agreement.
These developments strengthen Indonesia’s potential to become a Southeast Asian carbon hub, attracting foreign investment and carbon export revenue.
Roadmap and Next Steps: What Should Be Done Now
To seize the opportunities and meet the obligations under Perpres 110/2025, businesses and local governments should take these practical steps:
1. Conduct Emission Audits and Carbon Risk Mapping
- Inventory current GHG emissions.
- Identify major emission sources and reduction potentials.
- Assess future carbon allocation scenarios.
- Evaluate risks: excess emissions, cost implications, compliance exposure.
2. Develop Mitigation and Adaptation Strategies
- Choose technologies or processes to reduce emissions (e.g., energy efficiency, low-carbon fuels, carbon capture and storage).
- Explore carbon projects that can generate tradable units.
- Create a clear implementation roadmap (responsibilities, timeline, and budget).
3. Establish Reporting, Verification, and Registry Systems
- Align internal reporting systems with upcoming technical guidelines.
- Prepare verifiable MRV data and documentation.
- Understand how SRUK records and manages carbon units for trading.
- Ensure integration with national government systems.
4. Monitor Emerging Regulations and Technical Guidelines
- Keep track of technical manuals, verification modules, and Mutual Recognition Agreements (MRAs).
- Updates to national and international market linkages.
5. Promote Collaboration and Stakeholder Engagement
- Local governments: create regional emission reduction forums, identify area-based carbon potentials (forests, land use, renewable energy).
- Companies: find project partners, engage in carbon trading ecosystems, and involve local communities to maintain social and environmental integrity.
Momentum to Accelerate Indonesia’s Carbon Market
Perpres 110/2025 marks a turning point in Indonesia’s climate policy. It elevates NEK from an environmental instrument into a national economic tool integrated within green development and energy transition frameworks.
For businesses and local governments, now is the moment to get ready for the carbon market. Compliance is only one part of the equation; the real advantage lies in proactively developing carbon projects, investing in innovation, and building credibility.
By taking early steps, such as conducting audits, crafting mitigation strategies, and building transparent reporting systems, stakeholders can position themselves ahead of the curve.
Ultimately, NEK is not just about emission numbers, but about how Indonesia integrates economic value into climate action, ensuring emission reduction, sustainable development, and economic transformation move hand in hand.
Get in touch with our team to enter the carbon market.
