From Regulation to Market: One Year of Perpres 110/2025 towards High Integrity Carbon Market in Indonesia

Carbon buyers now pay more for credits they can trust, and Indonesia wants its carbon market to earn that trust. At COP31 in Antalya on November 10, a ministerial event organized by ICGD and IETA marked one year of Presidential Regulation 110/2025, the legal basis for that market. Government officials, standard setters and investors used the occasion to test how far Indonesia has come toward a high-integrity carbon market. Their answers cover the market case for integrity, a new Indonesian definition of it, the institutions now in place, and the Article 6 pathway that will carry Indonesian credits to international buyers.

For years, carbon credits of very different quality sold at similar prices. Anton Tsvetov of ICVCM told the panel that price and quality now move together. Credits carrying the Core Carbon Principles label sell at premiums of about 15 to 25 percent, and more in project types where integrity has improved most, such as landfill gas and cookstoves. The label has also become an entry ticket. In one buyer coalition, 40 percent of members prefer CCP-labeled credits, and HSBC buys nothing else. Across a market that has had a hard few years, the high-integrity segment is the only part still growing.

Flora Ji of Rubicon Carbon, a platform backed by TPG, described the same shift from the investor side. Carbon credits are an intangible product that sells on trust. Before Rubicon commits capital, it looks at the project fundamentals, the developer's record, the business model, the risk profile and whether it can absorb the downside if issuance falls short. An integrity score is only the minimum bar. When a project scores well on carbon but poorly on community, Rubicon digs into who lives there, what they give up and how the benefits are shared. Nature-based projects depend heavily on local conditions, she said, which makes an Indonesian definition of integrity useful to buyers.

If buyers pay for integrity, Indonesia needs a definition of it that buyers recognize and that fits local conditions. Paul Butarbutar's team has spent months on that question, and in Antalya they opened their answer to international comment. Their white paper, the High Integrity Principles for Indonesia, sets out 10 principles under three pillars. These are institutional integrity, climate and environmental outcomes, and social integrity.

The team started from what already exists. They mapped seven global frameworks, including the ICVCM Core Carbon Principles, Article 6.4, CORSIA, the UK VCM principles, the Cancun safeguards, SIS-REDD+ Indonesia and the UNDP supply-side criteria. Together these cover the core elements of integrity well, from additionality and baselines to rights, safeguards and benefit sharing. Each element now maps to one or more of the Indonesian principles.

Coverage on paper is only the start, because a global rule has to work in local conditions. The white paper names three areas where Indonesian context changes how a rule applies.

The next steps follow a clear sequence. The team will finish the consultation, then test the principles on real projects in each sector while surveying past grievance reports for recurring risks. The lessons will become how-to guidance for each sector, then practical eligibility criteria, and finally a framework the government can adopt as its official definition. The document will be updated as a living text throughout.

A definition needs a policy frame and institutions behind it, and Perpres 110/2025 has built both over the past year. Eddy Soeparno, Vice Chair of the People's Consultative Assembly, set the scale of the ambition in his keynote. Indonesia wants 8 percent annual growth and net zero by 2060 or earlier. Forestry and minerals hold more than 97 percent of its carbon potential, and the power plan adds 62 GW of new capacity, most of it renewable, at a cost of $190 billion. Three laws now in progress will shape that path. These are the Renewable Energy Bill, a revised Electricity Law, and a Climate Action Bill targeted for passage in early 2027. He said each will also produce high-integrity mitigation for the carbon market and for Article 6 partners.

The institutions behind the market have taken shape over the year. Ary Sudijanto of the Ministry of Environment described a national carbon trading program that links emissions trading, offsets and international cooperation, all tied to Indonesia's NDC. The national registry, SRUK, is running, and sectoral business processes are in place. The ministry's focus now is practical work on reliable data and MRV, clear procedures, and the capacity to run them.

The Ministry of Forestry has moved just as fast. Edo Mahendra listed a forestry carbon regulation in April, 31.7 million tons of legacy credits issued in July, concept notes to ART for nine provinces, and the launch of the Indonesia Forestry Carbon Hub. Before the end of March 2027 the ministry expects a social forestry regulation, a draft nesting procedure, a methodology panel, and a JCM guideline with Japan covering mangroves and peatland. It is also designing fiscal incentives for nature-based investment and pooling social forestry projects so that institutional investors can take part.

Each of these steps builds integrity as well as volume. A working registry guards against double counting. Nesting keeps project and jurisdictional claims consistent. Agreed methodologies give buyers a shared basis for judging what a credit is worth.

Article 6 is where Indonesia's carbon market meets international demand, and the pieces are close to ready. The Ministry of Environment's Article 6 regulation is expected before the end of 2026. It will set out how authorization and accounting work. Ary Sudijanto asked partners to weigh early what each cooperation brings, including the volumes, the periods and the accounting rules, so that both sides can plan with confidence.

Once the regulation is out, the land ministries will calculate how much headroom Indonesia has for corresponding adjustments, and the first nature-based transfers can follow. Edo Mahendra said Perpres 110/2025 opens Indonesia to every form of climate finance. Indonesia will pursue bilateral deals under Article 6.2, the crediting mechanism under Article 6.4 and results-based payments, with partners such as Japan, Singapore and Norway. Asked by Axel Michaelowa of Perspectives Climate Research which route comes first, he pointed out that only a few countries buy under Article 6.2 today, so the market needs more buyers and more trust. He also asked that Article 6.4 treat removals and reductions equally and keep every sector eligible in practice.

Integrity carries extra weight under Article 6. Each transferred outcome needs government authorization and a corresponding adjustment, so a reduction sold abroad is counted only once. Buyers under Article 6 also apply their own quality screens. The High Integrity Principles can give Indonesia one test for both project credits and international transfers, which would make its outcomes easier to authorize and easier to sell.

State capital will play a part as well. Pahala Mansury said Danantara oversees state companies that produce about half of Indonesia's emissions, mostly in energy. It will use carbon finance to move them toward clean power and waste to energy, and it wants to join Article 6 talks with partners such as Japan, Korea and Singapore.

Forest fires remain the risk every forest buyer asks about. Edo Mahendra proposed testing whether areas with carbon projects burn less than open-access land, on the simple logic that people protect what earns them income. If they do, the approach can scale up to jurisdictional risk mapping. He also argued that buffer pools are too thin for a bad fire year and called for insurance priced to each project's own risk. These market tools work alongside enforcement, including 21,000 new forest rangers approved by the President.

Transparency is the second safeguard. The Ministry of Forestry signed an MOU with ICVCM in 2025, and the Indonesia Forestry Carbon Hub will publish project information online, including each project's benefit-sharing promises. Anyone will be able to check a project against its design documents and raise a problem with the ministry. Edo Mahendra described this as a shared system of oversight, with communities, buyers and civil society working alongside the government. The nine provincial concept notes for ART will be launched at the Indonesia Pavilion on November 11.

Hashim Djojohadikusumo, the President's Special Envoy for Climate and Energy, closed the event with a plain test for the year ahead. The foundations are in place, he said, and Indonesia will now judge its carbon market by the investment it attracts and the emissions it reduces. Every credit must stand for a real, measurable and verifiable reduction or removal, and every project must respect rights, share benefits fairly and win local consent. He invited investors, financial institutions and international partners to come and invest in Indonesia.

He pointed to one investment already made. TPG and Rubicon Carbon, whose approach Flora Ji described earlier in the day, are backing a project that will benefit 1.6 million families, about six to seven million people.

That is the right test for the second year of Perpres 110/2025. The buyers in the room said they will pay more for credits they can trust. Indonesia now has most of the pieces to supply them, and the work ahead is to show that the principles hold up on real projects and that the first Article 6 transfers move. Landscape will follow that work closely and share what we learn.

Ministerial event organized by ICGD and IETA at the IETA Business Hub, COP31 Antalya, on Tuesday, November 10, 2026, from 10:00 to 11:30.