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Presidential Regulation No. 98 on the Implementation of Carbon Pricing to Achieve the Nationally Determined Contribution Target and Control over Greenhouse Gas Emissions in the National Development

Last updated: 10 February 2025

In 2021, Indonesia’s President issued Presidential Regulation No. 98 on the Implementation of Carbon Pricing to Achieve the Nationally Determined Contribution Target and Control over Greenhouse Gas Emissions in the National Development (“Carbon Pricing Regulation”), which establishes a framework for GHG pricing in Indonesia. The Carbon Pricing Regulation defines “carbon pricing” as “the value of each unit of greenhouse gas emissions, generated from human and economic activities”. In parallel, the term “greenhouse gas” is defined broadly as “gases contained in the atmosphere, both natural and anthropogenic, which absorb and re-emit infrared radiation”. Accordingly, methane is covered by the framework. 

The Carbon Pricing Regulation provides for the following measures:

  • It grants government ministries the power to implement GHG pricing for economic sectors that fall under their supervision (Article 46). The Ministry of Energy and Mineral Resources (“MEMR”) is empowered to implement GHG pricing for the energy sector. In terms of this power, the MEMR has established GHG pricing in the form of a domestic emissions trading scheme for the power generation sector, specifically coal-fired power plants with a capacity of 25 MW or more (under Ministerial Regulation No. 16 of 2022 on Guidelines for Carbon Economic Value Implementation for the Power Generation Sub-Sector, which expressly covers methane emissions). The Indonesian Government plans to expand this emissions trading scheme to cover oil- and gas-fired power plants starting in 2027. As of 2025, the MEMR has not adopted any regulation for the purpose of establishing mandatory carbon pricing for the production, processing and transportation of fossil fuels. 
  • It establishes a measurement and reporting system for GHG emissions. Business actors are required to measure their GHG emissions (Article 60) and measurement is done by multiplying activity data with emission intensity factors (Article 61). Measurement must be done at least once a year (Article 61). Business entities must report the measurement results in the National Registry System for Climate Change Control (Article 69). Business entities that do not report GHG emissions in the National Registry may be subject to fines (Article 70). 
    While the Carbon Pricing Regulation establishes measurement and reporting obligations for business entities, it does not establish verification requirements. Rather, for the moment, the Regulation only establishes verification obligations for entities that are subject to carbon pricing (i.e., coal-fired power plants). These entities are required to have their measurement results verified and validated by an independent third party (Article 68). 
  • It requires the Ministry of Environment and Forestry to create and maintain a National Greenhouse Gas Emissions Inventory, which must cover methane emissions (Articles 10 and 11). Emissions are calculated by multiplying activity data with emission intensity factors in accordance with the Intergovernmental Panel on Climate Change’s guidelines. 

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