From Framework to Execution: Forestry Carbon Offsets under MOF Regulation No. 6 of 2026

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Authors

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Background

Indonesia's carbon governance framework continues to evolve following the issuance of Presidential Regulation No. 110 of 2025 ("PR 110/2025"), which established the architecture for the implementation of carbon economic value instruments and national greenhouse gas emission control. While PR 110/2025 addressed various key concept, a number of critical matters remained at the sectoral level. The issuance of Minister of Forestry ("MOF") Regulation No. 6 of 2026 on the Procedures for Carbon Trading through Forestry Sector Emission Offsets ("MOF Reg 6/2026") therefore marks a significant development. The regulation further operationalizes PR 110/2025 by translating its high-level framework into a detailed, end-to-end process for project development, certification, and trading within the forestry sector.

Procedural and Compliance Requirements for Carbon Unit Issuance

As previously provided in the PR 110/2025, one of the most notable features of MOF Reg 6/2026 is the regulatory procedure for the full lifecycle of a forestry carbon project. At the front end, project developers are required to formalize their project design through either a Mitigation Action Design Document (Dokumen Rancangan Aksi Mitigasi Perubahan Iklim – "DRAM") for domestic certification or a Project Design Document (Dokumen Perencanaan Proyek – "DPP") for international certification, both of which must be recorded through the national registry system, namely the newly established Carbon Unit Registry (Sistem Registri Unit Karbon – "SRUK").^[1]

MOF Reg 6/2026 further operationalizes the lifecycle framework under PR 110/2025 by further regulating the certification and approval process, particularly in relation to the issuance of carbon units. For domestic units (Greenhouse Gas Emission Reduction Certificates – "SPE GRK"), project developers must first obtain a recommendation from the MOF, which is issued only after completion of a multi-stage process, including registration of the DRAM through SRUK, validation by an independent validation body, implementation of mitigation activities in accordance with the DRAM, and verification of achieved emission reductions by an independent verifier.^[2]

Notably, MOF Reg 6/2026 introduces additional administrative screening layers that are not expressly elaborated under PR 110/2025. In particular, the MOF will assess the applicant's compliance history and whether the applicant is subject to any administrative sanctions before issuing a recommendation.^[3]

For internationally certified units (non-SPE GRK), a similar process applies, with the key distinction that project developers must obtain prior approval from the MOF before proceeding with certification under international standards. This approval is granted upon submission of the DPP and supporting validation and verification documents, and remains valid for a limited period of 6 (six) months, within which the developer is expected to proceed with the certification process under the relevant international standard.^[4]

Participation with Intermediation Requirements

MOF Reg 6/2026 also elaborates on the categories of entities that may participate in forestry carbon trading. The previous framework under the MOF Regulation No. 7 of 2023 ("MOF Reg 7/2023") adopted a relatively broad approach; MOF Reg 6/2026 adopts a more defined scope, limiting participation to specifically recognized categories. Under MOF Reg 6/2026, eligible participants include, among others:^[5]

1. holders of a Forest Utilization Business License (Perizinan Berusaha Pemanfaatan Hutan – "PBPH") and other forest utilization rights;
2. holders of social forestry approvals;
3. customary law communities with recognized forest status;
4. holders of private forest rights (hutan hak); and
5. holders of Carbon Environmental Services Utilization Business License (Perizinan Berusaha Pemanfaatan Jasa Lingkungan Karbon – "PB-PJL Karbon").

MOF Reg 6/2026 clarifies the allocation of responsibility in collaborative arrangements. Specifically, where PBPH holders or PB-PJL Karbon holders cooperate with third parties in implementing mitigation activities and carbon trading, such permit holders remain designated as the responsible party for the carbon trading activities.^[6] This provision reinforces that, notwithstanding the involvement of partners or investors, regulatory accountability remains attached to the primary permit holder. From a structuring perspective, this has implications for risk allocation, contractual arrangements, and compliance responsibility within project partnerships.

On the other hand, similar to the approach under MOF Reg 7/2023, participation by community-based entities, particularly social forestry groups, customary communities, and private forest holders, is not entirely standalone. The regulation requires these entities to be supported by registered facilitators or partners, with such facilitators themselves subject to formal registration requirements.^[7] This goes beyond a mere experience-based requirement, as per the previous framework, and instead introduces a formal layer of qualification and oversight.

At the same time, MOF Reg 6/2026 accommodates project aggregation through collective implementation schemes, most notably the Integrated Area Development approach.^[8] Thus, multiple entities, particularly those within social forestry, customary, or smallholder contexts, may undertake mitigation activities jointly within a defined landscape.

Scope of Eligible Carbon Project Areas

MOF Reg 6/2026 introduces a more streamlined formulation of eligible areas for forestry carbon projects. Under the regulation, carbon units may be generated from mitigation activities conducted in:^[9]

1. production forests (including convertible production forests and utilization blocks within protected forests) that are already subject to relevant licenses or management rights;
2. utilization zones/blocks of Nature Conservation Area (Kawasan Pelestarian Alam – KPA) and Game Reserves (Taman Buru) that are not yet encumbered by any management rights, business licenses, or cooperation agreements;
3. customary forests (hutan adat);
4. private forests (hutan hak); and
5. state land outside designated forest areas.

Compared to the previous framework under MOF Reg 7/2023, this represents a notable simplification and consolidation. The earlier regulation provided a more granular and expansive listing, including explicit references to unencumbered forest areas across multiple forest functions, peatland and mangrove ecosystems (both within and outside forest areas), and conservation forest areas as a separate category.

Authorizations and Corresponding Adjustment

MOF Reg 6/2026 allows project developers to access international carbon markets.^[10] Where such transactions involve international mitigation use, developers are required to obtain authorization and corresponding adjustment, as previously introduced in PR 110/2025.

Where carbon units are intended for international mitigation purposes, including use toward another country's NDC or other international obligations, project developers are required to obtain authorization and corresponding adjustment. Project developers must submit an application to the MOF to obtain a recommendation for the issuance of authorization and corresponding adjustment. This application must be supported by the relevant carbon trading cooperation agreement.^[11]

Importantly, the issuance of a recommendation by the MOF is not automatic. The regulation expressly provides that the MOF will assess the volume of carbon units proposed for international transfer and Indonesia's NDC requirements. Based on this assessment, the MOF may either grant a recommendation, including specifying the volume of carbon units eligible for corresponding adjustment, or refuse to issue a recommendation on the basis of national climate priorities.^[12]

Embedding ESG Safeguards as Regulatory Requirements

Another key development under MOF Reg 6/2026 is the formal embedding of environmental and social safeguards as part of the regulatory framework, rather than as purely market-driven or voluntary standards. This integration begins at the project design stage, particularly through the DRAM requirements. In addition to technical project parameters, the regulation requires project developers to submit detailed supporting information covering the following:^[13]

1. identification of the project proponent;
2. demonstration of additionality;
3. a community engagement plan across planning, implementation, monitoring, and evaluation stages;
4. a carbon benefit-sharing arrangement agreed with local communities;
5. identification and management plans for biodiversity impacts and reversal risks; and
6. plan and achievement of the Free Prior Informed Consent (Persetujuan Atas Dasar Informasi Awal Tanpa Paksaan – Padiatapa), which is defined as a process of disclosing all information relating to climate change mitigation actions in an open and complete manner to relevant stakeholders as the basis for obtaining their consent or rejection without coercion with respect to such climate mitigation actions.^[14]

Beyond the design stage, MOF Reg 6/2026 extends these safeguards into the implementation and operational phase. Project developers are expressly required to apply principles of environmental, social, and governance protection in conducting carbon trading activities. These include:^[15]

1. compliance with applicable laws and alignment with national forestry programs;
2. transparency and effective forest governance;
3. protection of the rights of indigenous peoples and local communities;
4. meaningful stakeholder participation;
5. consistency with natural forest conservation and biodiversity protection;
6. measures to address reversal risks; and
7. actions to mitigate leakage or displacement of emissions.

Project developers must submit periodic reports on the implementation of these safeguards to the MOF and establish and maintain a risk management system as part of the overall carbon project and trading activities, which system is also subject to periodic reporting.^[16]

Taken together, this framework reflects a shift from ESG being primarily driven by certification standards to becoming a regulatory baseline applicable across all forestry carbon projects, irrespective of certification pathway. In practical terms, this increases the compliance burden but also enhances regulatory certainty, particularly for investors seeking alignment between domestic legal requirements and international sustainability expectations.

Validation and Verification: Introduction of Individual Experts

MOF Reg 6/2026 maintains the requirement that validation and verification be conducted by independent accredited entities, which must meet specific institutional and accreditation criteria, including recognition at the national and/or international levels.

However, a notable development is the introduction of flexibility for certain project types. For projects undertaken by social forestry groups, customary law communities, and private forest holders, the regulation allows validation and verification to also be carried out by individual experts, provided that such experts are registered with internationally recognized accreditation bodies.^[17]

This marks a targeted deviation from the otherwise institutional-based approach, potentially lowering barriers to entry for community-based projects while still maintaining alignment with international standards.

Non-Tax State Revenue

MOF Reg 6/2026 retains the overall fiscal approach previously introduced under MOF Reg 7/2023, confirming that carbon activities in the forestry sector remain subject to Non-Tax State Revenue (Penerimaan Negara Non Pajak – "PNBP") in the form of forest utilization charges for carbon sequestration and/or storage activities.

However, a notable refinement is introduced in terms of the scope of transactions subject to PNBP. MOF Reg 6/2026 narrows the scope by explicitly providing that PNBP is derived from transactions of carbon trading through emission offsets only.^[18] The removal of references to emission trading indicates a more targeted approach, aligning the regulation specifically with the offset-based mechanism that forms the core of forestry sector carbon activities under this framework.

Jurisdictional Approach and Nesting Requirements

Finally, MOF Reg 6/2026 reinforces Indonesia's shift toward a jurisdictional approach to carbon trading, by expressly allowing the MOF and governors to undertake carbon trading through a Jurisdiction-Based Program (Program Berbasis Yurisdiksi), being a climate mitigation and carbon trading program implemented at the national and/or provincial level.

Under this model, mitigation activities and resulting carbon units may be developed at a national or sub-national level, including across areas that may already be subject to existing rights or permits, subject to alignment or agreement with the relevant rights holders.^[19]

Importantly, the regulation introduces a mandatory nesting requirement, defined as the alignment of emission reduction planning and implementation across national, provincial, and project levels to prevent double counting and overlapping claims over generated carbon units.^[20]

Transitional Provisions

MOF Reg 6/2026 provides a set of transitional measures to ensure continuity of ongoing carbon projects and regulatory implementation. Existing forestry carbon activities will continue to refer to the previous carbon roadmap under the MOF Decree No. SK.1027/MENLHK/PHL/KUM.1/9/2023 until a new roadmap is formally issued under the regulation, which is mandated to be issued within 1 (one) year from the issuance of MOF Reg 6/2026.^[21] In parallel, project registration (DRAM/DPP) will temporarily be conducted through the MOF's internal system until the SRUK is fully operational.^[22]

For ongoing projects, the regulation imposes a 6-month compliance window, requiring project proponents that are already in validation, implementation, verification, or pre-transaction stages or those holding carbon units to report their activities and align with the new framework.^[23]

The issuance of MOF Reg 6/2026 marks a meaningful step forward for Indonesia's forestry carbon market, translating the policy architecture of PR 110/2025 into a workable operational framework. That said, a number of provisions warrant close attention from market participants. Most notably, the MOF's discretion to assess compliance history before issuing recommendations, and its authority to limit or refuse corresponding adjustment based on NDC considerations, introduce a layer of regulatory gatekeeping that project developers and investors will need to factor into their project structuring and risk allocation. The rollout of SRUK and the forthcoming carbon roadmap, both of which remain pending, will be critical in determining whether the framework delivers the procedural certainty the regulation promises.

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1. Article 11 of MOF Reg 6/2026 ↩
2. Article 15 of MOF Reg 6/2026 ↩
3. Article 16 of MOF Reg 6/2026 ↩
4. Articles 20 – 24 of MOF Reg 6/2026 ↩
5. Article 6 (1) of MOF Reg 6/2026 ↩
6. Article 8 of MOF Reg 6/2026 ↩
7. Article 6 (2) of MOF Reg 6/2026 ↩
8. Article 7 of MOF Reg 6/2026 ↩
9. Article 9 of MOF Reg 6/2026 ↩
10. Article 25 of MOF Reg 6/2026 ↩
11. Article 25 of MOF Reg 6/2026 ↩
12. Article 26 of MOF Reg 6/2026 ↩
13. Article 12 of MOF Reg 6/2026 ↩
14. Article 1 (26) of MOF Reg 6/2026 ↩
15. Article 28 of MOF Reg 6/2026 ↩
16. Article 29 of MOF Reg 6/2026 ↩
17. Article 42 of MOF Reg 6/2026 ↩
18. Article 46 of MOF Reg 6/2026 ↩
19. Article 30 of MOF Reg 6/2026 ↩
20. Article 31 of MOF Reg 6/2026 ↩
21. Articles 59 and 63 of MOF Reg 6/2026 ↩
22. Article 60 of MOF Reg 6/2026 ↩
23. Article 61 of MOF Reg 6/2026 ↩

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Disclaimer:
This client update is the property of ARMA Law and intended for providing general information and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. ARMA Law has no intention to provide a specific legal advice with regard to this client update.

Go to

1. Background
2. Procedural and Compliance Requirements for Carbon Unit Issuance
3. Participation with Intermediation Requirements
4. Scope of Eligible Carbon Project Areas
5. Authorizations and Corresponding Adjustment
6. Embedding ESG Safeguards as Regulatory Requirements
7. Validation and Verification: Introduction of Individual Experts
8. Non-Tax State Revenue
9. Jurisdictional Approach and Nesting Requirements
10. Transitional Provisions

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