Indonesia’s New Carbon Trading Framework for the Waste Sector: An Overview of Minister of Environment/BPLH Regulation No. 11 of 2026

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Authors

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Minister of Environment ("MOE")/Environmental Control Agency (BPLH) Regulation No. 11 of 2026 concerning Procedures for Carbon Trading in the Waste Sector ("MOE Reg 11/2026") establishes a regulatory framework for the implementation of carbon trading in Indonesia's waste sector following the establishment of the new carbon governance regime marked by the issuance of the Presidential Regulation No. 110 of 2025 ("PR 110/2025"), which we have broken down in our previous ARMA Update.

The regulation sets out, among others, the mechanisms and procedures for carbon trading, the participation of relevant entities, and the administration and implementation of carbon trading activities in the waste sector. This ARMA Update provides an overview of the key provisions and compliance considerations under Regulation No. 11/2026.

Carbon Trading for the Waste Sector

Carbon trading in the waste sector covers the following subsectors:[1]

Solid Waste	Liquid Waste	Municipal Waste
industrial solid waste	industrial wastewater and domestic wastewater	domestic solid waste

Carbon Trading in the waste sector may be conducted through the Carbon Exchange and/or direct trading. Transactions through the Carbon Exchange are recorded through the relevant Carbon Exchange operator and integrated with the Carbon Unit Registry System (Sistem Registri Unit Karbon — "SRUK"), while direct trading may be conducted through the relevant Carbon Unit issuance or certification platform, with the utilization and transaction of the relevant Carbon Units likewise recorded through the SRUK.[2]

Carbon Trading Roadmap

For the implementation of carbon trading in the waste sector, the MOE is responsible for preparing and establishing a Carbon Trading Roadmap for the waste sector.[3] The key points of the Carbon Trading Roadmap for the waste sector are as follows:

Preparation Stages	Considerations	Output
The preparation of the Carbon Trading Roadmap involves the following stages:[4] preparation and determination of the greenhouse gas ("GHG") emissions baseline; preparation of climate change mitigation targets; provision of carbon reserves; preparation of carbon allocations; and determination of the sectoral scope of climate change mitigation actions.	In preparing the Carbon Trading Roadmap, the MOE takes into account, among others, the following aspects:[5] the plans and strategies for achieving the Nationally Determined Contribution ("NDC") target in the waste sector; the objectives and strategies for carbon trading; the implementation period for carbon trading; the compliance period for performance measurement; the mechanisms for determining and establishing the GHG emissions baseline, as well as the GHG emission reduction targets to be achieved by the persons responsible for businesses and/or activities; and harmonization with the implementation mechanisms of other Economic Value of Carbon (Nilai Ekonomi Karbon — "NEK") instruments.	The Carbon Trading Roadmap is set out in a document containing at least the following information:[6] the NDC for the waste sector; carbon trading for the waste sector; the GHG emissions profile of the waste sector; the determination of GHG emission reduction targets; the determination of carbon allocations; and the scope of climate change mitigation actions in the waste sector.

The Carbon Trading Roadmap is established by way of a decision of the MOE and serves as the basis for the implementation of carbon trading in the waste sector.[7]

Parties in Carbon Trading for the Waste Sector

Carbon Trading in the waste sector may be carried out by a Person Responsible for Climate Change Mitigation Actions (Penanggung Jawab Aksi Mitigasi Perubahan Iklim), namely the person responsible for the relevant business and/or activities, which may include:[8]

Party Type	Description
Regional Governments	have a legal basis for implementing climate change mitigation actions and have entered into a cooperation agreement with a business entity having the required legal status under the applicable laws and regulations and/or a management unit
Private Parties	are obligated to implement climate change mitigation actions, have the required legal status in accordance with the applicable laws and regulations, and have the capacity to manage assets, technology, or facilities for climate change mitigation
Management Units (Unit Pengelola)	may consist of an individual or group that implements climate change mitigation actions and has the required institutional status in accordance with the applicable laws and regulations

Where a private business entity does not have the capacity to manage assets, technology, or facilities for climate change mitigation, it may cooperate with another business entity that has the required legal status and the capacity to manage climate change mitigation assets, technology, or facilities owned by another party. Further, a Management Unit may also cooperate with an individual or group acting as an aggregator.[9]

Thus, these provisions provide flexibility in structuring participation in waste-sector Carbon Trading by allowing the required capacity to be met through cooperation arrangements and by expressly recognizing the role of aggregators in supporting Management Units.

Domestic Carbon Trading

Domestic Carbon Trading consists of:

a. GHG Emissions Trading[10]

implemented through:[11]

1. the preparation and designation of Regulated Installations (Instalasi yang Diatur), which are installations that are required to participate in the GHG Emissions Trading;
2. the preparation and determination of the GHG emissions cap based on carbon allocation;
3. the determination of GHG emission allowances;
4. the determination of the portion of the GHG emissions cap that may be compensated through GHG emissions offsets; and
5. the trading of GHG emission allowances.

GHG emission allowances may be traded by purchasing allowances from other Regulated Installations. Alternatively, the relevant business and/or activity may implement Climate Change Mitigation Actions and/or purchase GHG Emissions Offsets. Any remaining GHG Emission Allowances may be banked for up to 2 (two) years following the relevant compliance year, after which they may no longer be traded. Reports on such activities are subject to verification by an independent validation and verification body and are submitted through the SRUK.[12]

b. GHG Emissions Offset[13]

which may be carried out by a person responsible for a business and/or activity that holds Carbon Units and is not designated as a Regulated Installation and is implemented through the following stages:[14]

1. submission of the Climate Change Mitigation Action Design Document (Dokumen Rancangan Aksi Mitigasi Perubahan Iklim — "DRAM") or Project Planning Document (Dokumen Perencanaan Proyek — "DPP");
2. validation of the DRAM or DPP;
3. implementation of Climate Change Mitigation Actions;
4. verification of the achievement of Climate Change Mitigation Actions; and
5. submission of the verification report on the achievement of Climate Change Mitigation Actions.

Following the verification process and review by the MOE, the relevant person responsible for the business and/or activity may obtain: (i) an approval for the issuance of non-SPE-GRK under an international standard; or (ii) a recommendation for the issuance of SPE-GRK under the national framework. The relevant non-SPE-GRK is subsequently issued by the international standard, while SPE-GRK is issued by the MOE through the SRUK.[15]

MOE Reg 11/2026 further regulates the implementation of the existing Carbon Trading framework under PR 110/2025 specifically for the waste sector, including the application of GHG Emissions Trading to Regulated Installations and GHG Emissions Offsets to eligible non-regulated participants. It also sets out sector-specific requirements on the use and banking of GHG Emission Allowances, as well as verification and reporting through the SRUK.

International Carbon Trading

International Carbon Trading may be carried out by a person responsible for a business and/or activity that has obtained Carbon Units.[16] MOE Reg 11/2026 identifies 2 (two) types of International Carbon Trading:

Trading Type	Description & Requirements
Carbon Trading Requiring Authorization and Corresponding Adjustment	This type of carbon trading includes:[17] internationally linked GHG Emissions Trading; GHG Emissions Offset trading that meets the requirements under Article 6.2 and Article 6.4 of the Paris Agreement; and voluntary GHG emissions offset trading to fulfil other international obligations. This trading is implemented through the determination of the relevant type of Carbon Trading, issuance of Authorization and implementation of the Corresponding Adjustment through recording in the SRUK, implementation of the Carbon Trading transaction, adjustment of the relevant records in the SRUK, and reporting.[18] In particular, internationally linked GHG Emissions Trading requires the approval of the MOE, while transfers under Article 6 of the Paris Agreement and voluntary transactions used to fulfil another country's NDC or other international mitigation obligations are subject to Authorization and Corresponding Adjustment.[19]
Carbon Trading Not Requiring Authorization and Corresponding Adjustment	This applies to GHG Emissions Offset trading that is not used for the fulfilment of an NDC and/or other international obligations. Such Carbon Trading remains subject to approval by the MOE through recording in the SRUK, followed by the implementation of the Carbon Trading transaction, recording of the utilization of the relevant Carbon Units, and reporting.[20]

MOE Reg 11/2026 further operationalizes the international Carbon Trading framework under PR 110/2025 for the waste sector by specifying the types of transactions that require Authorization and Corresponding Adjustment and the applicable procedures for both authorized and non-authorized transactions. Importantly, international transactions that do not require Authorization and Corresponding Adjustment remain subject to approval, recording, and reporting through the SRUK.

Registration and Reporting

The MOE records the Carbon Units arising from Carbon Trading in the SRUK, comprising GHG Emission Allowances, SPE-GRK, and non-SPE-GRK. Such records are documented in an annual GHG Emissions Trading report and an annual GHG Emissions Offset report. The reports capture, among others, transfers of the relevant Carbon Units, climate change resources generated from Carbon Trading, and the total GHG emissions reductions achieved. The annual reports are subsequently recorded in the National Registry System for Climate Change Control (Sistem Registri Nasional Pengendalian Perubahan Iklim — "SRN PPI") through the SRUK.[21]

Monitoring and Evaluation

The MOE shall conduct monitoring and evaluation based on the relevant reports, as mentioned in the Registration and Reporting section. The monitoring and evaluation shall cover:[22]

1. the total contribution of GHG Emission Trading to the achievement of the NDC targets;
2. the total contribution of GHG Emission Offset to the achievement of the NDC targets;
3. resources generated from Carbon Trading;
4. the actual utilization of low-carbon technology in Carbon Trading businesses and/or activities;
5. the calculation of projected carbon potential from Carbon Trading businesses and/or activities; and
6. stakeholder participation and the implementation of benefit-sharing agreements.

The results of the monitoring and evaluation shall be documented in a report, which shall serve as the basis for:

1. the formulation of national Climate Change control policies;
2. the preparation of national Climate Change communications documents;
3. the preparation of the Biennial Transparency Report (dokumen pemutakhiran data 2 (dua) tahunan Perubahan Iklim); and/or
4. the implementation of guidance and supervision.

Transitional Provisions

The regulation provides transitional arrangements for GHG Emissions Offset activities that were registered to obtain Carbon Units in the form of SPE-GRK or non-SPE-GRK prior to the entry into force of MOE Reg 11/2026. Such activities are not required to obtain a notification from the MOE on the receipt and recognition of the registration of the DRAM or DPP. However, the issuance of the relevant Carbon Units remains subject to obtaining a recommendation or approval for issuance from the MOE.

Where data interoperability with an international standard cannot yet be implemented, the MOE shall independently record the relevant information in the SRUK no later than 2 (two) business days after, as applicable: (i) the verification report on the achievement of Climate Change Mitigation Actions is submitted through the international scheme; (ii) the Carbon Unit certificate is issued; or (iii) the Carbon Unit transaction takes place.[23]

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Footnotes

[1] Article 2 (2) of the MOE Reg 11/2026. ↩

[2] Article 2(3)-(5) of the MOE Reg 11/2026. ↩

[3] Article 3 of the MOE Reg 11/2026. ↩

[4] Article 4 (1) of the MOE Reg 11/2026. ↩

[5] Article 4 (2) of the MOE Reg 11/2026. ↩

[6] Article 9 (1) of the MOE Reg 11/2026. ↩

[7] Article 9 (2) and (3) of the MOE Reg 11/2026. ↩

[8] Article 10 of the MOE Reg 11/2026. ↩

[9] Article 10 (6)-(8) of the MOE Reg 11/2026. ↩

[10] Article 1 (25) of the MOE Reg 11/2026 defines GHG Emissions Trading as a mechanism for transactions involving GHG Emission Allowances among business actors. ↩

[11] Article 13 of the MOE Reg 11/2026. ↩

[12] Articles 19–21 of the MOE Reg 11/2026. ↩

[13] Article 1 (23) of the MOE Reg 11/2026 defines GHG Emissions Offset as a reduction in GHG emissions achieved through a business and/or activity to compensate for emissions generated elsewhere. ↩

[14] Article 22 of the MOE Reg 11/2026. ↩

[15] Articles 33 and 34 of the MOE Reg 11/2026. ↩

[16] Article 38 of the MOE Reg 11/2026. ↩

[17] Article 39 (4) of the MOE Reg 11/2026. ↩

[18] Article 39 of the MOE Reg 11/2026. ↩

[19] Articles 40–43 of the MOE Reg 11/2026. ↩

[20] Article 45 of the MOE Reg 11/2026. ↩

[21] Article 46 of the MOE Reg 11/2026. ↩

[22] Article 47 of the MOE Reg 11/2026. ↩

[23] Article 51 of the MOE Reg 11/2026. ↩

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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.

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1. Carbon Trading for the Waste Sector
2. Carbon Trading Roadmap
3. Parties in Carbon Trading for the Waste Sector
4. Domestic Carbon Trading
5. International Carbon Trading
6. Registration and Reporting
7. Transitional Provisions

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