Rooting Carbon in the Fields: Minister of Agriculture Regulation No. 18 of 2026 on Carbon Trading through GHG Emission Offsets in the Agriculture Sector

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Authors

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Introduction

The Minister of Agriculture ("MOA") Regulation No. 18 of 2026 on Procedures for Carbon Trading through Greenhouse Gas ("GHG") Emission Offsets in the Agriculture Sector ("MOA Reg 18/2026") was issued on 6 October 2026 and promulgated on 12 October 2026. It takes effect three months after promulgation, which places its entry into force on 12 January 2027.

Presidential Regulation No. 110 of 2025 on the Implementation of Carbon Economic Value (Nilai Ekonomi Karbon – "NEK") Instruments and National GHG Emission Control ("PR 110/2025") sets the national architecture for carbon trading but leaves the procedural detail to each sector. MOA Reg 18/2026 was issued specifically to implement Article 64 of PR 110/2025.^[1]

This update should be read alongside our earlier update on PR 110/2025, as this MOA regulation follows the same architecture while adding sector-specific requirements, similar to the forestry sector regulation, Minister of Forestry Regulation No. 6 of 2026 ("MOF Reg 6/2026"), which we have summarized in our previous ARMA Update as well as the waste sector regulation, which we have summarized in our update here.

Scope and Eligible Mitigation Actions

MOA Reg 18/2026 specifically covers carbon trading through GHG Emission Offsets (project-based crediting mechanisms) only and does not regulate GHG emissions trading (cap-and-trade). Mitigation actions cover three subsectors: rice fields (persawahan), livestock (peternakan) and plantations (perkebunan).^[2] Article 16 then specifies where actions are carried out: paddy rice fields and horticultural cultivation land, livestock business units, and plantation land.^[3]

Two types of mitigation action qualify:^[4]

1. Emission reduction through low-emission technology, practices or farm management, such as water management in rice fields, low-emission varieties, balanced fertilisation, crop residue management, soil amendments and livestock waste management; and
2. Enhanced sequestration and/or carbon stock through soil carbon improvement, planting of perennial crops (tanaman tahunan), cover crops, rehabilitation of degraded agricultural land and conservation agriculture.

Who May Trade, and on What Conditions

Carbon trading is carried out by the party responsible for the Climate Change Mitigation Action, which may be a Business Actor (Pelaku Usaha), the Government, or a Farmer Institution (Kelembagaan Petani), each on different conditions.^[5]

	Business Actors	Government	Farmer Institutions
Who qualifies	Holders of an agriculture business license and/or agriculture business registration.[6]	The MOA and Regional Governments.[7]	Farmer institutions acting independently, or together with a partner/facilitator (mitra dan/atau pendamping).[8]
Entity requirements	Must hold a business identification number (Nomor Induk Berusaha – "NIB") and an agriculture KBLI.[9]	Must establish or appoint a public service agency (Badan Layanan Umum – "BLU"/Badan Layanan Umum Daerah – "BLUD") or other work unit.[10]	A Farmer Institution acting independently may be a cooperative or other business entity. Both the Farmer Institution and any partner must hold an NIB and an agriculture KBLI, and the partner must also meet criteria in the technical guidelines.[11]
Key conditions	Must cooperate with at least three surrounding Farmer Institutions through profit sharing (bagi hasil), having regard to the land area and/or business unit size that the Business Actor owns.[12]	The unit carries out mitigation on Ministry or Regional Government assets.[13]	A partner acts for and on behalf of the Farmer Institution and bears the financing under their cooperation agreement.[14]

Benefit-Sharing with Farmers

Every Business Actor, and every partner working with a Farmer Institution, must set the profit-sharing arrangement out in a cooperation agreement that reflects free, prior and informed consent ("FPIC" or persetujuan atas dasar informasi di awal tanpa paksaan – "Padiatapa"). At a minimum, the agreement must cover the obligations of both parties, the proportional profit-sharing percentage, and the term.^[15]

The percentage must be determined with reference to at least: (i) the cost of technology deployed; (ii) land area and/or business unit; (iii) GHG emission reduction achieved; and (iv) the number of carbon units generated. Further detail on the cooperation agreements, and on the criteria for partners, is left to technical guidelines to be issued by the Head of the Agency for Agricultural Assembly and Modernization within the Ministry of Agriculture (Kepala Badan Perakitan dan Modernisasi Pertanian – "Head of the Agency") within three months of promulgation.^[16]

Domestic Pathway: SPE-GRK Recommendation

Every application under MOA Reg 18/2026 runs through the Carbon Unit Registry System (Sistem Registri Unit Karbon – "SRUK"), the national registry governed by Minister of Environment/BPLH Regulation No. 10 of 2026 on the Carbon Unit Registry System ("MOE Reg 10/2026"), which MOA Reg 18/2026 cites as a legal basis. Recording of the design document, the recommendation or approval, and any Authorization request are all made through SRUK, and the recording and anti-double-counting rules in MOE Reg 10/2026, which we covered in our earlier update, apply alongside this regulation.

A Business Actor must first obtain a recommendation from the MOA for a GHG Emission Reduction Certificate (Sertifikat Pengurangan Emisi Gas Rumah Kaca – "SPE-GRK") before it may trade, by applying for recording of its Climate Change Mitigation Action Design Document (Dokumen Rancangan Aksi Mitigasi Perubahan Iklim – "DRAM") through SRUK.^[17]

The process runs as follows:

Stage		Key points	Time limit in calendar days
1	DRAM submission	Through SRUK. The DRAM covers the mitigation plan, methodology and standards applied, environmental and sustainable development impact analysis, role of public consultation, and supporting data: land legality, cooperation documents, baseline GHG data, the FPIC plan and achievement, and a commitment statement on environmental, social and governance ("ESG") safeguards.[18]	None stated
2	Technical review	By a technical team of Ministry echelon I units, established by Ministerial Decree and run by the Head of the Agency.[19] It reviews scope, methodology, certification scheme, legality of the responsible entity, initial carbon unit utilisation needs, completeness of data, and ESG safeguards.[20]	30 days from submission[21]
3	Outcome	Notification letter of acceptance and recognition of recording; or return for correction, with rejection if no correction is submitted.[22]	20 days to correct; 10 days for re-review[23]
4	Validation	By an independent validation body that is a legal entity, has validators competent in agriculture, is accredited by the National Accreditation Committee (Komite Akreditasi Nasional – "KAN") and is registered in SRUK.[24]	None stated
5	Implementation	Mitigation action carried out, followed by an implementation report.[25]	None stated
6	Verification	By an independent verification body meeting the same criteria as validation bodies.[26]	None stated
7	Application and review	Application through SRUK, reviewed against completion of the preceding stages.[27]	30 days[28]
8	Outcome	Recommendation issued through SRUK; or return for correction (20 days to correct, 10 days for re-review); or rejection.[29]	As above

An application may be rejected where the same emission reduction is used or claimed by more than one party, scheme or mitigation target, or where the Business Actor is subject to legal sanctions for violations related to the mitigation action.^[30] The Business Actor remains the party responsible for carbon trading even where it cooperates with other parties in implementation.^[31]

The same procedure applies to the Ministry and Regional Governments (through their designated units) and to Farmer Institutions, whether acting independently or with a partner.^[32]

International Standard Pathway: Non-SPE-GRK Approval

For units issued under international standards (non-SPE-GRK), the responsible party must first obtain approval from the MOA, by applying for recording of its Project Design Document (Dokumen Perencanaan Proyek – "DPP" or "PDD") through SRUK.^[33] The procedure mirrors the SPE-GRK pathway, except that validation and verification bodies need only be accredited by an internationally recognised accreditation body as the regulation does not expressly require KAN accreditation.^[34]

Authorization for International Use

Units that have received an SPE-GRK recommendation or non-SPE-GRK approval may then be granted Authorization (Otorisasi) by the Minister of Environment, on the MOA's recommendation.^[35] MOA Reg 18/2026 defines Authorization as consent to use carbon units to meet another country's nationally determined contribution ("NDC"), international mitigation obligations, "and other interests" (dan kepentingan lainnya).

The application is made through SRUK, before or after the carbon unit is issued, and the MOA has 20 days to review it, counted from issuance of the unit or from receipt of the application respectively.^[36] The review covers the volume of units to be traded, Indonesia's NDC needs and ESG safeguards compliance, and the MOA may recommend Authorization in full or in part, or reject with reasons.^[37]

Multi-Sector Projects, State Revenue, and Monitoring

Carbon trading that involves more than one sector, such as agroforestry, biochar and biogas, is carried out in coordination with the steering committee for NEK instruments and the relevant sector ministries. The regulation provides for this coordination but does not set out how it works or which ministry leads.^[38] Levies on carbon trading follow the non-tax state revenue (Penerimaan Negara Bukan Pajak – "PNBP") regulations, and MOA Reg 18/2026 does not itself set rates or a PNBP mechanism.^[39]

The MOA monitors validation, implementation, verification and reporting by responsible parties, and provides guidance through dissemination, training and consultation. Responsible parties report on carbon trading implementation, public participation, implementation of benefit-sharing agreements and follow-up on community complaints, to the Minister with a copy to the Head of the Agency. The MOA evaluates at least once a year, including community involvement and benefit-sharing.^[40]

Transitional Provisions

Projects already under way must report to the MOA within six months of the regulation taking effect, which should be around July 2027:^[41]

1. responsible parties already at the stage of validation, implementation, verification or reporting must report their activities, and may then apply for an SPE-GRK recommendation or non-SPE-GRK approval under MOA Reg 18/2026;
2. responsible parties already holding carbon units that have not yet been transacted must report to the MOA; and
3. responsible parties holding units with crediting periods starting from 2021 that have already been transacted must report those units.

Units held but not yet authorised may be recognised as achievements toward the agriculture sector's NDC target, and units with crediting periods from 2021 that have already been transacted are recognised as such achievements.^[42]

ARMA Commentaries

• Farmer participation shapes who can lead a project: Business Actors are required to cooperate with at least three surrounding Farmer Institutions, sized against their own land or business unit, which suits agricultural enterprises with their own land or livestock operations. A developer that does not qualify as a Business Actor under Article 4 may participate as a partner or facilitator of a Farmer Institution under Article 6, acting on its behalf and bearing the financing. On the text, the Farmer Institution then applies for the SPE-GRK recommendation. Every party in the chain needs an NIB and an agriculture KBLI, so in practice a foreign proponent may participate through an Indonesian partner or vehicle, subject to the applicable eligibility requirements.

• Validation and verification capacity: Validation and verification bodies must be legal entities within the agriculture-competent validators and verifiers, accredited by KAN and registered in SRUK for the domestic pathway, or internationally accredited bodies on the international pathway. MOA Reg 18/2026 also does not allow individual experts to validate or verify. MOF Reg 6/2026, by contrast, allows individual experts to do so for holders of social forestry approvals, customary forest status and private forest registration, provided they are registered with an internationally recognised accreditation body for units issued under an international registry.^[43]

• Legacy credits and double claiming: Transacted units with a crediting period from 2021 are recognised toward the agriculture NDC, and the regulation does not say whether Authorization or a corresponding adjustment applies to them. We expect the six-month reporting to be the basis on which the MOA tracks these units and decides how, or whether, they are later Authorized and adjusted, but until that is confirmed buyers face a potential double-claiming risk. Holders of legacy credits should report within the window, and buyers should review their contracts for claim and representation language.

• Boundaries with forestry, and methodology gaps: Agroforestry and other multi-sector activities are expressly recognised and routed through coordination between the NEK steering committee and the relevant sector ministries. However, it does not set out in particular whether a project receives a single or separate approval under such coordination. Agroforestry developers should therefore engage both ministries and confirm the approval route early. On methodology, the regulation lists no recognised methodologies and only requires "conformity of methodology" at DRAM review. We expect the technical guidelines to provide further clarification on the assessment of existing methodologies.

• Multi-sector projects beyond agroforestry: Biochar and biogas are recognised as multi-sector activities, and the relevant counterpart ministry will depend on the project design. Biogas from livestock manure that generates power or displaces fossil fuel may also be relevant to the energy sector's carbon rules which are currently under transition from the Minister of Energy and Mineral Resources Regulation No 16 of 2022, while biochar and organic waste processing may relate to the waste sector regulation. Plantation projects within a forest area (kawasan hutan) or peat may also involve forestry and peat ecosystem considerations, and coastal rice field or aquaculture projects in coastal areas may relate to the blue carbon which is also under transition from the Minister of Marine and Fisheries Regulation No. 1 of 2025. As the coordination mechanism with the NEK steering committee is expected to be detailed further, developers would benefit from mapping each component of the activity to its sector at the design stage and engaging early with the relevant ministries.

• Open points and what we expect: MOA Reg 18/2026 sets the framework and leaves the detail to follow-on rules. The technical guidelines, due on 12 January 2027, will fix the partner criteria and the content of cooperation agreements, and so how farmer partnerships are structured. Several matters remain open, such as: treatment of projects spanning land of different legal status beyond the land legality requirement; the applicable PNBP rates, which follow the general PNBP regulations; and as there is no sanctions chapter, whether non-compliance will be handled only through rejection or return of applications or also through sanctions under other applicable regulations.

1. "Provisions on the procedures for Carbon Trading through GHG Emission Offsets as referred to in Article 61 letter b are regulated in the relevant Ministerial Regulation." ↩
2. Article 2(3) of MOA Reg 18/2026. ↩
3. Article 16(1) of MOA Reg 18/2026. ↩
4. Article 16(3)-(5) of MOA Reg 18/2026. ↩
5. Article 3(1) and (2) of MOA Reg 18/2026. ↩
6. Article 4(1) of MOA Reg 18/2026. ↩
7. Article 3(3) and Article 5(1) of MOA Reg 18/2026. ↩
8. Article 6(1) of MOA Reg 18/2026. ↩
9. Article 4(2) of MOA Reg 18/2026. ↩
10. Article 5(1) of MOA Reg 18/2026. ↩
11. Article 6(2), (4), and (5) of MOA Reg 18/2026. ↩
12. Article 4(3)-(4) of MOA Reg 18/2026. ↩
13. Article 5(2) of MOA Reg 18/2026. ↩
14. Article 6(3) of MOA Reg 18/2026. ↩
15. Article 4(5), (6) and Article 6(6), (7) of MOA Reg 18/2026. ↩
16. Article 7 and Article 45 of MOA Reg 18/2026. ↩
17. Article 8(1) and (2) of MOA Reg 18/2026. ↩
18. Article 9(2)-(3) of MOA Reg 18/2026. ↩
19. Article 9(4)-(7) of MOA Reg 18/2026. ↩
20. Article 10(1)-(2) of MOA Reg 18/2026. ↩
21. Article 10(3) of MOA Reg 18/2026. ↩
22. Articles 11-13 of MOA Reg 18/2026. ↩
23. Articles 11-13 of MOA Reg 18/2026. ↩
24. Articles 14-15 of MOA Reg 18/2026. ↩
25. Article 16(1), (2) and (6) of MOA Reg 18/2026. ↩
26. Articles 17-18 of MOA Reg 18/2026. ↩
27. Articles 19-21 of MOA Reg 18/2026. ↩
28. Articles 19-21 of MOA Reg 18/2026. ↩
29. Articles 22-23 of MOA Reg 18/2026. ↩
30. Articles 22-23 of MOA Reg 18/2026. ↩
31. Article 24 of MOA Reg 18/2026. ↩
32. Articles 25-28 of MOA Reg 18/2026. ↩
33. Articles 29-31 of MOA Reg 18/2026. ↩
34. Articles 29-31 of MOA Reg 18/2026. ↩
35. Article 32 of MOA Reg 18/2026. ↩
36. Articles 32 and 33(4)-(5) of MOA Reg 18/2026. ↩
37. Articles 33(2)-(3) and 34-35 of MOA Reg 18/2026. ↩
38. Articles 36-37 of MOA Reg 18/2026. ↩
39. Article 38 of MOA Reg 18/2026. ↩
40. Articles 39-42 of MOA Reg 18/2026. ↩
41. Articles 43-44 of MOA Reg 18/2026. ↩
42. Articles 43-44 of MOA Reg 18/2026. ↩
43. Article 43 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. Introduction
2. Scope and Eligible Mitigation Actions
3. Who May Trade, and on What Conditions
4. Benefit-Sharing with Farmers
5. Domestic Pathway: SPE-GRK Recommendation
6. International Standard Pathway: Non-SPE-GRK Approval
7. Authorization for International Use
8. Multi-Sector Projects, State Revenue, and Monitoring
9. Transitional Provisions
10. ARMA Commentaries

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