Ecobiz.asia – Indonesia has established a new framework for carbon trading in the waste sector, covering industrial solid and wastewater as well as domestic waste, under a regulation signed by Environment Minister and Head of the Environmental Control Agency (BPLH) Moh Jumhur Hidayat.
Ministerial Regulation No. 11/2026 on Carbon Trading Procedures for the Waste Sector was signed in Jakarta on Aug. 12, 2026. The regulation implements Presidential Regulation No. 110/2025 on the implementation of economic instruments for greenhouse gas (GHG) emissions and national GHG control.
The regulation provides a framework for domestic and international carbon trading in the waste sector, linking carbon transactions and the utilization of carbon units to the national Carbon Unit Registry System (SRUK).
For the domestic market, carbon trading can take the form of GHG emissions trading and GHG emissions offsets. Transactions can be conducted through the carbon exchange or through direct trading.
Under the emissions trading mechanism, the government will determine regulated installations, GHG emission caps, emission allowances, the portion of emissions that can be compensated through offsets and mechanisms for trading emission allowances.
The designation of regulated installations will consider factors including business type, emission levels, contribution to mitigation targets, availability of emissions data and readiness to implement measurement, reporting and verification (MRV) systems.
Companies will be able to trade emission allowances by purchasing allowances from other installations. They may also undertake their own mitigation activities or purchase GHG emission offsets, with implementation and transactions recorded through the SRUK.
The regulation also allows local governments, private companies and management units to act as responsible entities for climate-change mitigation activities in the waste sector.
Local governments must have a legal basis for implementing mitigation activities and may cooperate with businesses or management units. Businesses, meanwhile, must have an obligation to implement mitigation activities, valid business licenses and the capacity to manage mitigation-related assets, technologies or facilities.
For international carbon trading, the regulation distinguishes between transactions requiring government authorization and corresponding adjustments and those that do not.
Transactions requiring authorization include GHG emissions trading linked to international systems, offsets under Article 6.2 and Article 6.4 of the Paris Agreement, and voluntary carbon offsets used to meet other international obligations.
Under Article 6.2, the transfer of Internationally Transferred Mitigation Outcomes (ITMOs) can only take place after authorization from the minister/head of BPLH and must be accompanied by a corresponding adjustment.
Transactions under Article 6.4 will follow the carbon-unit utilization mechanism established under the Paris Agreement.
Carbon offsets that are not used to meet Indonesia’s nationally determined contribution (NDC) or other international obligations do not require authorization or a corresponding adjustment under the regulation. They must, however, still go through a process involving approval by the minister/head of BPLH, registration in the SRUK, trading, recording of carbon-unit utilization and reporting.
The regulation also requires the government to develop a carbon trading roadmap for the waste sector. The roadmap will at least cover the waste sector’s NDC, GHG emissions profile, emission-reduction targets, carbon allocation and the scope of mitigation activities.
The roadmap will serve as the basis for implementing carbon trading in the waste sector, providing a framework that connects Indonesia’s domestic carbon market with international transactions, carbon offsets, the SRUK and the Paris Agreement’s Article 6 mechanisms. ***
