Agricultural Carbon Trading Officially Regulated under Minister of Agriculture Regulation No. 18 of 2026

Introduction

On 6 October 2026, the Minister of Agriculture of the Republic of Indonesia enacted Regulation of the Minister of Agriculture of the Republic of Indonesia Number 18 of 2026 on Procedures for Carbon Trading through Greenhouse Gas Emission Offsetting in the Agricultural Sector (“Minister of Agriculture Regulation No. 18/2026”), which took effect on 12 October 2026. This Regulation governs the mechanism for Carbon Trading through Greenhouse Gas Emission Offsetting in the agricultural sector, covering implementation stages, document requirements, institutional involvement, and application and approval procedures through the Carbon Unit Registry System (Sistem Registri Unit Karbon or “SRUK”).

The enactment of Minister of Agriculture Regulation No. 18/2026 follows up on the provisions of Article 64 of Presidential Regulation Number 110 of 2025 on the Implementation of Carbon Economic Value Instruments and National Greenhouse Gas Emission Control, and refers to Regulation of the Minister of Environment/Head of the Environmental Control Agency Number 10 of 2026 on the Carbon Unit Registry System. This Regulation aims to provide guidelines for implementing Carbon Trading through Greenhouse Gas Emission Offsetting in the agricultural sector to support the achievement of the agricultural sector’s Nationally Determined Contribution (“NDC”) targets and national greenhouse gas emission control, while ensuring the protection of communities surrounding carbon project sites.

Key Provisions

Sectoral Scope and Parties to Carbon Trading

Article 2 of Regulation of the Minister of Agriculture of the Republic of Indonesia Number 18 of 2026 stipulates that the scope of this Regulation covers procedures for Carbon Trading through Greenhouse Gas (“GHG”) Emission Offsetting in the agricultural sector. GHG Emission Offsetting is carried out through Climate Change Mitigation Actions in the agricultural sector implemented in three subsectors, namely rice cultivation, livestock, and plantations.

Article 3 paragraphs (1) and (2) stipulate that carbon trading may only be conducted by persons responsible for Climate Change Mitigation Actions, comprising:

1. Businesses;

2. the government (ministries and regional governments); and

3. Farmer Institutions.

Cooperation and Benefit-Sharing Obligations for Business Operators with Farmer Institutions

Article 4 of Regulation of the Minister of Agriculture of the Republic of Indonesia Number 18 of 2026 stipulates that Businesses in the agricultural sector include holders of business licences and/or holders of agricultural business registration certificates or registrations in accordance with the applicable laws and regulations. Such Businesses must possess a Business Identification Number (Nomor Induk Berusaha or “NIB”) and an Indonesian Standard Industrial Classification (Klasifikasi Baku Lapangan Usaha Indonesia or “KBLI”) applicable to the agricultural sector.

In conducting Carbon Trading through Greenhouse Gas (“GHG”) Emission Offsetting, Businesses are required to establish cooperation with Farmer Institutions through a benefit-sharing mechanism involving at least three (3) Farmer Institutions located in the vicinity of the activity site. The parties to be involved shall be determined by taking into consideration the land area and/or the size of the business unit or activity owned or operated by the Businesses.

Such cooperation must be formalised in an agreement based on free, prior, and informed consent. Pursuant to Article 4 paragraph (6), the cooperation agreement must contain, at a minimum:

1. the obligations of each party;

2. the proportional allocation of benefits; and

3. the term of the agreement.

Furthermore, Article 4 paragraph (7) stipulates that the determination of the proportional benefit-sharing allocation must be based, at a minimum, on:

1. the amount of expenditure or the cost of the technology used;

2. the land area and/or the business unit or activity;

3. the amount of GHG emission reductions; and

4. the number of Carbon Units generated.

Government and Farmer Institutions

Article 5 stipulates that any Ministry or Regional Government intending to conduct Carbon Trading through Greenhouse Gas (“GHG”) Emission Offsetting must establish and/or designate a public service agency (badan layanan umum or “BLU”), a regional public service agency (badan layanan umum daerah or “BLUD”), or another work unit to implement Climate Change Mitigation Actions on assets owned by the Ministry or Regional Government.

Pursuant to Article 6, Farmer Institutions may conduct Carbon Trading through GHG Emission Offsetting in the agricultural sector independently, in the form of a cooperative or another business entity, or in cooperation with partners and/or facilitators through a benefit-sharing mechanism. Under such cooperation, the partners and/or facilitators act for and on behalf of the Farmer Institutions and bear the financing costs in accordance with the cooperation agreement. Farmer Institutions and their partners and/or facilitators must possess a Business Identification Number (“NIB”) and an Indonesian Standard Industrial Classification (“KBLI”) applicable to the agricultural sector, while partners and/or facilitators must also satisfy the criteria set out in the technical guidelines.

The cooperation agreement must be based on free, prior, and informed consent and must contain, at a minimum:

1. the obligations of each party;

2. the proportional allocation of benefits; and

3. the term of the agreement.

The determination of the benefit-sharing proportions must take into account, at a minimum, the cost of the technology used by the partners and/or facilitators, the land area and/or the business unit or activity owned by the Farmer Institutions, the amount of GHG emission reductions, and the number of Carbon Units generated. Pursuant to Article 7, further provisions on cooperation agreements shall be stipulated in the technical guidelines.

Procedure for Obtaining an SPE GHG Recommendation for Businesses

Article 8 of Regulation of the Minister of Agriculture of the Republic of Indonesia Number 18 of 2026 stipulates that Businesses must first obtain a recommendation from the Minister for a Greenhouse Gas Emission Reduction Certificate (Sertifikat Pengurangan Emisi Gas Rumah Kaca or “SPE GHG”) in the agricultural sector before conducting Carbon Trading through Greenhouse Gas (“GHG”) Emission Offsetting. Applications must be submitted through the Carbon Unit Registry System (“SRUK”) in accordance with the following stages:

Procedures for the Government and Farmer Institutions

Article 25 requires BLUs/BLUDs or other work units belonging to a Ministry or Regional Government to obtain an SPE GHG recommendation from the Minister by submitting a DRAM. Article 27 imposes the same obligation on Farmer Institutions, whether operating independently or in cooperation with partners/facilitators. Articles 26 and 28 provide that the stages of DRAM assessment, validation, verification, and issuance of recommendations apply mutatis mutandis—that is, in the same manner, with the necessary adjustments—to both groups.

Non-SPE GHG Pathway (International Standards)

Articles 29 through 31 of Regulation of the Minister of Agriculture of the Republic of Indonesia Number 18 of 2026 govern the mechanism for obtaining non-SPE GHG approval for persons responsible for mitigation actions using schemes other than SPE GHG. The person responsible for the mitigation action must obtain the Minister’s approval by submitting an application to register a Project Planning Document (Dokumen Perencanaan Proyek or “DPP”) in the SRUK. The process follows, mutatis mutandis, the stages set out in Articles 9 through 23, except for the requirements applicable to validation and verification bodies. Pursuant to Article 31, such bodies must be legal entities, have validators and verifiers competent in the agricultural sector, and be accredited by an internationally recognised accreditation body rather than the National Accreditation Committee (KAN).

Authorisation Where Carbon Is Used for the Benefit of Another Country or for International Purposes

Pursuant to Articles 32 through 35 of Regulation of the Minister of Agriculture of the Republic of Indonesia Number 18 of 2026, Carbon Units that have obtained an SPE GHG recommendation or non-SPE GHG approval may obtain Authorisation from the minister responsible for government affairs in the environmental sector, based on a recommendation from the Minister of Agriculture. Applications are submitted by the person responsible through the SRUK, either before or after the Carbon Units are issued. The review must be completed within a maximum of 20 days, taking into consideration the number of Carbon Units to be traded, the requirements for achieving the Nationally Determined Contribution (NDC) targets, and the application of social and environmental safeguards and good governance principles. The Minister of Agriculture may recommend Authorisation for all or part of the Carbon Units covered by the application, or reject the application with reasons provided.

Cross-Sectoral Carbon Trading and Levies

Article 36 governs carbon trading involving multiple sectors, for example through agroforestry, biochar, and biogas management. Under Article 37, such activities are coordinated with the steering committee responsible for implementing Carbon Economic Value (“NEK”) instruments and controlling GHG emissions, together with the ministries/agencies responsible for the relevant sectors. Article 38 stipulates that levies imposed on carbon trading activities are governed by the laws and regulations on Non-Tax State Revenue (Penerimaan Negara Bukan Pajak or “PNBP”). This Regulation does not specify the amount or rate of such levies.

Monitoring, Guidance, Reporting, and Evaluation

Articles 39 through 42 govern the monitoring, guidance, reporting, and evaluation of Carbon Trading through GHG Emission Offsetting in the agricultural sector. The Minister monitors compliance with validation requirements, implementation of mitigation actions in accordance with the DRAM/DPP, verification, and verification reports as a basis for policy improvements and guidance. Guidance is coordinated by the Head of the Agency through outreach, training, technical guidance, consultation, and assistance. In addition, persons responsible for mitigation actions must report to the Minister, with a copy to the Head of the Agency, on the implementation of carbon trading, community participation, implementation of benefit-sharing cooperation agreements, and follow-up actions concerning public complaints. These reports form the basis for evaluations conducted at least once a year, covering facilities and infrastructure, methodologies, carbon potential calculations, compliance with document and other requirements, community involvement, and benefit-sharing arrangements.

Transitional Provisions

Article 43 stipulates that persons responsible who have already reached the stage of validating a Climate Change Mitigation Action Design Document (“DRAM”) and/or a Project Planning Document (“DPP”), implementing Climate Change Mitigation Actions, verifying mitigation action achievements, or reporting such achievements must report their activities no later than six (6) months after this Ministerial Regulation enters into force. After submitting the report, the person responsible for the Climate Change Mitigation Action may apply to the Minister responsible for government affairs in the agricultural sector for a recommendation for a Greenhouse Gas Emission Approval Letter (“SPE GHG”) or approval for the issuance of a non-SPE GHG.

Closing

Regulation of the Minister of Agriculture of the Republic of Indonesia Number 18 of 2026 establishes a framework for implementing Carbon Trading through GHG Emission Offsetting in the agricultural sector, covering the requirements applicable to persons responsible, the preparation and assessment of documents, validation and verification of mitigation actions, and the acquisition of an SPE GHG recommendation or non-SPE GHG approval. This Regulation also governs the Authorisation of Carbon Units for the benefit of another country or for international purposes, cross-sectoral carbon trading, and the monitoring, reporting, and evaluation of mitigation action implementation.

In implementing the Regulation, persons responsible for mitigation actions must pay attention to compliance with administrative and technical requirements, the application of social and environmental safeguards and good governance principles, and the obligations to cooperate with Farmer Institutions and share benefits with them in accordance with the applicable provisions. Accordingly, carbon trading in the agricultural sector is expected to support the achievement of Nationally Determined Contribution (NDC) targets while ensuring the participation and protection of communities surrounding activity sites.