Regulation of the Minister of Forestry Number 6 of 2026 Amending Forest Carbon Trading through Offset Schemes and ESG Requirements

Introduction

On April 13, 2026, the Ministry of Forestry (“MoF”) issued Regulation of the Minister of Forestry Number 6 of 2026 on Procedures for Carbon Trading through Forestry Sector Greenhouse Gas Emission Offsets (“MoF Regulation 6/2026”). MoF Regulation 6/2026 governs the implementation of carbon trading in the forestry sector through the emission offset scheme for business entities, communities, and the government.

MoF Regulation 6/2026 was issued to implement the provisions on the administration of Carbon Economic Value instruments and the control of national greenhouse gas emissions as governed in Presidential Regulation Number 110 of 2025 on Administration of Carbon Economic Value Instruments and Control of National Greenhouse Gas Emissions, and to support the achievement of the Nationally Determined Contribution (“NDC”) greenhouse gas emission reduction target while observing social and environmental aspects.

Comparison

MoF Regulation 6/2026 repeals Regulation of the Minister of Environment and Forestry Number 7 of 2023 on Procedures for Forestry Sector Carbon Trading (“MoEF Regulation 7/2023”). The following is the comparison table between MoF Regulation 6/2026 and MoEF Regulation 7/2023:

Key Provisions

Carbon Trading Actors and Partnership Responsibilities

Under Article 6 paragraph (1), carbon trading may be conducted by:

1. Holders of PBPH and management rights;

2. Holders of Social Forestry Management Approvals;

3. Customary law communities holding customary forest status determinations;

4. Holders of rights forest registrations; and

5. Holders of Business Licensing for Utilization of Environmental Services (Perizinan Berusaha Pemanfaatan Jasa Lingkungan, “PB PJL”) for Carbon.

Article 6 paragraph (2) stipulates that businesses from social forestry groups and communities collaborate with registered partners. Article 8 stipulates that in collaborations with other parties, including investors, the commercial license holder (PBPH or Carbon PB PJL) is responsible for the implementation of carbon trading.

Location Legality and Concession Area Protection

Article 9 paragraph (1) stipulates that emission mitigation actions are implemented in the following areas:

1. Production Forest areas (permanent/convertible) and utilization blocks of protection Forest Areas that have been encumbered with licensing;

2. Utilization zones/blocks of Nature Conservation Areas (Kawasan Pelestarian Alam, “KPA”) and Hunting Parks that have not been encumbered with rights or licenses;

3. Customary forests;

4. Rights forests; and/or

5. State forests that are not Forest Areas.

Article 30 paragraph (4) stipulates that in the implementation of Jurisdiction-Based Programs, the government does not conduct carbon trading in areas that already have licensing (such as PBPH or customary forests) prior to obtaining an agreement from the relevant license holders.

Document Recording Procedures and Deadlines

Businesses applying for the domestic Greenhouse Gas Emission Reduction Certificate (Sertifikat Pengurangan Emisi Gas Rumah Kaca, “SPE GRK”) submit the Climate Change Mitigation Action Plan Document (Dokumen Rancangan Aksi Mitigasi Perubahan Iklim, “DRAM”) through the SRUK as set forth in Article 11 and Article 12. The DRAM is complemented with operational supporting data which includes, among others:

1. A community engagement plan through the Free, Prior and Informed Consent (Persetujuan Atas Dasar Informasi Awal Tanpa Paksaan, “Padiatapa”) scheme;

2. A carbon benefit-sharing plan mutually agreed upon with the community; and

3. A biodiversity management and reversal risk prevention plan.

The Minister of Forestry verifies the completeness of the documents within a maximum of 5 (five) working days. If the documents are incomplete, businesses complete them within a maximum of 5 (five) working days after receiving the notification as governed in Article 14. License holders may also involve experts and technical personnel in preparing these documents as set forth in Article 13 paragraph (2).

Issuance of SPE GRK and Administrative Sanction Blocking

Prior to issuing the domestic Carbon Unit recommendation in the form of an SPE GRK, the Ministry of Forestry examines the compliance history of businesses as governed in Article 16 paragraph (2). If businesses are subject to administrative sanctions, the Ministry of Forestry rejects the application. Businesses whose applications are rejected due to administrative sanctions may only reapply after such sanctions are lifted, as set forth in Article 16 paragraph (7). If the documents are declared complete and there are no administrative sanctions, the examination process for submitting a recommendation proposal to the Minister is carried out within a maximum period of 14 (fourteen) working days.

International Standards (Non-SPE GRK) and Approval Expiration

Businesses using international standards record the Project Planning Document (Dokumen Perencanaan Proyek, “DPP”) in the system. The approval of the Minister of Forestry for the issuance of non-SPE GRK carbon units by international standards is valid for 6 (six) months as governed in Article 24 paragraph (1). Businesses submit the non-SPE GRK issuance approval document to the international standard institution within the 6 (six) month validity period.

Foreign Carbon Trading Authorization

Businesses may export carbon. If the trading mechanism requires a Corresponding Adjustment (adjustment of carbon stock accounting in the state balance sheet), businesses submit an application for authorization to the Minister of Forestry as governed in Article 25. The Minister of Forestry assesses the application by considering the number of Carbon Units and the need to achieve the national NDC target, and then issues a recommendation within a maximum of 7 (seven) working days under Article 26, which the businesses subsequently uses to apply for a definitive authorization to the minister organizing government affairs in the environmental protection and management sector.

ESG Standard Obligations and Risk Management System

Businesses implement Environmental, Social, and Governance (ESG) principles in the implementation of carbon trading as governed in Article 28. These principles include:

1. Legal compliance and forest governance;

2. Fulfillment of the rights of indigenous peoples and local communities;

3. Biodiversity conservation; and

4. Reversal risk management and reduction of emission displacement to other areas.

Businesses also maintain and operate a risk management system to manage technical and social risks, and report it in the operational report to the Ministry of Forestry under Article 29.

Accreditation of Audit Institutions and Local Workforce Obligations

Projects are validated and verified by an independent institution that is a legal entity and accredited as governed in Article 41 and Article 42. If using an international registry scheme, the institution is accredited by an international body. Independent validation and verification institutions are also required to provide Indonesian workers with international qualifications under Article 42 paragraph (1) letter d.

Electronic Collection of Non-Tax State Revenue

Levies on carbon trading transactions are imposed as Non-Tax State Revenue (Penerimaan Negara Bukan Pajak, “PNBP”) on forest utilization for carbon sequestration or storage activities as set forth in Article 46. Businesses deposit the PNBP through the Non-Tax State Revenue Information System (Sistem Informasi Penerimaan Negara Bukan Pajak, “SIPNBP”) application.

Integrated Reporting and Performance Evaluation

Businesses submit project implementation reports through an electronic information system as governed in Article 54. The report shall at least contain:

1. The realization of carbon trading implementation through the emission offset scheme;

2. Community participation and implementation of the benefit-sharing agreement; and

3. Follow-up on community complaints.

The report data serves as the basis for document evaluation and field audits by the Ministry of Forestry at least 1 (one) time a year under Article 55. The evaluation covers the realization of facilities and infrastructure, methodology, and carbon potential. The Minister of Forestry also provides a community complaint mechanism as set forth in Article 48.

Government Support for Community Groups

The government provides support to businesses from community groups and customary law communities as governed in Article 56. This support includes capacity and skill building through mentoring during the following stages:

1. Activity planning, including identification of ESG risks and their mitigation measures;

2. Activity implementation; and

3. Technical reporting of carbon activities.

Transitional Provisions

The Ministry of Forestry sets forth transitional provisions for the implementation of ongoing activities. The previously stipulated Carbon Trading Roadmap remains in use until a new roadmap is issued as governed in Article 59. The document recording process may also be conducted through the internal electronic system of the ministry until the SRUK is fully operational under Article 60.

Businesses and persons in charge of mitigation actions that are already at the stage of DRAM or DPP validation, activity implementation, verification, or reporting, including those who already possess Carbon Units but have not yet conducted transactions, resubmit their activity reports to the Minister of Forestry no later than 6 (six) months since the promulgation of this regulation, with a deadline of October 13, 2026, as governed in Article 61.

Closing

MoF Regulation 6/2026 redirects the governance of forestry sector carbon trading from a quota-based scheme to a project-based emission offset mechanism, affirming the use of the Carbon Unit Registry System as the basis for the recording and tracking of carbon units and replacing the fixed quota approach used to determine export authorization recommendations, with authority now vested in the Minister of Forestry based on substantive assessment. The implementation of carbon trading is also placed within an integrated electronic system, ranging from reporting, document recording, to periodic evaluations, accompanied by an expansion of the scope of actors who can participate, regulation of activity locations, and mechanisms for issuing carbon units for both domestic and international markets. In terms of governance, MoF Regulation 6/2026 strengthens Environmental, Social, and Governance (ESG) aspects, risk management system obligations, and the requirement for validation and verification by accredited institutions, including provisions on the use of Indonesian workers in international schemes and the collection of Non-Tax State Revenue through an electronic system. In the context of cross-border trading, the recommendation for carbon unit export authorization is subject to administrative approval by the Minister of Forestry, while operational implementation continues to follow digitized reporting and verification standards. For businesses who have carried out activities, there is an obligation to resubmit reports to the Minister of Forestry within a maximum period of 6 (six) months since promulgation or no later than October 13, 2026, covering all stages of activities from planning, implementation, verification, up to the ownership of untransacted carbon units.