[Column] Indonesia’s Forest Carbon Credits and the JCM – Procedures for Transfers Abroad in Light of Minister of Forestry Regulation No. 6 of 2026 and Japan’s Systems

2026-10-28

✅ In a nutshell

🌳 In April 2026, Indonesia promulgated Minister of Forestry Regulation No. 6 of 2026, which sets out the procedures for carbon trading in the forestry sector, and repealed the previous 2023 regulation.
🔖 There are two routes for carbon units—domestic emission reduction certificates and units issued under international standards such as Verra—and where units are transferred abroad for use toward another country’s NDC (Nationally Determined Contribution), the text can be read as requiring authorization and corresponding adjustments regardless of the route.
🇯🇵 METI materials list J-Credits and JCM (Joint Crediting Mechanism) credits as credits that can be reflected in verified emissions under Japan’s emissions trading scheme, and in 2024 Japan and Indonesia signed a mutual recognition arrangement between the JCM and Indonesia’s certification system.
📝 Indonesia’s new regulation does not mention the JCM by name, and I could find no direct conflict on the face of the text; however, I believe some points still require confirmation, including the legal basis of the mutual recognition arrangement, the deadline for reviewing the arrangement, and how credit volumes are determined.

Table of Contents

Introduction

In this article, I take up Indonesia’s Minister of Forestry Regulation No. 6 of 2026 (Peraturan Menteri Kehutanan Nomor 6 Tahun 2026) and explain the procedures for transferring forest-sector carbon credits abroad, as well as their relationship with Japan’s systems, particularly the Joint Crediting Mechanism (JCM).
A comparison of the same Indonesian system with Malaysia’s system is explained in a column on the website of our Malaysian entity.

In Indonesia, the carbon trading system has been revised many times over a short period, and I suspect many people find it difficult to understand “which credits can be transferred abroad, and through which procedures.”
From the perspective of Japanese companies, there are also questions as to whether Indonesian forest credits can be used under Japan’s systems, and whether the JCM is inconsistent with Indonesia’s new regulation.

In this article, I read together the text of the Minister of Forestry Regulation, its parent legislation Presidential Regulation No. 110 of 2025, Minister of Environment Regulation No. 10 of 2026 issued in the same year, and Japanese materials, in order to set out the flow of procedures and the points of contact with Japan’s systems.
Please note that this article organizes the text of Indonesian laws and regulations from the perspective of Japanese practice, and individual matters require confirmation by local Indonesian counsel.

Positioning of the Indonesian Regulation

The formal title of Minister of Forestry Regulation No. 6 of 2026 is the “Minister of Forestry Regulation on Procedures for Carbon Trading through Greenhouse Gas Emission Offsets in the Forestry Sector.”
According to the original text of the regulation published in the Ministry of Forestry’s legal database, it consists of 26 pages and 65 articles, was enacted on April 6, 2026, and promulgated on April 13 of the same year (State Gazette No. 238 of 2026).
Under Article 65, it has been in force since the date of promulgation.

According to the preamble, this regulation was issued to implement Article 64, Article 68(4), Article 76(4), Article 86, and Article 94(6) of Presidential Regulation No. 110 of 2025 (Presidential Regulation on the Implementation of Carbon Economic Value Instruments and the Control of National Greenhouse Gas Emissions).
According to Indonesia’s legal database, the Presidential Regulation was enacted and promulgated on October 10, 2025.
In addition, under Article 64 of the Minister of Forestry Regulation, Minister of Environment and Forestry Regulation No. 7 of 2023 (Procedures for Carbon Trading in the Forestry Sector) has been repealed.

Registration of carbon units is governed separately by Minister of Environment Regulation No. 10 of 2026 (Regulation on the Carbon Unit Registry System).
This regulation was enacted on July 2, 2026, and promulgated and brought into force on July 6 (State Gazette No. 449 of 2026).
The carbon unit registry system is called Sistem Registri Unit Karbon (SRUK) in Indonesian, and the authorization procedures required for transfers abroad are set out mainly in this regulation.

Who May Trade and Eligible Areas

According to Article 5 of the Minister of Forestry Regulation, carbon trading may be conducted by business actors, the Minister of Forestry, and provincial governors.
Article 6(1) lists the following five as business actors.

Holders of a Forest Utilization Business Permit (Perizinan Berusaha Pemanfaatan Hutan, PBPH) and holders of management rights
Holders of social forestry management approval
Customary law communities that have received customary forest designation
Registered holders of private (rights) forests
Holders of a Carbon Environmental Service Utilization Business Permit (Perizinan Berusaha Pemanfaatan Jasa Lingkungan Karbon, PB-PJL Karbon)

Of these, holders of social forestry management approval, customary law communities, and registered holders of private forests must be accompanied by a registered partner or facilitator (Article 6(2)).
In addition, according to Article 8, even where a holder of a forest utilization business permit or the like conducts trading in cooperation with others, the permit holder remains the party responsible for the carbon trading.
It is necessary to keep in mind the structure whereby, even if a foreign company is involved as an investor or purchaser, the trading entity is always the permit holder.

Eligible areas are also limited: according to Article 9(1), in production forests and protection forests, eligibility is limited to areas in which a business permit, management approval, or management rights have already been established.

Two Routes for Carbon Units

According to Article 10 of the Minister of Forestry Regulation, carbon trading requires the holding of carbon units, of which there are the following two types.

Domestic emission reduction certificates (Sertifikat Pengurangan Emisi GRK, SPE GRK; GHG Emission Reduction Certificate). These are issued by the minister in charge of the environment, based on a recommendation from the Minister of Forestry.
Units issued under international standards (non-SPE GRK). These are issued by the issuing body of the international standard, based on approval from the Minister of Forestry.

Article 1(12) also defines carbon units as including those based on domestic certification, international certification, or emission allowances.

Required Contents of the Project Document

Under either route, a project document must first be registered.
The project document for the domestic route is called a climate change mitigation action design document (Dokumen Rancangan Aksi Mitigasi Perubahan Iklim, DRAM).
Article 12 requires the DRAM to set out the emission reduction plan, methodology, analysis of environmental impacts, analysis of impacts on sustainable development, consultation with residents, and so on, and lists the following as supporting materials.

An explanation of additionality
A plan for the participation of residents
A carbon benefit-sharing plan agreed with residents
A plan for managing biodiversity and reversal risk
A plan for, and the results of, Free, Prior and Informed Consent (Padiatapa; FPIC)

Under Article 21, these provisions apply mutatis mutandis to the project document for the international standard route (Dokumen Perencanaan Proyek, DPP; Project Design Document).
In other words, even when using international standards such as Verra, residents’ consent and agreement on benefit sharing are required as requirements under Indonesian regulations.

Review Periods

The documentary check of the project document must be completed within 5 business days of receipt of the application (Article 14(3)), and the review for a recommendation or approval within 14 business days of the documents being complete (Article 16(3)).
The review also checks the history of legal compliance and whether any administrative sanctions have been imposed, and an applicant subject to an administrative sanction cannot reapply until the sanction is lifted (Article 16(2), (5), and (7)).
Under Article 23(2), these provisions also apply mutatis mutandis to the international standard route.

Approval for the International Standard Route Lapses After Six Months

The international standard route contains a provision of practical importance.
According to Article 24(1), the Minister of Forestry’s approval for issuance under an international standard is valid for six months.
The person who received the approval submits it to the international standard body (Article 24(2)).
If the issuance process is prolonged, the approval may need to be obtained again, so it would seem necessary to apply with a view to the timing of completion of verification and issuance.

Transfers Abroad, Authorization, and Corresponding Adjustments

Which Transactions Require Corresponding Adjustments?

The categories of transactions abroad are set out in Article 68(1) of the parent Presidential Regulation.
That paragraph lists the following three as transactions requiring authorization and corresponding adjustments (an accounting adjustment whereby, after units are transferred to another country, they are deducted from the transferring country’s NDC accounting to prevent double counting).

Internationally linked emissions trading
Offset trading that satisfies Article 6.2 and Article 6.4 of the Paris Agreement
Voluntary offset trading for other international obligations

On the other hand, offset trading not used for another country’s NDC or other international obligations is stated not to require authorization or corresponding adjustments.
Paragraph (3) of the same Article provides that units traded abroad are issued based on domestic standards, standards of the United Nations Framework Convention on Climate Change, or other international standards.

Article 28 of the Minister of Environment Regulation takes the same approach, dividing the use of units into three categories: achievement of Indonesia’s NDC; achievement of another country’s NDC or other international mitigation obligations; and other mitigation purposes or the voluntary carbon market.
It then requires the recording of authorization and corresponding adjustments only for the second use.
In other words, whether a corresponding adjustment is required is determined not by the type of unit, but by how it is used.

Units Under International Standards Are Also Covered

Article 25(1) of the Minister of Forestry Regulation provides that “business actors holding carbon units” may conduct carbon trading abroad.
Paragraph (2) of the same Article provides that, where such trading requires authorization and corresponding adjustments, an application for a recommendation is made to the Minister of Forestry.
Neither provision limits the type of unit.
Article 25(2) of the Minister of Environment Regulation also requires the authorization status of units issued under international standards to be recorded.
Accordingly, on the face of the text, units under international standards such as Verra can also be read as potentially subject to authorization and corresponding adjustments.

Review of the Recommendation and Its Timeline

An application for a recommendation must be accompanied by documents relating to cooperation in carbon trading through offsets (Article 25(3)).
The Minister of Forestry reviews the application based on the volume of units to be traded and the need to achieve the NDC (Article 26(1)).
The Minister then decides whether to issue a recommendation specifying the volume of units subject to corresponding adjustments, or not to issue a recommendation on the ground of the need to achieve the NDC (Article 26(2)).
Where a recommendation is issued, the applicant is notified within 7 business days of receipt of the application (Article 26(3)).
However, this deadline applies only where a recommendation is issued; no deadline is specified where no recommendation is issued.

A business actor that has received a recommendation applies to the minister in charge of the environment for authorization and corresponding adjustments (Article 27(1)).
According to Article 17 of the Minister of Environment Regulation, the relevant ministers, such as the Minister of Forestry, review the application by approving it in full, approving it in part, or rejecting it.
The Minister of Environment grants authorization and records the corresponding adjustment within 15 business days of receiving the relevant minister’s recommendation (Article 17(3) and (7) to (9)).

The Order of Applications Requires Confirmation

Because Article 25(1) of the Minister of Forestry Regulation refers to “business actors holding carbon units,” a straightforward reading suggests that the recommendation is applied for after the units have been issued.
In the list of procedural steps in Article 11(2) of the Minister of Environment Regulation as well, the application for an authorization recommendation is placed after the issuance of units.
On the other hand, Article 18 of the same Minister of Environment Regulation provides that an application for an authorization recommendation may be made either before or after the issuance of units.
It is difficult to determine the relationship between these provisions from the text alone, and I believe whether authorization can be obtained at the pre-issuance stage needs to be confirmed with the authorities on a case-by-case basis.

Overview of Procedures and Timelines

Below is a list of the procedures discussed so far, showing which have specified timelines and which do not.
I believe the parts where the timeline column is blank are the parts that should be addressed in the contract.

Stage	Basis	Timeline
Documentary check of the project document	Minister of Forestry Regulation, Article 14(3)	Within 5 business days of receipt of the application
Remedying deficiencies	Minister of Forestry Regulation, Article 14(4)	Within 5 days of notification (not specified as business days)
Review for recommendation or approval	Minister of Forestry Regulation, Article 16(3)	Within 14 business days of the documents being complete
Validity period of approval for the international standard route	Minister of Forestry Regulation, Article 24(1)	6 months
Recommendation for corresponding adjustment (where recommended)	Minister of Forestry Regulation, Article 26(3)	Within 7 business days of receipt of the application
Recommendation for corresponding adjustment (where not recommended)	Minister of Forestry Regulation, Article 26(2)(b)	Not specified
Authorization	Minister of Environment Regulation, Article 17	Within 15 business days of receipt of the recommendation
Timing of the application for recommendation	Minister of Forestry Regulation, Article 25(1); Minister of Environment Regulation, Articles 11(2) and 18	Whether before or after issuance requires confirmation with the authorities

Indonesian Credits from the Perspective of Japan’s Systems

The JCM Is a System for Use Toward Japan’s NDC

The JCM is a mechanism under which Japan and a partner country cooperate to implement emission reduction measures and allocate the resulting reductions or removals according to each country’s contribution.
According to the Ministry of the Environment’s explanation of the JCM, transfers to Japan are made in line with Article 6 of the Paris Agreement; Japan counts them toward achieving its NDC, and the corresponding amount is not counted toward the partner country’s reductions.
According to the same explanation, the Plan for Global Warming Countermeasures (Cabinet decision of February 18, 2025) sets a target of securing international emission reductions and removals of approximately 100 million t-CO2 cumulatively by FY2030 and approximately 200 million t-CO2 cumulatively by FY2040 through public-private collaboration.

The JCM became a statutory system through the 2024 amendment to the Act on Promotion of Global Warming Countermeasures (Act No. 56 of 2024).
The amended Act came into force on April 1, 2025, and on the same day, the Global Environment Centre Foundation was designated as the designated implementing body, the Joint Crediting Mechanism Implementation Agency, designated by the Government of Japan (JCMA).

Emissions Trading Scheme Materials List J-Credits and JCM Credits

One possible motive for Japanese companies to purchase Indonesian credits is the emissions trading scheme under the GX Promotion Act, which began in FY2026.
According to a METI leaflet, the scheme covers business operators whose average direct CO2 emissions over the most recent three fiscal years are 100,000 t-CO2 or more.

METI’s FY2026 briefing materials list J-Credits and JCM credits as credits that can be reflected in verified emissions.
The same materials state that the amount deductible through cancellation is capped at 10% of actual emissions.
The materials do not describe any method for reflecting credits issued under international standards such as Verra in verified emissions.

Therefore, where the purpose is use under Japan’s emissions trading scheme, it would seem important, even for Indonesian forest credits, whether they were issued through the JCM.
Conversely, credits from routes such as Verra would likely be considered on the premise of voluntary use or use under other countries’ systems.

The Japan–Indonesia Mutual Recognition Arrangement

Japan and Indonesia signed a bilateral document on the JCM on August 26, 2013.
Furthermore, according to a press release by the Ministry of the Environment, on October 28, 2024, the signing of a Mutual Recognition Arrangement (MRA) between the JCM and Indonesia’s greenhouse gas emission reduction certification system was completed between Japan’s Ministry of the Environment and Indonesia’s Ministry of Environment and Forestry (as it then was).

The main contents of the text of the mutual recognition arrangement are as follows.

Recognizing the JCM and Indonesia’s emission reduction certification system (Indonesian greenhouse gases emission reduction certification, SPEI) as mutual recognition cooperation as provided in Indonesia’s Minister of Environment and Forestry Regulation No. 21 of 2022 (paragraph 1)
Mutually recognizing that both countries’ registries, measurement, reporting and verification standards, and certification systems are operated in line with the Paris Agreement and its guidance (paragraph 4)
Allocating credits from JCM projects using SPEI equitably, taking into account the contributions of each government and the project participants (paragraph 8)
Implementing authorization and corresponding adjustments for JCM credits using SPEI (paragraph 9)
Recording information on JCM projects in Indonesia’s National Registry System for Climate Change Control (Sistem Registri Nasional Pengendalian Perubahan Iklim, SRN PPI) (paragraph 11)
Beginning consultations with the Forestry and Other Land Use (FOLU) sector and the waste sector (paragraph 13)
The arrangement continues until December 31, 2030, and may be extended by written consent of both sides (paragraph 21)

The point that consultations are to begin with the forestry sector is considered particularly important in relation to the Minister of Forestry Regulation that is the subject of this article.

Does the JCM Conflict with Indonesia’s New Regulations?

No Direct Conflict Is Apparent on the Face of the Text

I could not find any provision mentioning the JCM by name in the text of Minister of Forestry Regulation No. 6 of 2026, Minister of Environment Regulation No. 10 of 2026, or Presidential Regulation No. 110 of 2025.
On the other hand, Article 29(3) of the Minister of Environment Regulation cites the cooperative approaches under Article 6.2 of the Paris Agreement and the mechanism under Article 6.4 as the basis for use toward another country’s NDC.
Since the JCM has been comprehensively approved on the Japanese side as a cooperative approach under Article 6.2 of the Paris Agreement, it is presumably envisaged that the JCM will also be treated within this framework on the Indonesian side.

In addition, paragraph 9 of the mutual recognition arrangement provides that authorization and corresponding adjustments will be implemented for JCM credits.
The authorization and corresponding adjustments required by Indonesia’s new regulations are consistent in direction with the content of this arrangement.
In that sense, it is considered that, in terms of system design, the JCM and Indonesia’s new regulations are intended to connect.

Four Points Require Confirmation

That said, looking at the details, I believe the following four points require confirmation.

The first is the legal basis of the mutual recognition arrangement.
The arrangement recognizes the JCM and SPEI as mutual recognition cooperation as provided in Indonesia’s Minister of Environment and Forestry Regulation No. 21 of 2022.
Presidential Regulation No. 110 of 2025 repealed the former Presidential Regulation No. 98 of 2021 in Article 101, but provides in Article 100 that implementing regulations of the former Presidential Regulation remain in effect insofar as they do not conflict with the new Presidential Regulation, or until they are replaced.
Minister of Environment and Forestry Regulation No. 21 of 2022 was issued under the former Presidential Regulation, but whether it has already been replaced could not be determined from the materials reviewed for this article.

The second is the deadline for reviewing the arrangement.
Article 99 of the Presidential Regulation provides that international agreements (perjanjian internasional) in the field of carbon economic value agreed by the Government of Indonesia before this Presidential Regulation came into force must be adjusted within one year of promulgation.
Since the Presidential Regulation was promulgated on October 10, 2025, this deadline arrived on October 10, 2026.
Whether the mutual recognition arrangement, being an inter-ministerial arrangement, constitutes such an “international agreement,” and whether any adjustment has been made, could not be determined from the published materials reviewed for this article.

The third is jurisdiction on the Indonesian side.
The counterparty to the arrangement was the Ministry of Environment and Forestry, but the ministers in charge of the environment and of forestry are now separate, and Minister of Forestry Regulation No. 6 of 2026 also cites Presidential Regulation No. 175 of 2024, which concerns the Ministry of Forestry, as one of its bases.
For JCM projects in the forestry sector, it is considered that both registration of the project document and a recommendation under the Minister of Forestry Regulation, and authorization under the Minister of Environment Regulation, will be required.
This is an inference from the text, and actual practice needs to be confirmed with the authorities.

The fourth is how credit volumes are determined.
Paragraph 8 of the mutual recognition arrangement provides for equitable allocation taking into account the contributions of each government and the project participants.
On the other hand, Article 26 of the Minister of Forestry Regulation allows the Minister of Forestry to reduce the volume recommended, or not to issue a recommendation, based on the need to achieve the NDC.
What happens if the allocation agreed by the JCM Joint Committee does not match the volume recommended by the Minister of Forestry is not clear from the text.

Ongoing Obligations Imposed on Business Actors

The Minister of Forestry Regulation also imposes ongoing obligations on business actors engaged in trading.
Specifically, it requires compliance with, and reporting on, seven safeguard principles relating to social, environmental, and governance matters (Article 28); validation and verification by independent validation and verification bodies (Articles 41 to 45); payment of non-tax state revenue (Article 46); and reporting on the status of trading, implementation of benefit sharing, and handling of grievances (Article 54).
From the purchaser’s perspective, whether these obligations are being fulfilled bears directly on the credibility of the credits and the risk of future disputes, so it may be worth making them the subject of the seller’s representations and warranties.

Transitional Measures and Upcoming Milestones

Some transitional measures also involve important timing.

According to Article 61, business actors that, at the time of entry into force, were already at the stage of review of a project document, project implementation, verification, or reporting, as well as business actors that already held carbon units but had not traded them, were required to report their activities to the Minister of Forestry within six months of promulgation.
Since the promulgation date was April 13, 2026, this deadline arrived on October 13, 2026.
When purchasing credits from an existing project, I believe it should be confirmed whether the seller has made this report.

In addition, Article 63 provides that the Minister of Forestry will establish a new carbon trading roadmap within one year of entry into force, making April 13, 2027 the deadline.

As a minor point, Article 17(3) refers to Article 16(5)(b) (deficient documents) as the basis for rejection, but it is item (c) of the same paragraph (under administrative sanction) that provides for a proposal of rejection.
This appears to be an erroneous cross-reference, and in practice the authorities’ approach needs to be confirmed.

What Japanese Purchasers Should Address in Their Contracts

In a Philippine matter in which I was previously involved, there was discussion about how JCM credits should be allocated between the Japanese and Philippine sides, and whether they could be further transferred after the allocation was decided.
In that case as well, who holds the credits and how far they can be moved was not determined by contract alone; some aspects had already been determined by the system.
The same applies to Indonesian forest credits: the contract needs to be structured on the premise of what scope of procedures is required under both the Japanese and Indonesian systems.

Based on the provisions and Japanese systems discussed so far, the following are matters that purchasers would want to address in the sale and purchase agreement.

Specifying the intended use and route. Decide whether the credits will be used for Japan’s emissions trading scheme, another country’s NDC, or voluntary use, and where they will be used for Japan’s emissions trading scheme, confirm that they come through the JCM route.
Conditions precedent. Make the Minister of Forestry’s approval (which lapses after six months under the international standard route), the recommendation, and the Minister of Environment’s authorization conditions precedent to delivery.
Volume adjustment. Provide for quantity and price adjustments, and termination conditions, where the recommendation covers only part of the volume applied for, or where no recommendation is issued on the ground of the need to achieve the NDC.
Consistency with JCM allocation. For JCM projects, provide for how to deal with any discrepancy between the allocation agreed by the Joint Committee and the volume recommended by the Minister of Forestry.
Deadlines. Given that the regulation sets no deadline where no recommendation is issued, set contractual deadlines and the treatment if they pass.
Seller’s representations and warranties. Cover residents’ consent and agreement on benefit sharing, compliance with safeguard principles, the existence of any administrative sanctions, and the making of reports under transitional measures.
Cost allocation. Specify who bears the non-tax state revenue.
Provision of information. Set out the seller’s duty to cooperate with reporting, evaluation, and the handling of grievances.

In particular, a contract that merely states “with corresponding adjustment” leaves it unclear which category of transaction is envisaged.
I believe it is important to specify concretely in the contract the purpose of the transaction and the procedures required on each of the Japanese and Indonesian sides.

Conclusion

Minister of Forestry Regulation No. 6 of 2026 establishes two routes for forest-sector carbon units—domestic certificates and units under international standards—and requires a recommendation or approval from the Minister of Forestry for both.
Whether a corresponding adjustment is required for transfers abroad is determined by use, and on the face of the text, units under international standards may also be covered.
However, the Minister of Forestry may issue a recommendation for a reduced volume, or decline to issue a recommendation on the ground of the need to achieve the NDC, and no deadline is set where no recommendation is issued.

Since METI materials list J-Credits and JCM credits as the credits usable under Japan’s emissions trading scheme, the JCM route would appear to be the realistic option for Japanese companies considering use under that scheme.
Both the JCM and Indonesia’s new regulations are premised on Article 6.2 of the Paris Agreement, and no direct conflict is apparent on the face of the text.
On the other hand, points requiring confirmation remain with respect to the legal basis of the mutual recognition arrangement and the deadline for its review, the change in jurisdiction, and the relationship between allocation and the recommended volume.

For purchasers, I believe the first step in preparing for institutional uncertainty is to specify the intended use and route, make obtaining approval and recommendation conditions precedent, and include in the contract adjustments for cases where the volume is reduced.

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*This article is a general overview based on Japanese and Indonesian laws, regulations, and materials published as of October 20, 2026. The interpretation and application of Indonesian law need to be confirmed with local Indonesian counsel and the relevant authorities.