Regulation of the President of the Republic of Indonesia number 98 of 2021 on the implementation of carbon pricing to achieve the nationally determined contribution target and control over greenhouse gas emissions in the national development.

This Presidential Regulation implementing, among others, the Law no. 32 of 2009 on Environmental Protection and Management and consisting of 90 articles, sets out the country’s framework for action against climate change, stipulating climate change mitigation action plans to reduce greenhouse gas emissions and introducing various schemes based on carbon pricing. The following relevant terms are defined: Nationally Determined Contribution (NDC); Carbon Economic Value (NEK); greenhouse gases; greenhouse gas emissions; climate resilience; climate change mitigation; estimated level of greenhouse gas emissions; adaptation to climate change; greenhouse gas emissions upper limit; national registry system; carbon trading; emission trading; results-based payment; Measurement, Reporting, Verification (MRV); carbon rights; carbon levy; ecosystem; greenhouse gas emissions reduction certificate; business actor.
Definition of purpose, objectives and scope includes: a. efforts to achieve NDC targets; b. the administration of NEK; c. transparency framework; d. monitoring and evaluation; e. coaching and funding; and f. steering committee. The achievement of NDC targets requires the preparation of a climate change mitigation plan according to the following steps: 1) compiling an inventory of greenhouse gas emissions; 2) preparing and determining greenhouse gas emission standards; 3) preparing and determining climate change mitigation targets. According to the Regulation, six types of greenhouse gases have to be included in the inventory and business entities will be required to compile data on their emissions and submit it to a competent governmental authority; the Regulation plans to establish standards for three types of greenhouse gas emission, at national, state, and sectoral levels and three related types of climate change mitigation targets. The climate change mitigation plan will be formulated on the basis of these these standards and targets in a separated Ministerial Regulation. Concerning the reduction of greenhouse gas emissions, the Regulation provides for various schemes based on the idea of carbon pricing, moving from the Indonesia definition of “Carbon Economic Value” (NEK) and including carbon emission trading. The Regulation obliges business actors to record the implementation of the various schemes based on carbon pricing and report the results in the National Registry System on Climate Change, under penalty of fines in case of misconduct. What is more, the Regulation also stipulates the introduction of a climate change mitigation labelling scheme that targets products and services contributing to the mitigation of climate change.