Draft Regulation of the Minister of Agriculture on Carbon Trading in the Agricultural Sector: Business Actors Required to Undergo a Multi-Stage Process

Introduction

The Draft Regulation of the Minister of Agriculture on Procedures for Carbon Trading through Greenhouse Gas Emissions Offsetting in the Agricultural Sector (the “Draft Ministerial Regulation”) serves as an implementing regulation of Article 64 of Presidential Regulation Number 110 of 2025 on the Implementation of Carbon Economic Value Instruments and National Greenhouse Gas Emissions Control (“Presidential Regulation 110/2025”). Substantively, the Draft Ministerial Regulation governs the procedures for Carbon Trading through the Greenhouse Gas (GHG) Emissions Offset scheme in the agricultural sector, covering the rice farming, livestock, and plantation sub-sectors.

The Draft Ministerial Regulation was prepared to implement the mandate of Article 64 of Presidential Regulation 110/2025, which provides the legal basis for technical regulations on carbon trading through the GHG Emissions Offset scheme in the agricultural sector. The preparation of the Draft Ministerial Regulation is based on the need to accommodate the characteristics of the agricultural sector, which has emission sources and carbon sequestration potential that differ from those of other sectors, such as methane emissions from rice fields and livestock and the potential for carbon sequestration on plantation land. Through these regulations, the Ministry of Agriculture seeks to clarify the implementation of carbon trading in the agricultural sector, ranging from the preparation of mitigation action plan documents, the validation and verification process by independent bodies, to the issuance of tradable emission reduction certificates. 

Key Provisions

• Scope and Responsible Parties 

As stipulated in Article 2, the scope of this Draft Ministerial Regulation covers the procedures for Carbon Trading through GHG Emissions Offsetting carried out in businesses and/or activities constituting Climate Change Mitigation Actions in three agricultural sub-sectors, namely rice farming, livestock, and plantations.

Article 3 stipulates that the persons responsible for Climate Change Mitigation Actions who may conduct Carbon Trading consist of four groups: 

• • Businesses (both holders of business licences and holders of registration/registrations for agricultural businesses);

  • The Minister (through a work unit implementing a Jurisdiction-Based Program);

  • Governors and regents/mayors (through the relevant regional apparatus organizations); and

  • Farmer Institutions. 

Specifically for Business Actors, Article 3 paragraph (4) requires cooperation with Farmer Institutions in the implementation of GHG Emissions Offsetting, while Farmer Institutions themselves are required to fulfil business licensing requirements if they intend to act as the responsible party.

• Mechanism for Obtaining a GHG Emission Reduction Certificate (SPE GHG) for Businesses

 

• Mechanism for the Minister, Governors, and Regents/Mayors

Article 15 stipulates that where the Minister, governor, or regent/mayor acts as the person responsible for Climate Change Mitigation Actions, Carbon Trading shall be carried out through a Jurisdiction-Based Program by establishing or designating a public service agency (or regional public service agency), a Government-established funding management institution, or another special institution. Article 16 requires the submission of a proposed DRAM to the Minister through the SRUK, and Article 17 stipulates that all assessment, validation, implementation, and verification stages applicable to Business Actors shall also apply mutatis mutandis to the Minister, governors, and regents/mayors.

• Mechanism for Obtaining Non-SPE GHG

In addition to the domestic SPE GHG route, Article 18 provides an alternative route in the form of an application for non-SPE GHG, namely certification based on international standards. The person responsible for the mitigation action submits a project planning document (containing the project design and details of emission reductions/sequestration) to the Minister through the SRUK and is required to fulfil the applicable international standard requirements. Article 19 applies the assessment through verification stages mutatis mutandis from the SPE GHG mechanism, with the exception of the provisions concerning the achievement report as stipulated in Article 13. Furthermore, Articles 20 through 22 stipulate that approval for non-SPE GHG shall be issued by the Minister based on the recommendation of the Head of the Agency (a high-ranking senior executive official within the Ministry of Agriculture responsible for carrying out duties and functions in the field of agricultural assembly and modernization), shall remain valid for a period of 6 (six) months, and shall be submitted to the relevant international standards body. The issuance of non-SPE GHG by an international standards body may only be carried out after such approval from the Minister has been obtained.

• Authorization, Corresponding Adjustment, and Carbon Unit Trading

For GHG Emissions Offset schemes connected to international mechanisms (including those subject to Articles 6.2 and 6.4 of the Paris Agreement or other voluntary international obligations), Article 24 requires the person responsible for the mitigation action to submit an application for Authorization and Corresponding Adjustment to the ministry responsible for environmental affairs, the granting of which shall be based on a recommendation from the Minister of Agriculture and assisted by a technical team. As for the utilization of the results of mitigation actions, Article 26 stipulates that a responsible party that has obtained SPE GHG or non-SPE GHG may trade such Carbon Units to parties whose emissions exceed the upper limit within a given period, to Business Actors conducting voluntary offsetting, and/or to the general public.

• Monitoring, Guidance, Reporting, and Evaluation

The Minister is authorized to monitor the fulfilment of the validation, implementation, and verification stages by all persons responsible for mitigation actions (Article 27), the results of which shall serve as the basis for improving policies and implementing guidance in the form of technical guidelines, training, directions, technical assistance, and electronic consultations (Article 28). The Minister is also required to ensure the availability of public information concerning Carbon Trading in the agricultural sector (Article 29).

From the perspective of the obligations of the actors, Article 30 requires the persons responsible for mitigation actions to submit reports on the implementation of Carbon Trading electronically to the Minister (with copies to the governor/regent/mayor), which shall at a minimum contain the implementation of activities, community participation, implementation of benefit-sharing agreements, and follow-up to public complaints. Such reports shall serve as the basis for the annual evaluation conducted by the Head of the Agency as stipulated in Article 31, while Article 32 regulates the obligation of the Minister to facilitate the improvement of public knowledge and skills in the implementation of Carbon Trading.

Transitional Provisions

Article 33 regulates transitional provisions for persons responsible for Climate Change Mitigation Actions who have carried out activities prior to the entry into force of this Ministerial Regulation. These provisions cover two categories, namely: 

• persons responsible who have entered the validation stage of the Climate Change Mitigation Action Plan Document (DRAM) and/or the stage of preparing project planning documents, implementing mitigation actions, verifying results, or reporting the achievement of mitigation actions; and 

• persons responsible who already possess Carbon Units but have not yet conducted Carbon Trading transactions through the Greenhouse Gas (GHG) Emissions Offset scheme.

With respect to both categories, the Ministerial Regulation requires the persons responsible to report the activities that have been carried out to the Minister and to submit an application for a recommendation or approval from the Minister in accordance with the provisions stipulated in this Ministerial Regulation. These transitional arrangements are intended to ensure that all carbon trading activities through the GHG Emissions Offset scheme remain aligned with the new provisions.

Closing

This Draft Regulation of the Minister of Agriculture implements Article 64 of Presidential Regulation Number 110 of 2025, which provides the technical foundation for the implementation of Carbon Trading through the Greenhouse Gas (GHG) Emissions Offset scheme in the agricultural sector. This is achieved through provisions governing the procedures for submitting Climate Change Mitigation Action Plan Documents (DRAM), the validation and verification processes, the mechanisms for issuing GHG Emission Reduction Certificates (SPE GHG) and non-SPE GHG, as well as provisions concerning Carbon Unit trading, monitoring, reporting, and transitional provisions.