INDONESIA Trends and Developments Contributed by: Emir Nurmansyah, Serafina Muryanti, Adya Sepasthika and Kenny Poltak, ABNR Counsellors at Law
Biofuels and B40 Mandate Alongside electricity-sector measures, Indonesia is continuing to promote biofuel development through the mandatory B40 biodiesel programme, requiring a blend of 40% palm oil-based biodiesel and 60% diesel fuel. Domestic biodiesel utilisation in 2025 reached 14.2 million kL, exceeding the government’s target and contributing to reduced diesel imports and emission reductions. Carbon Trading: Forestry Carbon Offset On 6 April 2026, the Minister of Forestry issued Regu- lation No 6 of 2026 on Procedures for Carbon Trading through Greenhouse Gas (GHG) Emission Offsets in the Forestry Sector (MoF Reg 6/2026), which replaces Minister of Environment and Forestry Regulation No 7 of 2023. The new regulation is an implementing rule of Presidential Regulation No 110 of 2025 on the Organi- sation of Carbon Economic Instruments. Its primary objective is to regulate how carbon trading through GHG emission offsets may be conducted in the for- estry sector, while ensuring alignment with Indone- sia’s nationally determined contribution (NDC) targets under the Paris Agreement.
historically affected financing structures and residual value analysis. New Framework for Waste-to-Energy Projects One of the key developments over the last 12 months is the issuance of Presidential Regulation No 109 of 2025 on Urban Waste Management through Waste- to-Renewable Energy Processing Based on Environ- mentally Friendly Technology (PR 109/2025), which revoked PR 35/2018 on waste-to-energy develop- ment. PR 109/2025 broadens the regulatory frame- work beyond electricity, allowing urban waste to be processed into electricity, bioenergy, renewable fuels and other derivative products through environmentally friendly technologies. The most significant change is procurement. Under PR 35/2018, regional governments could appoint regional-owned enterprises (ROEs) or run open ten- ders, with state-owned enterprises (SOEs) available as a fallback where no private developer or ROE could undertake the project. PR 109/2025 instead shifts pro- curement to a more centralised model, with project development led by BPI Danantara through its invest- ment holding company, SOEs and their subsidiaries Hybrid Power Plants and De-Dieselisation The MEMR also recently introduced MEMR Regula- tion No 19 of 2025 on Hybrid Power Plants (“MEMR Reg 19/2025”), which establishes the regulatory framework for hybrid renewable energy projects. The introduction of this regulation plays a key role to sup- port the government’s de-dieselisation programme and the integration of renewable generation with bat- tery energy storage systems and other supporting technologies. The economic logic is compelling. Many of Indone- sia’s outer islands continue to rely on diesel genera- tion, which is costly to subsidise, exposed to fuel price volatility and carbon-intensive. Replacing or supple- menting diesel with hybrid solar-and-storage or wind- and-storage configurations can lower long-term costs and emissions, while improving reliability.
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