Indonesia has taken an advanced position in the region on the introduction and implementation of carbon pricing in the power sector. Indonesia launched its power-sector emissions trading system (ETS) in February 2023, covering roughly 80 percent of national generation. These milestones underscore the recognition of carbon pricing as a policy instrument that can support the broader objectives of Indonesia’s energy transition. Nevertheless, Indonesia’s carbon pricing policies remain constrained by several structural factors that undermine their effectiveness.

President Prabowo Subianto in October 2025 adopted Presidential Regulation No. 110/2025 which provides renewed momentum for reform. The one-year regulatory transition window offered by this regulation provides an opportunity to incorporate targeted reforms into the design and implementation of carbon pricing instruments.

This Thematic Report aims to assess the state of carbon pricing in Indonesia  and to identify potential  reforms that support achievement of the JETP goals and advance the government’s regulatory process. It serves as a key input to the larger body of JETP analysis and implementation work.

This Thematic Report was prepared by the International Energy Agency (IEA), the JETP Secretariat, and the Policy Working Group of JETP Indonesia, with substantial contribution from the World Bank. The IEA’s contribution was made through its Clean Energy Transitions Programme, which serves as the IEA’s flagship initiative to transform the world’s energy system to achieve a secure and sustainable future for all. 

As with policy recommendations in the CIPP and the JETP Progress Report more broadly, the recommendations in this Thematic Report are not legally binding. They provide a strategic basis that the Government may consider for power-sector planning and policy-making under the JETP process.

🔎 Access the Report via this link

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