Permen LHK 7/2023 on Forestry Sector Carbon Trading

Updated 2026-11-02 · 4 min read · By the akar.earth specialist team

Permen LHK 7/2023 set the first forestry carbon trading procedure in Indonesia. What it covered, who it applied to, and how Permenhut 6/2026 now takes over.

Permen LHK 7/2023 is the Ministry of Environment and Forestry regulation that set Indonesia’s first dedicated procedure for carbon trading in the forestry sector. It applied the carbon economic value (NEK) framework of Perpres 98/2021 to forest carbon, and it is the predecessor of Permenhut 6/2026, which the Ministry of Forestry socialised in April 2026.

What Permen LHK 7/2023 is

The Indonesian title is Tata Cara Perdagangan Karbon Sektor Kehutanan (procedures for forestry sector carbon trading). It was issued in 2023 by the then-combined Ministry of Environment and Forestry (KLHK). It sat between two layers:

• Above it: Perpres 98/2021 and the general NEK procedures in Permen LHK 21/2022.
• Alongside it: OJK’s exchange rule POJK 14/2023, which created IDXCarbon later the same year.

At a high level, Permen LHK 7/2023 covered forestry emissions trading and offsetting, the actors who could take part, the mitigation actions that could generate units, the domestic and international trading routes, the role of SRN-PPI registration, and the government’s approval role. We do not cite article numbers or fee rules here; use the official text for those.

Who it applied to

The regulation reached anyone managing forest land and wanting to trade carbon from it:

• Forest business licence holders (PBPH) in production forest, for example through restoration, improved management or avoided conversion.
• Social forestry permit holders (perhutanan sosial), within the limits of their permits. See carbon in social forestry.
• Forest managers in other forest functions, where the law allowed.
• Buyers of forestry units, domestic and foreign.

How each actor could take part depended on forest function (production, protection, conservation) and the type of licence or approval. That link between carbon and tenure is the reason any forest project in Indonesia starts with a tenure check. See who owns the carbon.

What it required and changed

Permen LHK 7/2023 made three things explicit for forest carbon:

1. Carbon trading follows the licence. The right to run a carbon activity and trade its results was tied to the holder’s forest licence or approval, and to the forest function of the area.
2. Domestic recording. Mitigation actions and results had to be recorded nationally, in SRN-PPI at the time, and certified through the domestic cycle (DRAM, verification, SPE-GRK).
3. NDC first. Trading, and especially international transfer, had to be consistent with Indonesia’s NDC and the FOLU Net Sink 2030 target.

What it meant for developers and buyers

For developers, Permen LHK 7/2023 clarified who could trade, but it also added approvals and uncertainty about international sales. Analysts link that period to weak prices: BeZero notes that Indonesian nature-based credits average an ‘A’ rating yet trade at a fraction of real abatement cost, citing regulatory uncertainty among the causes, and a 2025 IETA paper says international carbon finance to Indonesia effectively stalled after the NDC-alignment rules.

For buyers, it meant checking each Indonesian forest credit on two levels: the international certification, and whether the project held the right licence and domestic records. That double check is still the core of buyer due diligence.

How Permenhut 6/2026 changes the picture

After the 2024 split of KLHK into separate environment and forestry ministries, the Ministry of Forestry issued Permenhut 6/2026, socialised on 29 April 2026. Compared with the 2023 rule, public statements about the new regulation stress:

Practical steps for projects started under the 2023 rule

If your project was designed or approved under Permen LHK 7/2023, list every approval, registration and certificate you hold, with dates. Compare that list with the stages in Permenhut 6/2026 and note any gaps. Then ask the Ministry of Forestry in writing how the gaps are treated.

Open questions

• Revocation and transition. Confirm in the Permenhut 6/2026 text whether Permen LHK 7/2023 is revoked, and how applications filed under it are handled.
• Existing approvals. Projects approved under the 2023 rule should check whether they need fresh approvals or only a registry migration to SRUK.
• Licence-specific rules. Treatment of each licence type may have changed; read the new text for your forest function.

See the Indonesia regulation hub for the full framework, or ask our regulatory navigation service to map a project from the old procedure to the new one.