Climate change encourages governments and businesses to not only measure Greenhouse Gas (GHG) Emissions, but also control the amount of emissions generated by business activities.
In Indonesia, one of the instruments under the Carbon Economic Value (NEK) framework is the Technical Approval for Emission Caps for Business Actors (PTBAE-PU).
PTBAE-PU establishes an emission cap for GHG emissions for business actors and/or an emission quota for a specific compliance period. Therefore, PTBAE-PU is not merely an administrative document. Instead, this instrument connects emission caps, actual emissions, monitoring, reporting, verification (MRV), compliance, and emissions trading.
What Is PTBAE-PU?
Simply put, PTBAE-PU is an emission cap or emission quota established for business actors during a specific compliance period.
For example:
PTBAE-PU = 1,000,000 tCO₂e
This figure becomes the emission cap used as a reference during the compliance period. At the end of the period, the company compares its actual emissions with the PTBAE-PU.
If Actual Emissions Are Below the Cap
For example:
PTBAE-PU: 1,000,000 tCO₂e
Actual Emissions: 900,000 tCO₂e
Therefore, the difference is:
100,000 tCO₂e
This surplus position may become part of an emissions compliance or trading mechanism in accordance with the applicable requirements.
If Actual Emissions Exceed the Cap
Conversely, if:
PTBAE-PU: 1,000,000 tCO₂e
Actual Emissions: 1,100,000 tCO₂e
There is an excess emission of:
100,000 tCO₂e
This condition indicates that actual emissions are above the established emission cap. Therefore, the company needs to fulfill its obligations according to the applicable mechanism.
As a result, comparing actual emissions with PTBAE-PU becomes an important element in determining the business actor’s compliance position.
How Does PTBAE-PU Work?
In simple terms, the PTBAE-PU mechanism can be illustrated as follows:
Emission Cap → Monitoring → Actual Emission Measurement → Reporting → Verification → Comparison → Compliance/Emissions Trading
The government establishes an emission cap or quota based on the applicable framework and requirements. Meanwhile, business actors monitor and measure their actual emissions.
Next, the measurement and reporting results are verified at the end of the compliance period. This process provides reasonable assurance over the emission data used to determine the business actor’s position against the PTBAE-PU.
What Is the Role of MRV in PTBAE-PU?
One important component of PTBAE-PU implementation is Measurement, Reporting and Verification (MRV).
Why is MRV important? Emissions control and emissions trading require reliable, consistent, and traceable emission data.
Business actors need to know:
- How much actual emissions are generated?
- What activities are responsible for those emissions?
- How are the emissions calculated?
- What are the data sources and emission factors?
- How is the data reported?
- Can the measurement and reporting results be verified?
In addition, under the carbon trading mechanism for the electricity generation subsector, business actors participating in carbon trading are required to prepare an annual GHG emission monitoring plan for each generating unit.
In other words:
No reliable data → No reliable compliance assessment.
What Is the Relationship Between PTBAE-PU and ISO 14064-1?
GHG management is an important part of corporate emission management.
ISO 14064-1 provides a framework for organizations to quantify and report GHG emissions and removals at the organizational level.
Meanwhile, PTBAE-PU is a regulatory instrument under the NEK framework that establishes an emission cap or quota for business actors.
The two are connected through data, measurement, and emission information management. However, ISO 14064-1 does not automatically serve as the basis for establishing PTBAE-PU.
In simple terms:
ISO 14064-1
- Develops an organizational GHG inventory
- Identifies emission sources and removals
- Quantifies emissions
- Produces documented GHG information
PTBAE-PU
- Establishes an emission cap or quota
- Conducts monitoring and measurement of actual emissions
- Reports emissions
- Conducts verification
- Compares actual emissions with the emission cap
- Supports compliance and emissions trading mechanisms
Therefore, companies involved in the PTBAE-PU mechanism need to have a strong, documented, consistent, and traceable emission data management system.
Why Is Emission Data So Important?
Imagine that a company has:
PTBAE-PU = 1,000,000 tCO₂e
However, the company does not have an adequate emission data system.
At the end of the period, the company must be able to demonstrate whether its emissions are:
850,000 tCO₂e
950,000 tCO₂e
or
1,050,000 tCO₂e
These differences can result in different compliance positions.
Therefore, GHG data management becomes an important foundation for PTBAE-PU implementation.
Activity data, calculation methods, emission factors, monitoring, documentation, and reporting need to be managed systematically. In this way, emission information can be traced and verified.
How Is PTBAE-PU Related to Emissions Trading?
PTBAE-PU is related to the cap-and-trade mechanism in emissions trading.
Simply put, the mechanism can be understood through the following stages:
CAP
Establish the emission cap.
↓
MEASURE
Measure actual emissions.
↓
REPORT
Report the measurement results.
↓
VERIFY
Ensure the quality and reliability of emission information.
↓
COMPARE
Compare actual emissions with the emission cap.
↓
COMPLIANCE / TRADE
Fulfill compliance requirements or conduct trading in accordance with the applicable requirements.
Under this mechanism, the surplus or deficit emission position needs to be assessed based on the applicable trading and compliance requirements for the relevant sector or subsector.
Therefore, PTBAE-PU is not only about how much of an emission cap is allocated. It is also about how business actors manage their emissions throughout the compliance period.
Which Sectors Currently Use PTBAE-PU?
Indonesia’s NEK framework is designed to support national GHG emissions control and may cover various sectors.
However, the mandatory emissions trading implementation involving PTBAE-PU that has been concretely implemented is currently found in the electricity generation subsector.
For this subsector, Minister of Energy and Mineral Resources Regulation No. 16 of 2022 on the Procedures for Implementing Carbon Economic Value in the Electricity Generation Subsector regulates the implementation of NEK, including PTBAE and carbon trading.
In its initial phase, PTBAE for electricity generation applies to coal-fired power plants (PLTU), including PLTU units connected to the PT PLN (Persero) grid.
Minister of Energy and Mineral Resources Regulation No. 16 of 2022 also categorizes PLTU based on installed capacity. The categories include 25 MW to less than 100 MW, 100 MW to 400 MW, and capacities above 400 MW, with specific provisions for mine-mouth PLTU.
Therefore, within the context of the PTBAE-PU implementation currently in place, the electricity generation subsector, particularly coal-fired power plants, represents the most concrete sector for mandatory emissions trading at present.
For other sectors, the implementation of NEK instruments and emissions trading may involve different stages, requirements, and instruments. Therefore, the status of PTBAE-PU obligations needs to be assessed based on the sector, subsector, type of activity, and implementation phase.
What Regulations Are Relevant to PTBAE-PU?
The implementation of PTBAE-PU is part of the regulatory framework for Carbon Economic Value and national GHG emissions control.
Several relevant regulations include:
1. Presidential Regulation No. 110 of 2025
Presidential Regulation No. 110 of 2025 on the Implementation of Carbon Economic Value Instruments and National Greenhouse Gas Emissions Control serves as the current national framework.
This regulation governs the implementation of NEK instruments and national GHG emissions control. It covers, among other areas, carbon allocation, NDC, the implementation of NEK instruments, transparency frameworks, and monitoring and evaluation.
Presidential Regulation No. 110 of 2025 has also revoked and replaced Presidential Regulation No. 98 of 2021.
2. Minister of Energy and Mineral Resources Regulation No. 16 of 2022
Minister of Energy and Mineral Resources Regulation No. 16 of 2022 on the Procedures for Implementing Carbon Economic Value in the Electricity Generation Subsector is an important sectoral regulation for implementing NEK and carbon trading in the electricity generation subsector.
3. Minister of Environment and Forestry/Environment Regulation No. 10 of 2026
Minister of Environment and Forestry/Environment Regulation No. 10 of 2026 on the Carbon Unit Registry System regulates the carbon unit registration system, supporting the recording, traceability, and integrity of carbon units as well as domestic and international carbon trading.
In addition, the regulation governs the connection with SRN PPI and the Carbon Exchange, including mechanisms to prevent double counting. This regulation has been effective since 6 July 2026.
4. OJK Regulation No. 10 of 2026
For carbon trading through the Carbon Exchange, OJK Regulation No. 10 of 2026 amends OJK Regulation No. 14 of 2023.
The regulation covers, among other matters, carbon units, Carbon Exchange operators, consumer protection, and administrative sanctions.
With these regulatory developments, PTBAE-PU does not operate independently. Instead, it forms part of an ecosystem connecting:
GHG Measurement → MRV → PTBAE-PU → Compliance → Carbon Trading → Carbon Registry
Why Is Verification Important in PTBAE-PU?
Verification helps ensure that the emission information used in PTBAE-PU implementation has adequate quality and reliability.
The verification process does not only assess whether a figure has been calculated. It also considers data, methodology, supporting evidence, monitoring processes, calculations, and reporting used to generate the emission information.
As a result, verification helps increase confidence in the data used to determine the business actor’s position against its emission cap.
Therefore, verification readiness should be developed from the beginning of the monitoring period. Companies should not wait until the reporting period has ended to begin preparing for verification.
What Should Companies Prepare?
Companies involved in the PTBAE-PU mechanism need to prepare a comprehensive emission management system.
Several important aspects include:
1. GHG Data
Ensure that activity data and emission sources are available and properly documented.
2. Emission Calculation
Ensure that the calculation methods and emission factors used are consistent with the applicable methodologies and requirements.
3. Monitoring System
Establish a consistent monitoring system throughout the compliance period.
4. Documentation
Ensure that all data and supporting evidence are traceable.
5. Reporting
Prepare emission reports in accordance with the applicable requirements.
6. Verification Readiness
Ensure that the organization is prepared for the verification process conducted by an independent party.
How Does PTBAE-PU Drive Carbon Management?
PTBAE-PU shows that emission management is moving beyond environmental reporting toward carbon management.
Companies need to understand more than:
“How much are our emissions?”
They also need to understand:
“What is our emission cap?”
“Are actual emissions below or above the emission cap?”
“What are the main sources of our emissions?”
“What strategies can reduce our emissions?”
“How can the data be substantiated?”
With this approach, GHG management can become part of a company’s operational and business strategy.
How Is PTBAE-PU Connected to the Carbon Economic Value Ecosystem?
PTBAE-PU is one part of Indonesia’s Carbon Economic Value (NEK) ecosystem.
This ecosystem connects various components. The process includes emission cap or allocation, monitoring, measurement, reporting, verification, registration, and carbon unit trading.
In addition, recent regulatory developments increasingly emphasize registration, traceability, carbon unit integrity, and the prevention of double counting through the Carbon Unit Registry System.
Ultimately, the success of the PTBAE-PU mechanism depends on one foundation:
Reliable Emission Data
Without accurate, consistent, transparent, and verifiable emission data, emissions control and emissions trading mechanisms may face challenges in determining the compliance position of business actors.
Measure. Report. Verify. Manage.
PTBAE-PU is not only about establishing an emission cap.
It is part of the journey toward more measurable, transparent, and accountable carbon management.
Need GHG Verification for PTBAE-PU?
CBQA Global supports organizations with GHG Verification, GHG Inventory, ISO 14064-1, and ISO 14064-3 according to applicable needs and requirements.
Make sure your emission data is accurate, documented, traceable, and ready for verification.
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