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Indonesian Economic Value of Carbon (Nilai Ekonomi Karbon) Trading Scheme
General Information
Indonesia’s Economic Value of Carbon, or Nilai Ekonomi Karbon (NEK), Trading Scheme is a mandatory, intensity-based ETS for the power sector that was launched in early 2023. In its first phase spanning from 2023 to 2024, it exclusively targeted coal-fired power plants (CFPPs) connected to the Perusahaan Listrik Negara (PLN) grid with a capacity of 25 MW or greater. In 2025, 563 installations – both connected to and not connected to the PLN grid – were covered under the ETS, consisting of CFPPs with a capacity above 25 MW, combined-cycle power plants, gas engine power plants, and gas-fired power plants. The majority of the plants covered by the NEK are operated by the state-owned electricity company PLN.
The Indonesian government has established intensity targets, known as Technical Emissions Ceiling Approvals, or Persetujuan Teknis Batas Atas Emisi (PTBAE). These targets determine the number of allowances that installations receive for each MWh of electricity generated. Covered entities must surrender allowances for all their covered emissions, with allocation based on PTBAE, emission intensity, and emission average. Additionally, entities have the option to purchase allowances via auctions.
Eventually, the Indonesia ETS is expected to function as a hybrid “cap-tax-and-trade” system, operating concurrently with a carbon tax. Facilities failing to meet their obligations under the ETS will be subject to this tax, the rate of which will be aligned with the domestic carbon market’s price.
While the system currently regulates the power sector, the government is actively preparing to extend coverage to the industrial sector. The Ministry of Industry is coordinating the development of sectoral emissions reporting systems for energy-intensive industries, including cement and fertilizers, which are intended to be integrated into the national MRV framework and the national registry to support a future extension of ETS coverage to industrial sectors.
The Indonesian Carbon Exchange (IDXCarbon) was officially launched in September 2023, under the supervision of the Financial Services Authority of Indonesia (Otoritas Jasa Keuangan, OJK).
“Presidential Regulation No.110/2025” on carbon pricing established the national legal framework for a domestic trading system, a carbon levy that functions as a compliance backstop, and a results-based payment mechanism tied to Article 6 of the Paris Agreement.
In 2025, the scope of the ETS was expanded to cover captive CFPPs that are not connected to the electricity grid and gas power plants (gas fired power plants, gas engine power plants and combined cycled power plants). As a result, the total number of covered installations rose from 146 in 2024 to 563 in 2025.
Due to regulatory changes and revisions of legislation, the allocation of allowances for 2025 has been postponed, no allowances were issued and no trading operations took place as of January 2026. Reporting obligations for covered installations still apply.
In 2025, OJK and the Ministry of Environment (MoE) operationalized IDXCarbon as the national carbon exchange, recording participation from more than 130 entities and transactions totaling ~0.6 MtCO2e.
Emissions & Targets
1,053.4 MtCO2e (2023)
By 2030: Absolute national emissions cap of ~1.35 GtCO₂e (unconditional) and ~1.49 GtCO₂e (conditional on international support), replacing previous BAU-based targets (NDC 2.0).
By 2060: Climate neutrality (NDC 2.0; Long-Term Strategy, 2021).
Size & Phases
PHASE 1: Two years (2023 and 2024)
PHASE 2: Three years (2025 to 2027)
PHASE 3: Three years (2028 to 2030)
The total emissions limit under the Indonesian ETS is the sum of the bottom-up output-based emissions limits for all individual covered entities.
The Ministry of Energy and Mineral Resources (MEMR) establishes the PTBAE, or the emissions limit, for the power sector. This is based on: (i) actual emissions, which must be below the emissions reduction target set for the sector, and (ii) the carbon trading roadmap for the power sector.
PHASE 1:
The ETS was applicable only to coal-fired power plants connected to PLN’s grid. The total emissions limit was approximately 256.8 MtCO2e.
The emissions limit for the power subsector for Phase 1 was as follows:
- non-mine mouth coal-fired power plants with a capacity of ≥25 MW to <100 MW: 1.3 tCO2e/MWh
- mine mouth coal-fired power plants with a capacity of ≥100 MW: 1.1 tCO2e/MWh
- non-mine mouth coal-fired power plants with a capacity of 100 MW to ≤400 MW: 1 tCO2e/MWh
- non-mine mouth coal-fired power plants with a capacity of >400 MW: 0.9 tCO2e/MWh
PHASE 2 and PHASE 3:
The emissions limits for the second and third phases have not yet been determined, but they are expected to be more stringent than in the first.
Indonesia’s October 2025 NDC introduces an absolute national emissions cap (1.35 GtCO2e in 2030, unconditional), which the government describes as the carbon budget that future ETS phases will align with as coverage expands beyond the power sector.
PHASE 1: Coverage was limited to coal-fired power generators connected to PLN’s grid only. Details on thresholds are provided below. Phase 1 covered about 37% of national power generation capacity via 99 PLN-connected coal units. With Phase 2 (2025 to 2027) expanding to captive coal and gas-fired plants supplying energy-intensive industries, the system is expected to regulate roughly 55–60% of power-sector emissions.
PHASE 2: The government expanded the scheme to include coal-fired power plants with capacity above 25 MW and not connected to PLN’s grid (captive CFPPs), gas-fired power plants, gas engine power plants and combined cycled power plants connected to PLN’s grid.
PHASE 3: The expansion will encompass all fossil fuel power plants, including diesel power plants with a capacity of 2 MW or greater and coal-fired power plants with capacity below 25 MW regardless of their connection to PLN’s grid.
INCLUSION THRESHOLDS: In 2024, coal-fired power generation facilities with installed capacity exceeding 25 MW are included. Smaller coal and fossil fuel plants will be incorporated at a later point (see above).
The MoE has indicated that the government plans to implement emission caps for four additional sectors in the future: forestry, industrial processes and product use, agriculture, and waste management.
Beyond the power sector, the government has indicated its intention to gradually expand ETS coverage to major emitting industrial subsectors, supported by ongoing development of MRV frameworks in the industrial sector under the Ministry of Industry.
The government has stated that future ETS phases are expected to align sectoral caps with the national absolute carbon budget defined in the 2025 NDC, moving the ETS from a purely intensity-based instrument in the power sector toward a broader economy-wide system.
Point source
In 2023: 42 entities covering 99 installations
In 2024: 63 entities covering 146 installations
In 2025: 563 installations
Note: The number of entities and installations is expected to continue increasing as new installations commence operations and additional categories are included, in line with the roadmap's expansions.
Allowance Allocation & Revenue
In Indonesia, allowances are referred to as Persetujuan Teknis Batas Atas Emisi Pelaku Usaha (PTBAE-PU).
PHASE 1 and 2:
Auctioning: In the NEK, auctioning is conducted through a system managed by IDXCarbon, where bid and offer instructions are matched based on a time and price priority scheme (refer to the ‘Market Design’ section).
- Auction share: 0% (2025)
- Auction volume: None
To date, no auction has taken place. Details regarding auction shares and related requirements or provisions are yet to be determined.
Benchmarking: MEMR sets intensity targets based on cap/PTBAE, installations’ average emissions of the previous year, and installations’ average emissions intensity of the previous year. These targets dictate the number of PTBAE-PU allowances allocated for every MWh of electricity generated. If the necessary data is unavailable, allocation is based on comparison with similar plants of equivalent installed capacity. In the first year, allowances will be given 100% for free. For the second year or the following year, installations will receive either 75% or up to 85% of their allowances for free. The gradual reduction from 100% free allocation toward 75-85% is framed by the government as transitional support for energy-intensive and trade-exposed industries such as nickel processing, steel, and cement that currently rely on captive coal and gas power. The deduction percentage depends on the installation’s compliance with the ETS.
Covered entities that receive allowances must participate in trading. If they do not, they receive a written warning and free allocation for the next compliance period is reduced to 75%.
Presidential Regulation No.110/2025 positions a future “carbon levy” as a compliance backstop alongside free allocation and future auctions. The regulation empowers the government to introduce an administratively managed reserve and results-based payment channels so that ETS-covered entities can access additional compliance units or face a financial charge aligned with prevailing market prices.
Not defined
The Ministry of Finance has indicated that future ETS auction proceeds and carbon levy revenues will be channeled through Indonesia’s Environment Fund to support power sector decarbonization, MRV infrastructure, and the financing of the energy transition.
Flexibility & Linking
Banking is allowed within phases, though PTBAE-PUs are valid for a maximum of two years from the end of the previous compliance period. Banking is not allowed across phases.
Borrowing is not allowed.
The use of domestic offset credits – known as carbon reduction units, or Sertifikat Pengurangan Emisi Gas Rumah Kaca (SPE-GRK) – is allowed. Credits equivalent to SPE-GRKs may also be used.
QUALITATIVE LIMITS: Offset credits must stem from mitigation activities from:
- New and renewable energy power plants;
- Transportation, construction, and industry including energy efficiency activities; or
- Other activities in the energy sector.
They must also be issued on the national registry.
QUANTATIVE LIMITS: None
In 2023, 6,260 tCO2 in offset credits were retired, all from the Lahendong geothermal project.
Since January 2025, Indonesia has authorized selected projects (including ~1.78 MtCO2e from PLN-affiliated power projects) for international transfer under Article 6, following the lifting of a four-year moratorium on cross-border carbon credit exports. These credits, issued under national MRV and registered in the national registry, can generate revenue to help meet Indonesia’s 2030 cap under the updated NDC.
The NEK Trading Scheme is not linked with any other system.
Carbon tax: Indonesia carbon tax (upcoming)
Domestic crediting mechanism: Indonesia Emissions Reduction Certification
Compliance
The compliance period for the Indonesian ETS is one year, with trading occurring from January 1 to April 20 of the following year. Surplus allowances at the end of the trading period may be traded in the following period, provided it is within the same phase.
FRAMEWORK: The national MRV system is stipulated in the Presidential Regulation 110/2025 and in the “Ministry of Environment and Forestry Regulation 21/2022”. For the power subsector, the MRV system is stipulated in the “Ministry of Energy and Mineral Resources Regulation 16/2022”.
MONITORING: An MRV system is currently in operation in the industrial sector and the power generation sub-sector. Pilot MRV programs are also being conducted in the cement and fertilizer sectors.
REPORTING: Reports are submitted to the MEMR through the Directorate General of Electricity via an online platform, the APPLE-Gatrik. These reports must be submitted by the end of January of the year following the reporting year. Installations must report CO2, CH4, and N2O emissions, expressed in units of CO2e.
VERIFICATION: Emissions must be verified by a third-party verifier that is accredited by the Komite Akreditasi Nasional (KAN), Indonesia’s national accreditation body. This verification should be completed by the end of March, following the January reporting deadline. Verifiers are required to adhere to the guidelines for GHG emission verification in the power subsector.
The plan was to concurrently implement carbon trading and a carbon tax, with the latter serving as a penalty mechanism. However, as discussions on carbon tax regulations continue and their implementation is postponed, an alternative enforcement approach was introduced:
- Should verified emissions exceed the allocated PTBAE-PU by the end of the period, allocations will be given according to the results of carbon trading transactions in the previous carbon trading period up to a maximum of 85% and the PTBAE-PU will be reduced by up to 15%.
- Entities which fail to report their GHG emissions or participate in carbon trading by the end of the period will see a 25% reduction in their PTBAE-PU.
Presidential Regulation No.110/2025 clarifies that, going forward, entities that do not surrender sufficient units will face a carbon levy set in line with prevailing market prices. This embeds the “cap–tax–and–trade” model in national law by tying the financial penalty directly to the ETS price signal.
Market Regulation
MARKET PARTICIPATION:
Compliance entities, specifically those holding an “Electricity Supply Business License for Public Purpose” or “Electricity Supply Business License for Own-Use,” are eligible to engage in carbon trading. The government has positioned IDXCarbon as the central infrastructure not only for domestic allowance and offset trading but also for Article 6-authorized international transactions, following the October 2025 presidential decree lifting the export moratorium.
MARKET TYPES
Primary:
In the primary market, allowances and offset credits are traded through a mechanism that may be activated upon request by the relevant ministry. This platform facilitates offset selling, with a potential reserve price set as low as IDR 1 (less than USD 0.01), and bids commencing from this figure or higher. As of January 2026, there have been no auctions conducted under this system, and specific details about auction shares, along with associated requirements and provisions, remain to be defined.
Secondary:
Operated by IDXCarbon, launched at the Indonesia Stock Exchange (IDX) in September 2023 and licensed by the Financial Services Authority (OJK), the secondary market encompasses:
- Regular Market or ‘Continuous Auction’: Matching of bids and offers based on time and price priority, with minimum prices set at IDR 200 (USD 0.01) and governed by fraction price rules and an ‘auto rejection’ rule.
- Negotiated Market: Facilitates the settlement of pre-agreed trades through the exchange, requiring details of counterpart, carbon units, price, and volume.
- Marketplace: Enables project developers to list their projects and set prices.
IDXCarbon is integrated with the new centralized registry for carbon units and trading, Sistem Registri Unit Karbon (SRUK). Introduced by Presidential Regulation No. 110/2025, it replaces the SRN-PPI (Sistem Registri Nasional Pengendalian Perubahan Iklim) system for trading purposes; SRN-PPI will now be used solely for reporting mitigation and adaptation actions.
OJK has begun integrating IDXCarbon with the national registry to enable automated tracking of issuance, transfer, and surrender, including for internationally transferred mitigation outcomes under Article 6.
LEGAL STATUS OF ALLOWANCES: PTBAE-PUs and SPE-GRKs are classified as securities, allowing their transfer and trade in the capital market.
EVALUATION BY MEMR
Instrument type: Quantity-based instrument
Functioning: The MEMR evaluates on a regular basis the implementation of the ETS. If the evaluation reveals a shortage of allowances, the Minister and Director General may conduct additional auctions of PTBAE-PUs.
Other Information
Coordinating Ministry of Food Affairs: Chair of the National Steering Committee for Carbon Pricing Implementation; coordinates ministries/agencies in developing the national carbon pricing framework.
Coordinating Ministry for Economic Affairs (CMEA): Vice Chair of the National Steering Committee for Carbon Pricing Implementation.
Ministry of Environment (MoE): National focal point for UNFCCC; leads NDC development and implementation, including national mitigation and adaptation and implementation of carbon pricing (including providing authorization for national and international emission trading, and overseeing offsetting; oversees MRV; operates the national registry, SRUK).
Ministry of Energy and Mineral Resources (MEMR): Coordinates ETS implementation in the power subsector, including oversight of an integrated MRV system with the SRUK; responsible for preparing and implementing the 2021 voluntary pilot carbon market.
Ministry of Industry: Coordinates implementation of CPIs on the Industrial Processes and Product Use sector, including an emissions reporting system to be integrated with the SRUK.
Ministry of Finance: Leads the development and implementation of the carbon tax.
Indonesian Environment Fund: Handles climate funding; manages ETS revenues, including any international carbon credit trading.
Financial Services Authority (OJK): Oversees IDXCarbon, which is hosted on the Indonesia Stock Exchange.
Presidential Regulation No.110/2025 designates a national carbon pricing steering structure that coordinates the ETS, the carbon levy, and Article 6 results-based payments across the Ministry of Environment and Ministry of Forestry, the Ministry of Finance, the Ministry of Energy and Mineral Resources, and the Financial Services Authority (OJK) and other related ministries.
The Minister of Energy and Mineral Resources,
through the Directorate General of Electricity, evaluates the Indonesian ETS every six months. Results of this evaluation may lead to adjustments in the policy.
The Ministerial Regulation of Energy and Mineral Resources 16/2022 is currently being revised to align with the Presidential Regulation 110/2025.
Mexican Emissions Trading System
General Information
The Mexico ETS, the first in Latin America, started its pilot phase in January 2020. It covers direct CO2 emissions from fixed sources in the energy and industry sectors emitting at least 100,000 tCO2 per year, representing around 30% of national GHG emissions and 90% of emissions reported in the National Emissions Registry (RENE).* Under the Mexico ETS, covered entities must surrender allowances for all their covered emissions. Allowances are allocated through grandparenting based on historical emissions, which are verified annually. The level of free allocation is expected to be reduced from the first year of the operational phase, anticipated to begin in 2026.
The Mexican ETS started with a Pilot Program with two phases: a pilot phase between 2020 and 2021, and a transition phase in 2022. The Pilot Program aimed to test system design, contribute to the NDC 3.0 and other national mitigation goals, enhance the quality of emissions data, and build capacity in emissions trading, ultimately improving the design of the operational phase.
The regulation of the Pilot Program (“the Agreement on the establishment of the preliminary basis of the Pilot Program of the Emissions Trading System”) remains in force until the regulation for the operational phase is published.
* According to SEMARNAT.
In 2025, the sixth compliance year concluded. 88% of participants presented a positive verification report to the Ministry of Environment and Natural Resources (Secretaría de Medio Ambiente y Recursos Naturales, or SEMARNAT) for their 2024 emissions, and 86% complied with their surrender obligations. Between March and June 2025, participants verified their 2024 emissions.
In March 2025, SEMARNAT was restructured. This restructure created the Undersecretary for Sustainable Development and Circular Economy (Subsecretaría de Desarrollo Sostenible y Economía Circular), in charge of, among other things, the coordination and operation of the ETS.
In August, the first ordinary meeting of the Consultative Committee of the Emissions Trading System (COCOSCE) took place. The meeting discussed the regulation for the first operational phase of the ETS, as well as allowance allocation, obligations of the electricity sector, offsets and legal aspects.
In September, the government published the 2025 to 2030 Sectoral Program of Environment and Natural Resources. Its line of action 4.1.3 includes putting into operation the first phase of the ETS and guaranteeing the effective operation of the voluntary carbon market, as well as the alignment with other carbon pricing instruments.
In November 2025, the Intersecretarial Commission of Climate Change approved Mexico’s NDC 3.0, which was later presented during COP30. The NDC 3.0 sets an unconditional emissions cap of between 364 MtCO2e and 404 MtCO2e by 2035, and a conditional goal of between 332 MtCO2e and 363 MtCO2e by 2035.
Emissions & Targets
756.7 MtCO2e (2024 preliminary)
By 2030: Unconditional 35% below BAU GHG emissions baseline (NDC 2.0)
By 2035: Unconditional emissions cap of between 364 MtCO2e and 404 MtCO2e. Conditional goal of between 332 MtCO2e and 363 MtCO2e. Both options reflect an approximate 583 MtCO2e reduction from current levels. (NDC 3.0)
By 2050: Net zero emissions (NDC 3.0)
Size & Phases
PILOT PHASE: Two years (2020 and 2021)
TRANSITIONAL PHASE: One year (2022)
OPERATIONALPHASE: From 2025 onwards
An absolute cap limits the total emissions allowed in the system and is fixed ex-ante.
PILOT:
2020: 271.3 MtCO2
2021: 273.1 MtCO2*
Three reserves are filled each year with allowances additional to the cap:
- auctions reserve (equivalent to 5% of the cap, for regular auctions, which have not yet happened);
- new entrants’ reserve (equivalent to 10% of the cap, for new entrants as well as increases in production among existing regulated entities); and
- general reserve (equivalent to 5% of the cap, for ex-post adjustment allocation for entities with higher emissions relative to their baselines).
The reserves function as safeguards to avoid economic impacts on regulated entities during the Pilot phase, as required by the 2018 “General Law on Climate Change”.
* The increase in the cap between 2020 and 2021 is due to an extension in the sectoral allocation for regulated entities categorized as “others”.
PILOT PROGRAM: The Pilot ETS covered the energy and industrial sectors. The energy sector encompasses electricity generation, transmission, and distribution, as well as fossil fuel extraction, production, transport, and distribution.
The industrial sector includes automobile manufacturing, cement, lime, chemicals, food and beverages, glass, iron and steel, metals, mining, petrochemicals, and pulp and paper, as well as other industrial sub-sectors generating direct CO2 emissions from stationary sources at or above the threshold.
Inclusion thresholds: The Pilot ETS covers installations with annual direct emissions from stationary sources amounting to at least 100,000 tCO2.
OPERATIONALPHASE: Sectors and thresholds are not expected to change during the operational phase
Point source (all sectors)
~300 (2025)*
* According to SEMARNAT.
Allowance Allocation & Revenue
PILOT PROGRAM: The Pilot featured free allocation with the following specifications:
Initial allocation: Entities receive free allowances equivalent to 100% of their most recent verified emissions. New entrants receive free allowances based on their verified emissions in the year in which they first crossed the 100,000 tCO2 threshold. For participants that have not yet verified their emissions, initial allocation is done based on their historical emissions as reported to RENE.
Ex-post adjustment: An adjustment allocation is carried out from the general reserve for those participants that did not receive a quantity of free allowances equivalent to their verified emissions.
Participants may request additional allowances when an expansion in their production results in additional direct CO2 emissions from stationary sources.
Plant closures: When an installation closes permanently, it may have to surrender the allowances that it has for the compliance period of the year before its closure. As well, it should return the free allowances received for the compliance period in which it closes. Whether the installation must only surrender allowances, return allowances, or both, depends on the date of the year in which it closes. SEMARNAT then cancels these allowances.
Auctions: SEMARNAT may auction allowances from the auction reserve. As of December 2025, no auctions have taken place.
OPERATIONALPHASE: Free allocation is expected to be reduced from the beginning of the operational phase. SEMARNAT is in the process of developing the auctioning mechanism.
SEMARNAT is developing institutional arrangements to manage revenues during the operational phase.
Flexibility & Linking
Allowances allocated during the Pilot will not be eligible for banking into the operational phase. For the operational phase, banking will be allowed between phases and compliance years.
Although the possibility of borrowing is not explicitly stated, surrender of allowances for a given compliance period is done after allocation of allowances for the subsequent compliance period takes place.
The use of offset credits will be allowed in the operational phase.
QUALITATIVE LIMITS: Two types of flexibility instruments are foreseen, both of which will generate offset credits eligible for use under the ETS: offset credits and early action.
Offset credits: SEMARNAT will establish a domestic program for the generation of offset credits that can be surrendered for compliance. Domestic projects that have been validated and verified under internationally or domestically recognized protocols will be eligible. Emission reductions related to all GHGs will be eligible, except for those related to direct CO2 emissions.
Early action: Offset credits generated by mitigation projects operating in Mexico under recognized protocols before the pilot came into force (2020) can be eligible for use in the ETS. SEMARNAT issues offset credits only if a certificate of cancellation is presented and if they were not used for other compliance purposes. These projects will be expected to continue generating offset credits during the operational phase.
QUANTITATIVE LIMITS: Participants can meet up to 10% of their compliance obligations with offset or early action credits.
SEMARNAT is currently working on the regulations to implement the offset and early action provisions in the Pilot ETS. The eligibility rules for the use of offset credits within the ETS are being developed based on a mapping of activities and projects that could be used for this purpose.
Articles 89 and 90 of the General Law of Climate Change provide the general framework for the registry of mitigation outcomes, whereas articles 26 to 29 of the RENE regulation provide additional specifications on the projects that can be registered, such as the procedure for registration and basic information on which certificates from international registries are to be accepted.
The Mexico ETS is not linked with any other system. However, the General Law of Climate Change provides for linkages with other systems.
Carbon tax: National carbon tax
Carbon taxes (state level): Colima, Durango, Guanajuato, Mexico City, Morelos, Querétaro, San Luis Potosí, State of Mexico, Tamaulipas, Yucatán, Zacatecas
Compliance
One calendar year. SEMARNAT is evaluating the surrender date of allowances based on the experience obtained during the pilot.
FRAMEWORK: Articles 87 and 88 of the General Law of Climate Change provide the general framework for GHG reporting to RENE.
Verified annual CO2 emissions are reported both to the RENE (in addition to other obligations that regulated entities must report to the RENE) and to the ETS registry.
A monitoring plan is expected to be required in the operational phase from all regulated entities as a part of their obligations.
MONITORING: Under RENE, emitters with annual emissions of at least 25,000 tCO₂ in the energy, industrial, transport, agricultural, waste, commercial, and services sectors are required to report the six key GHGs identified by UNFCCC, as well as black carbon, chlorofluorocarbons (CFCs), hydrochlorofluorocarbons (HCFCs), halogenated ethers, halocarbons, and their mixes.
REPORTING: Annual self-reporting based on electronic templates prepared by SEMARNAT. Reporting is done electronically through the Annual Operating Statement (Cédula de Operación Anual).
VERIFICATION: Verification by independent accredited verifiers is required by the end of June of the subsequent year.
Reporting and verification should be made according to the criteria and procedures of the RENE*. Verification bodies need to be accredited to the Mexican Accreditation Entity and approved by the Federal Environmental Protection Agency (Procuraduría Federal de Protección al Ambiente). Verification organisms need to comply with the standards ISO 14065 (requirements for organizations conducting verification), ISO 14064-3 (verification and validation of GHG reports) and ISO 14066 (competence requirements for GHG validation teams and verification teams).
* According to SEMARNAT.
The Pilot Program is designed to pose no economic impact on regulated entities; however, non-compliant entities lose the opportunity to bank unused allowances into subsequent compliance periods within the pilot and will receive fewer allowances in the first allocation of the operational phase of the ETS (two fewer allowances for each non-delivered allowance during the pilot).
Sanctions are expected to be implemented in the operational phase of the ETS.
Market Regulation
MARKET PARTICIPATION: Under the pilot rules, market participation is limited to compliance entities and those that provide offset credits. SEMARNAT is designing and developing the process and rules to allow participants without obligations.
MARKET TYPES:
Primary: As of the end of 2025, there had been no auctions in the Mexican ETS pilot. SEMARNAT is preparing institutional arrangements to implement auctions during the operational phase.
Secondary: There is no exchange that trades allowances. As of the end of 2025, transactions can only take place via negotiation between participants.
LEGAL STATUS OF ALLOWANCES: Allowances in the Mexican ETS Pilot are “administrative instruments” and are not considered financial instruments. They are expected to remain as such in the operational phase.
None
Other Information
SEMARNAT: Ministry in charge of implementing the ETS.
COCOSCE: Formal technical forum for consultation, orientation, social participation, and advice for the Pilot ETS. Its members are representatives from SEMARNAT as well as the ministries of Finance, Energy, and Economy; a representative from the National Institute of Ecology and Climate Change; a representative of the Confederation of Industrial Chambers; a representative from the Coordinating Business Council; and representatives of the regulated sectors.
Article 10 of the Agreement on the establishment of the preliminary basis of the Pilot Program provided for SEMARNAT to annually review the Pilot, publishing reports on topics such as price behavior and emissions reductions achieved. SEMARNAT developed an internal evaluation on the ETS´s components during the Pilot, in order to improve and update the regulation of the operational phase.
Moreover, an evaluation of the Pilot, supported by the COCOSCE, has been conducted to determine if adjustments to the ETS design are necessary.
COCOSCE’s working groups have developed different recommendations to the Federal Government on the cap and allocation methods, offset credits, as well as key topics on the energy sector and legal recommendations.
Agreement on the establishment of the preliminary basis of the Pilot Program of the Emissions Trading System (implementing regulation of the pilot)
Regulation of the General Law of Climate Change on the National Emissions Register
Notice on the cap for the years 2020 and 2021
Notice on the reserve and sectoral allocation of allowances for the years 2020 and 2021
Mexico Emissions Trading System
Update to the National Strategy on Climate Change
Strategy of Sustainable Finance Mobilization of the Ministry of Finance
General Organization Manual of SEMARNAT