Indonesia urged to accelerate emissions verification to limit EU carbon costs
Indonesia's National Economic Council (DEN) is calling for faster verification of industrial emissions as exporters face the EU's Carbon Border Adjustment Mechanism (CBAM). A council simulation found that using verified emissions data rather than EU default values could lower compliance costs by about 90%, though that result applies to a single case, not all exporters.
Steel exports face particular risks
DEN member Mochamad Firman Hidayat presented the finding at a Center for Indonesian Policy Studies (CIPS) discussion in Jakarta on October 29, 2026. The simulation compared costs calculated with EU default figures against those calculated with specific Ministry of Industry data.
Firman urged Indonesia to accelerate the development of measurement, reporting and verification (MRV) frameworks, starting with high-risk industries such as iron and steel. "This is one of the quick wins that we must pursue," he said.
EU default emissions values are often used when verified actual data is unavailable. DEN's simulations suggest that, for some Indonesian products, the resulting carbon charges could exceed selling prices. The council warned that hot-rolled coils (HRC) and carbon steel wire rods could become uncompetitive in the European market.
DEN's analysis of 2025 trade data puts Indonesia's EU-bound exports in CBAM-covered product groups at approximately US$2.32 billion, accounting for 11.9% of its exports to the bloc. Indonesia exports about US$33.3 billion in those product groups worldwide, leaving them potentially exposed if other trading partners introduce similar carbon-pricing measures.
Eurostat data cited by CBAM Guide show that the EU imported 3.16 million metric tons of CBAM-covered Indonesian iron and steel goods in 2025, compared with 1.09 million metric tons in 2024.
Default values and rising carbon liabilities
Indonesia has country-specific default emissions values under Implementing Regulation (EU) 2025/2621, corrected by Implementing Regulation (EU) 2026/1740. CBAM Guide lists values of 8.230 tCO2e per metric ton for both semi-finished steel under CN 7207 12 10 and hot-rolled flat steel under CN 7208. The values are 8.250 tCO2e per metric ton for cold-rolled and coated flat steel under CN 7209 and 7210, and 1.700 tCO2e per metric ton for unwrought aluminum under CN 7601.
A markup is added to country default values to encourage producers to use verified actual emissions data. It increases from 10% in 2026 to 20% in 2027 and 30% from 2028 onward.
The share of embedded carbon liabilities subject to CBAM is also projected to increase as the EU Emissions Trading System phases out free allowances: from 2.5% in 2026 to 48.5% in 2030 and 100% in 2034. Shanghai Metals Market (SMM) estimates that, at full implementation, default-based liabilities could reach about €720 per metric ton for Indonesian cold-rolled stainless steel and nearly €580 per metric ton for some Indonesian HRC products.
Indonesia's own mandatory emissions trading scheme has covered only power generation since its introduction in 2023. Steel and aluminum manufacturing remain outside it, with no carbon price paid on their production. According to CBAM Guide, Indonesian exporters therefore have no Article 9 CBAM deduction currently available.
Carbon charges come in addition to the EU's steel safeguard tariff-rate quotas. A framework effective July 1, 2026, raised out-of-quota duties on certain stainless steel categories from 25% to 50%, according to SMM. Asian suppliers, including Indonesia, thus face a volume constraint as well as a carbon cost per metric ton.
Limited access to verification
Securing verification presents another challenge. SMM reported that, as of June 30, 2026, 24 EU national accreditation bodies were willing to provide CBAM accreditation services, but only nine were ready to take applications from verifiers. Eight were willing to accredit applicants from outside the EU.
Only three had begun accepting those third-country applications: Accredia in Italy, RvA in the Netherlands and Swedac in Sweden. That limited the verification options available to Asian producers.
SMM estimates the verification bill for one production facility at €5,000 to €50,000. The initial reporting cycle requires an on-site visit; verification conducted entirely remotely is not permitted for that first period.
Coordinating Indonesia's systems
CIPS researcher Andree Surianta called for an integrated emissions measurement framework recognized internationally. "It is not just about developing a system for our own internal use; it is about enabling carbon-related trade with our international partners," he said.
Andree said the Industry Ministry's developing emissions measurement mechanisms should align with the Environment Ministry's supervision of carbon trading to avoid fragmented regulation. The Industry Ministry is also working on decarbonization roadmaps for nine key industrial subsectors, among them metals, cement, chemicals and fertilizers.
Under the current EU schedule, purchases of CBAM certificates covering 2026 imports will begin in February 2027. Importers must submit their first annual declarations and surrender the required certificates by September 30, 2027.