Indonesia is expanding work on industrial emissions measurement and verification after a government simulation found that using actual production data could reduce estimated European Union carbon-border costs by as much as 90% in a selected industrial case. The results were presented on 29 October, following a policy discussion in Jakarta. The exercise was described as a comparison between EU default emissions values and installation-level information provided by Indonesia’s Ministry of Industry.
Mochamad Firman Hidayat, a member of Indonesia’s National Economic Council (DEN), presented the findings at an event organised by the Center for Indonesian Policy Studies (CIPS). The analysis was framed around potential financial exposure for Indonesian steel exporters under the EU’s Carbon Border Adjustment Mechanism (CBAM) when manufacturers cannot demonstrate installation-specific emissions. The council said the simulation identified a substantial gap between carbon costs calculated using default figures and those based on specific industrial emissions data.
The reported 90% reduction was tied to a single simulation and was not presented as evidence of savings already achieved by exporters. It was also described as not applicable uniformly across Indonesia’s industrial production. The government position presented alongside the findings emphasised that credible measurement and verification can affect access to European markets.
Default emissions values and exposure in Indonesia’s steel exports
Indonesia’s steel sector is identified as among the industries most directly affected by EU carbon-border requirements. The government singled out hot-rolled coil and carbon-steel wire rod as products facing particularly high competitive risks when EU default emissions values are used. In scenarios assessed by DEN, carbon costs estimated with default figures could exceed the selling value of certain steel products.
The council said such outcomes could affect export economics unless manufacturers demonstrate lower actual emissions, reduce production carbon intensity, or renegotiate commercial terms with European customers. For producers relying on energy-intensive processes, the difference between prescribed defaults and verified installation-level emissions may become a commercial factor. The analysis also noted that lower actual emissions do not automatically translate into lower CBAM liabilities.
DEN said CBAM outcomes depend on multiple elements, including the emissions intensity of the production process, the applicable EU calculation methodology, treatment of relevant precursors, and any applicable carbon-cost adjustments. It also stated that Indonesia’s immediate task is to establish monitoring, reporting and verification procedures enabling exporters to substantiate production emissions for European importers.
Trade mapping for CBAM-related product groups
DEN mapped 2025 trade data to estimate approximately €2.08 billion in Indonesian exports to the European Union across CBAM-related product groups. These goods were reported as about 11.9% of Indonesia’s merchandise exports to the EU. The mapping was disclosed on 29 October 2026 and converted using the European Central Bank reference exchange rate for that date.
The government said its coverage reflects relevant trade categories rather than an independently reconciled dataset across every legally covered eight-digit Combined Nomenclature (CN) code. It added that broader steel and industrial classifications can include products not currently covered by CBAM. As a result, assessing an individual exporter’s exposure requires product-level customs classifications, declared values, quantities, and emissions linked to the relevant production process.
Verification requirements under CBAM certificate pricing
For Indonesian steel producers, emissions verification is described as increasingly relevant commercially alongside environmental reporting. Under the EU framework, authorised CBAM declarants remain responsible for import declarations and certificate obligations. Producers outside the EU are required to supply compliant emissions information when importers plan to calculate liabilities using actual emissions.
If verified information is not available, calculations may use EU-prescribed default values. DEN said this can lead to unfavourable results when a plant’s actual emissions are materially lower than applicable defaults. The difference can influence supplier selection, export pricing, contract negotiations and investment decisions for manufacturers.
The European Commission published a CBAM certificate price of €82.32 per tonne of CO₂ equivalent for the third quarter of 2026. DEN noted that this benchmark does not represent a uniform charge per tonne of Indonesian steel because liability depends on the applicable emissions calculation, relevant benchmarks and other adjustments. Manufacturers therefore need to assess verification costs and potential benefits separately for each installation and product.
Coordination on measurement systems and decarbonisation programmes
Developing measurement arrangements requires more than collecting factory emissions figures. Indonesia must ensure its industrial monitoring framework is compatible with requirements from international customers and regulatory authorities. Andree Surianta, a senior researcher at CIPS, called for closer coordination between the Ministry of Industry’s emissions measurement framework and the Ministry of Environment’s oversight of the carbon market.
CIPS said lack of coordination could result in duplicated administrative procedures, inconsistent datasets and additional compliance costs for manufacturers operating in international markets. The Ministry of Industry is developing decarbonisation programmes for nine priority industrial subsectors including steel, cement, chemicals and fertilisers. The initiatives are described as part of efforts to improve energy efficiency, modernise industrial processes and prepare manufacturers for export markets influenced by carbon performance.
CIPS research presented on 29 October also reported that industrial businesses attach considerable importance to predictable regulation when considering investment in lower-carbon production. It pointed to regulatory clarity and accessible verification arrangements as factors alongside direct financial support for investment decisions.
Relevance beyond Indonesia for EU-bound steel exporters
The findings were described as relevant to other industrial exporters including India, Turkey, China, Serbia and the Western Balkans. DEN said producers supplying comparable goods can face different calculated carbon costs depending on production technology, actual emissions and their ability to provide evidence meeting EU requirements. It added that complete independently verified emissions records may support stronger commercial positioning than reliance on default values even when conventional production costs are similar.
For European buyers, access to reliable supplier emissions information was described as increasingly relevant in procurement decisions and landed-cost calculations. Banks and investors were also said to incorporate carbon accounting into assessments of future cash flow, export competitiveness and the commercial viability of production upgrades. DEN stated that its simulation indicates measurement-and-verification investment could have commercial value before more capital-intensive emissions-reduction programmes are completed.
The potential benefit was described as needing assessment at the level of individual installations and products rather than extrapolation from a single-case exercise. DEN said Indonesia’s next step is translating national emissions measurement initiatives into verified product-specific evidence accepted under European requirements. It added that demonstrating actual emissions could become important for protecting exporters’ margins as CBAM financial obligations become operational in 2027.