Abstract Climate change has emerged a critical worldwide concern with greenhouse gas emissions as the main cause. One of globally adopted solution is carbon trading. This research examines carbon trading policy in Indonesia within the national legal framework and its implementation challenges from legal and non-legal perspectives. Indonesia has demonstrated its commitment by ratifying the Kyoto Protocol and the Paris Agreement, as well as issuing regulations such as Presidential Regulation No. 98 of 2021 and POJK No. 14 of 2023. However, the implementation of cap-and-trade mechanism faces various challenges such as overlapping authorities, underdeveloped carbon market infrastructure, and limited understanding of industry stakeholders. This study uses a normative approach, analyzing national regulations and comparing them with regulations in other countries. The study emphasizes that carbon trading must ensure social, environmental, and economic justice, and ensure public participation, including vulnerable groups. The government is encouraged to develop derivative regulations, strengthen transparency and accountability mechanisms, and establish an independent oversight body. In conclusion, the success of carbon trading depends on multisectoral collaboration and the courage of the government to make this mechanism a tool for transformation towards sustainable development and climate justice.
Prananda et al. (Mon,) studied this question.