{"id":14872,"date":"2025-02-07T10:39:34","date_gmt":"2025-02-07T03:39:34","guid":{"rendered":"https:\/\/investinasia.id\/blog\/?p=14872"},"modified":"2025-02-07T10:39:34","modified_gmt":"2025-02-07T03:39:34","slug":"carbon-tax-indonesia","status":"publish","type":"post","link":"https:\/\/investinasia.id\/blog\/carbon-tax-indonesia\/","title":{"rendered":"Carbon Tax in Indonesia: A Key Step Towards a Greener Economy"},"content":{"rendered":"

Climate change is no longer a future concern\u2014it is unfolding in real time. The rising global temperature, unpredictable weather patterns, and environmental disasters are clear indicators of a worsening climate crisis. In response to this, governments worldwide, including Indonesia, are taking significant steps to mitigate greenhouse gas (GHG) emissions. One of Indonesia\u2019s key policies in this effort is the implementation of a carbon tax.<\/p>\n

What is Carbon Tax?<\/strong><\/h2>\n
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Carbon Tax in Indonesia (pexels.com)<\/figcaption><\/figure>\n

A carbon tax is a levy imposed on the carbon content of fuels or activities that generate carbon emissions. The goal is to encourage businesses and individuals to reduce their carbon footprint, invest in cleaner energy sources, and contribute to overall environmental sustainability.<\/p>\n

Also read:<\/strong> Tax Incentives in Indonesia: Key Benefits and Opportunities<\/a><\/strong><\/p>\n

Indonesia\u2019s Commitment to Emission Reduction<\/strong><\/h2>\n

Indonesia, as a signatory of the Paris Agreement 2015<\/strong>, has pledged to reduce GHG emissions. According to the Ministry of Environment and Forestry, the country aims to cut emissions by 31.89% with domestic efforts<\/strong> and up to 43.2% with international support<\/strong> by 2030. Additionally, Indonesia has accelerated its Net Zero Emission (NZE) target from 2070 to 2060<\/strong>.<\/p>\n

However, Indonesia remains one of the world’s largest GHG emitters. The European Commission\u2019s Emissions Database for Global Atmospheric Research (EDGAR) ranked Indonesia seventh among the top 11 GHG-emitting countries in 2022<\/strong>. To address this, the government is adopting various economic and regulatory instruments, including carbon taxation and an emission trading system<\/strong>.<\/p>\n

Legal Framework for Carbon Tax in Indonesia<\/strong><\/h2>\n

Indonesia\u2019s carbon tax policy is legally grounded in Law No. 7 of 2021 on the Harmonization of Tax Regulations (UU HPP)<\/strong> and Presidential Regulation No. 98 of 2021 on the Implementation of Carbon Economic Value (NEK)<\/strong>. These regulations provide a foundation for Indonesia\u2019s carbon pricing mechanisms, including carbon trading and taxation<\/strong>.<\/p>\n

Also read:<\/strong> Complete List of Industrial Estates in Indonesia<\/a><\/strong><\/p>\n

How Carbon Tax Works in Indonesia<\/strong><\/h2>\n
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Carbon Tax in Indonesia (pexels.com)<\/figcaption><\/figure>\n

Under Article 13 (8) and (9) of UU HPP<\/strong>, Indonesia\u2019s carbon tax rate is determined based on the market price of carbon per kilogram of CO2 equivalent (CO2e)<\/strong>. If the market price falls below IDR 30 per kilogram of CO2e<\/strong>, the minimum carbon tax will be set at IDR 30 per kilogram of CO2e<\/strong>.<\/p>\n

The government has adopted a phased approach<\/strong> for carbon tax implementation:<\/p>\n