Indonesia's COVID-19 Vaccination and Economic Resilience Strategy
Carbon Tax
as one concrete step, the policy of carbon taxes is regulated in the Law 7/2021 concerning
the Harmonization of Tax Regulations (UU HPP) to support NDC target by 2030.
PARISZUS
CO2
TAX
Source: Coordinating Ministry of Economic Affairs
Background:
• GHG emission controlling to decrease climate change risk and disaster in
Indonesia.
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Through NDC, Indonesia committed to reduce 29% of its GHG emissions
against the BAU or 41% of its emission with international support by 2030.
Indonesia climate change mitigation strongly needs fiscal instrument.
Economic behavior transformation that leads to low carbon development.
Key Points of The Carbon Tax Regulation on the Law 7/2021 (UU HPP):
The Carbon Tax will be carried out in stages according to a roadmap that will take into account the
development of the carbon market, achievement of NDC targets, sector readiness, and economic
conditions.
The implementation will prioritize the principles of justice and affordability by taking into account the
business climate and small communities.
The carbon tax rate is set higher or equal to the carbon price in the carbon market with a minimum
rate of IDR 30.00 per kilogram of carbon dioxide equivalent (CO2e) and will be evaluated periodically,
in line with the development of the GHG emission rate and the national economy's performance.
Starting in 2022, it will be imposed on the coal-fired power plant sector with a cap and tax scheme
that is in line with the implementation of the carbon market which has already started running in the
coal-fired power plant sector.
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