Part 4. CARBON PRICING: What Is The Impact For Indonesia?
Indonesia is one of the biggest pollution emitters and as one of Kyoto protocol signatory, Indonesia has a commitment in carbon mitigation. With Presidential Decree Number 98 of 2021, carbon price is expected to drive more financing and green investment that has an impact on reducing greenhouse gas (GHG) emissions. Indonesia plans to implement it on April 1, 2022. A successful implementation of carbon pricing needs to be supported by strong, accountable, and transparent policies. Governments at the national level should collaborate with the private sector, local governments and other parties to achieve more ambitious climate targets. In addition, the private sector support is also crucial, since private sector can participate with technological innovation and efficient business process.
The pricing of Indonesia’s carbon tax is IDR30 per kilogram (kg) of carbon dioxide equivalent (CO2e) or equivalent units. This price is considered too cheap. The reason of the low carbon price could be that this is still a beginning of the carbon price implementation that later on, it can be adjusted according to the market.
Carbon pricing includes carbon credit (carbon offset), and cap and trade. Some Indonesian companies have started to buy carbon credit. Those companies prefer to adapt early, in order to gain competitive advantage in near future. They argued that they need to participate in carbon mitigation initiative soon, so they don’t need to pay higher carbon prince in the future when the price is increased which may cause competitive disadvantage.
Green-based industries will be the most wanted of future investment and green low-cost financing. The enormous investment in electric vehicle industry and renewable energy sources such as solar, geothermal, and wind power will be an economic booster and absorb a highly skilled workforce. On top of that, Indonesia will be a reference and destination for low-carbon investment in various sectors, such as in the energy sector, transportation, and manufacturing industry by gaining the first mover advantage of carbon economy value policy.
References:
- Dian Eunique Nababan. 2021. Carbon Pricing as An Effort to Decarbonize and Transition Indonesia’s Green Economy. Carbon Pricing as An Effort to Decarbonize and Transition Indonesia’s Green Economy | kumparan.com
- Santia, Tira. 2021. Sri Mulyani Says Carbon Pricing Is Too Cheap To Cause Greenwashing Practices, What Is It? Sri Mulyani Says Carbon Pricing Is Too Cheap To Cause Greenwashing Practices, What Is It? – Business Liputan6.com
Picture: Yahoo.com
