Carbon tax, energy policy, and sustainable development in Indonesia

Djoni Hartono, Witri Indriyani, Beta Septi Iryani, Ahmad Komarulzaman, Anda Nugroho, Robi Kurniawan

Research output: Contribution to journalArticlepeer-review

6 Citations (Scopus)

Abstract

The effectiveness of carbon taxes has been subject to important debates on the sustainable development pathway. As an archipelagic country that is vulnerable to climate change, the impact of implementing this policy instrument is still understudied in the literature. This study examines the effect of carbon tax and recycling scenarios on the Indonesian economy by employing a dynamic computable general equilibrium (CGE). The result revealed that carbon tax revenue recycling combined with household transfer and investment yielded better GDP and employment rate than a household transfer only in the medium and long terms. Furthermore, the carbon tax revenue recycling on household transfer and renewable energy investment created energy intensity reductions. This study recommends implementing the tax by prioritizing specific sectors, setting appropriate tax levels, applying a transitional policy, and diversifying the investment strategy to align with the sustainable development pathway.

Original languageEnglish
Pages (from-to)2332-2346
Number of pages15
JournalSustainable Development
Volume31
Issue number4
DOIs
Publication statusPublished - Aug 2023

Keywords

  • carbon tax
  • CGE model
  • emission mitigation
  • energy intensity
  • revenue recycling
  • sustainable development

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