Munich Personal RePEc Archive

Understanding the political challenges of introducing a carbon tax in Indonesia

Rakhmindyarto, Rakhmindyarto and Setyawan, Dhani (2020): Understanding the political challenges of introducing a carbon tax in Indonesia. Published in: International Journal of Environmental Science and Technology (15 September 2020)

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Indonesia is the 6th largest carbon emitter in the world. It is also one of the most vulnerable countries to climate change, with a population of 250 million people spread across thousands of islands and low-lying coastal areas. This paper investigates the political challenges to introduce a carbon tax as a climate policy option in Indonesia. It is based on the analysis of 29 in�depth elite interviews with key Indonesian stakeholders. It fnds that, while political elites seem, in principle, to be open to the idea of a carbon tax, they are also cognisant of the impact of corruption challenges in the Indonesia context. Meanwhile, the business community opposes a carbon tax and fears the introduction of additional costs that may infuence productivity and competitiveness. Non-government organisations, however, support its immediate introduction. Overall, this work makes an important contribution to the ever-growing academic debate on the introduction of carbon prices to assist carbon mitiga�tion eforts. It also has important ramifcations in terms of transparency, accountability and political pluralism in Indonesia.

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