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Indonesia's Commitment to Reducing GHG and Its Impact on the Indonesian Economy: CGE Approach

Dasih, Kuntari and Widodo, Tri (2019): Indonesia's Commitment to Reducing GHG and Its Impact on the Indonesian Economy: CGE Approach.

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Abstract

To achieve the carbon emission target in Indonesia in 2030, what trade offs will be carried out if viewed from an economic perspective such as GDP, energy consumption? This study employs the CGE model to see the impact of imposing carbon tax on GDP and GHG emissions in Indonesia. Five scenarios have been applied to gauge the linkage between those factors. The main finding in this study is that carbon tax can reduce emissions in large numbers in Indonesia thus that carbon tax can be used as an effective emission control instrument. However, what needs to be concerned is the impact of carbon tax on decreasing GDP. It is different from Singapore where the impact of carbon tax almost does not affect GDP, in Indonesia even though the tax is applied in small amounts but has a significant effect on changes in GDP.

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