Abstract
Due to the high utilization of carbon results to environmental problems in most provinces in Indonesia, it can be concluded that Indonesia in urgently requires mechanism to solve environmental issues. Many attempts have been conducted by Government of Indonesia to solve the issues such as ratification of Kyoto Protocol and Paris Agreement, further the proposal on Nusantara Carbon Scheme (Skema Karbon Nusantara abbreviated as “SKN”). Unfortunately, the proposal has not adopted yet up to 2021. Calculating based on current situation, Indonesia's greenhouse gas emissions are predicted to increase to 1.573 and 1.751 MtCO2e in 2030, which contrary to the commitment under Nationally Determined Contribution (NDC). There are several options of mechanism to be adopted, the most popular mechanism that deems highly effective are cap and trade as well as carbon tax. Many mechanisms adopted in different countries, it is important to assess which mechanism is more effective to be applied in Indonesia. Therefore, this research is conducted to assess difference on the effectiveness on carbon tax and cap and trade, examine current Indonesia's stance towards the issue, and assess legal principle to be considered when applying the mechanism in Indonesia.Keywords: Carbon Tax, Cap and Trade, IndonesiaJEL Classifications: K32, K34DOI: https://doi.org/10.32479/ijeep.11375
Highlights
Due to the high utilization of carbon results to environmental problems in most provinces in Indonesia, among others, air and water pollution in megapolitan cities such as Jakarta and Bandung; loss of the country’s valuable forests due to unsustainable agricultural practices in the provinces of Sumatra, Kalimantan, Sulawesi, as well as Papua and West Papua; haphazard urbanization phase that results in traffic and urban sprawl; loss of fisheries, water supplies, and the country’s vibrant biodiversity; and contribution to the detrimental impacts of global climate change, such as sea level increase, severe weather disasters, and lower productivity as a result of increasing temperatures (National Development Planning Agency, 2019)
Discussing the Quantitative Effectiveness on the Implementation on Cap and Trade as Well as Carbon Tax As this research discussing with regards to the effectiveness on cap and trade and carbon tax, it is important to gain perspective on how much dangerous substances may be reduced by both applications
It can be concluded that the quantity of effectiveness between Cap and Trade as well as Carbon is relatively similar, which is between 2%-4%
Summary
Due to the high utilization of carbon results to environmental problems in most provinces in Indonesia, among others, air and water pollution in megapolitan cities such as Jakarta and Bandung; loss of the country’s valuable forests due to unsustainable agricultural practices in the provinces of Sumatra, Kalimantan, Sulawesi, as well as Papua and West Papua; haphazard urbanization phase that results in traffic and urban sprawl; loss of fisheries, water supplies, and the country’s vibrant biodiversity; and contribution to the detrimental impacts of global climate change, such as sea level increase, severe weather disasters, and lower productivity as a result of increasing temperatures (National Development Planning Agency, 2019). The Kyoto Protocol’s general principles sought to reduce greenhouse gas pollution by developing nations, as well as the right to extend credit for lowering emissions, quota exchanges, and foreign reimbursement (Sindico, 2011). In term of mechanism of reducing the number of emission, Kyoto Protocol provides flexible mechanism which consists of Emission Trading (ET), Clean Development Mechanism (CDM), and Joint Implementation (JI) (Anggraini, 2009)
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