The Government's Plan to Reduce Jakarta's Pollution Does Not Include a Carbon Tax

Friday, 25 August 2023

The Government's Plan to Reduce Jakarta's Pollution Does Not Include a Carbon Tax

JAKARTA. The government chooses not to make carbon tax policy the preferred solution to address Jakarta's air pollution.

This is because the government will still impose a carbon tax starting in 2025, to anticipate the implementation of the Carbon Border Adjustment Mechanism (CBAM), which will be implemented by European countries.

Quoting, Jakarta's air pollution problem will be handled in other ways—for example, the use of more environmentally friendly technology in Steam Power Plants (PLTU).

Given, that PLTU is considered as one of the factors that contribute to air pollution in Jakarta.

In addition to the use of technology, the government will also reduce the use of power plants that have been operating for decades, gradually or phasing down.

The government also argues that the implementation of a carbon tax cannot be done this year since there must be incentive and disincentive mechanisms prepared. However, carbon trading through carbon exchanges will begin in September 2023.

For information, the imposition of a carbon tax is regulated in the Law (UU) on Harmonization of Tax Regulations (HPP). In this regulation, the government has set the carbon tax rate higher or equal to the carbon price in the carbon market.

The lowest rate is IDR 30.00 per kilogram of carbon dioxide equivalent (CO2e).

The plan is to impose a carbon tax in several stages. This policy will be imposed on steam power plants (PLTU) for the first stage. It will then be expanded in 2025.

PLTU is considered easier to control so this policy will be easier to implement. In addition, the application of carbon tax on PLTU will be a reference in determining when to expand. (ASP/KEN)


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