Indonesia passes carbon tax bill as part of GHG regulation effort
Foreign Legal Consultant (partner level), Ginting & Reksodiputro in association with Allen & Overy
Foreign Legal Consultant, Ginting & Reksodiputro in association with Allen & Overy
Senior Associate, Ginting & Reksodiputro in association with Allen & Overy
21 October 2021
There are two important legislative developments in Indonesia as the country attempts to meet its obligations under the Paris Agreement. Indonesia’s House of Representatives (Dewan Perwakilan Rakyat or DPR) has passed an omnibus bill including, among other things, a carbon tax, that now awaits President Jokowi’s signature.
There is also a current draft presidential regulation that outlines a larger emissions reduction framework, including a cap-and-trade system. The carbon tax will eventually be part of this emissions reduction framework.
Putting in place this framework is a step towards meeting Indonesia’s treaty obligations, but structured and coordinated implementing regulations will be necessary to establish both the carbon tax and the cap-and-trade system as effective policy.
The carbon tax and cap-and-trade system may eventually impact key sectors of the economy and every level of government.