The Indonesian government is planning plans to implement a carbon tax of IDR 30 per kilogram (kg) of carbon dioxide equivalent (CO2e) or equivalent units as of April 1, 2022, to reduce carbon emissions that have a negative impact on the environment. The coal-based Power Plants are also subject to carbon tax, CNBC reported.
Chairman of the Indonesian Private Electricity Producers Association (APLSI) Arthur Simatupang said this carbon tax will have an impact on the commercial side, depending on the power purchase agreement (PPA) with PT PLN (Persero).
"We are still studying this regulation, which of course will have an impact on the commercial side and depend on the arrangements in each PPA," he told CNBC Indonesia, Monday, as reported by CNBC.
CNBC further noted that, he said that APLSI understands the purpose of implementing this carbon tax to reduce emissions, but according to him it must be gradual and planned in the long term.
"Power plant entrepreneurs always want to reduce their carbon footprint in the future," he said.
He further said, in order to technically suppress carbon production, APLSI anticipates using boiler technology that is much more efficient and low in emissions, so that it can be more environmentally friendly.
"To our knowledge, what the government will do is not in the form of a carbon tax, but rather carbon trading with a stamp (emission limit)," he said. Regarding the carbon tax, he emphasized that APLSI is ready to discuss with the government in making the right formulation. "So that a smooth and sustainable energy transition can occur," he continued, CNBC said in its report.
The rules regarding this carbon tax are contained in the Law on the Harmonization of Tax Regulations (RUU HPP). The tariff set by the government is lower than the previous proposal of Rp 75 per kg CO2 equivalent.
He explained that a carbon tax is imposed on carbon emissions that have a negative impact on the environment. The imposition of a carbon tax is carried out by taking into account the carbon tax roadmap, and/or the carbon market roadmap, accordingto report.
The carbon roadmap in question contains a strategy for reducing carbon emissions, priority sector targets, alignment with new and renewable energy development, and/or alignment between various other policies.
The carbon tax roadmap policy is set by the government with the approval of the Indonesian House of Representatives (DPR). Then, the subject of the carbon tax is an individual or entity that buys goods that contain carbon and/or carries out activities that produce carbon emissions.
A carbon tax is payable on the purchase of carbon-containing goods or activities that produce a certain amount of carbon emissions in a certain period.
As for what is categorized when carbon tax is payable, namely at the time of purchase of goods containing carbon, at the end of the calendar year period from activities that produce a certain amount of carbon emissions, or other times that are further regulated based on government regulations.
The imposition of a carbon tax is carried out as follows:
- In 2021, the carbon trading mechanism will be developed.
- From 2022 to 2024, a tax mechanism based on emission limits (cap and tax) is applied to the power generation sector, limited to coal-fired Steam Power Plants (PLTU).
- In 2025 and beyond, the full implementation of carbon trading and the expansion of the carbon tax, taxation sector in stages according to the readiness of the relevant sectors by taking into account, among other things, economic conditions, readiness of actors, impacts, and/or scale.
Source: CNBC
