Indonesia's carbon tax rollout may face delays

Smoke and steam billows from the coal-fired power plant owned by Indonesia Power, next to an area for Java 9 and 10 Coal-Fired Steam Power Plant Project in Suralaya, Banten province, Indonesia, July 11, 2020. REUTERS/Willy Kurniawan

JAKARTA, March 25 (Reuters) - Indonesia may delay rolling out its carbon tax on coal power plant emissions, officials said on Friday, as authorities have yet to finalise details a week before its April 1 start date.

Under a sweeping law passed in October, Indonesia introduced a new levy for coal power plant operators of 30,000 rupiah ($2.09) per tonne of carbon dioxide equivalent (CO2e) for emissions above a set limit. read more

Indonesia, the world's eighth-largest green house gas emitter, has launched the highly-anticipated carbon tax as part of efforts to phase out the dirty fuel and reach net-zero emissions by 2060. The tax will also be the basis for setting up a carbon market by 2025.

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Top officials are taking into account global "dynamics" like inflation and the war in Ukraine, Hadi Setiawan, an official with Finance Ministry's Fiscal Policy Office told a virtual seminar on Friday.

"We might hear soon the result of (ministerial) discussions, whether we are still going with April 1 or whether there could be some delays," Hadi said.

Rolling out the carbon tax will make Indonesia the fourth country in Asia to introduce such a rule but analysts expect opposition from industries that have warned of implementation problems and higher power costs that could undermine manufacturing competitiveness.

Indonesia, the world's fourth-most populous country where coal powers 60% of electricity use, has trialled the tax for 32 operators. Emissions caps were set at 0.918 tonne CO2e per megawatt hour for power plants with a capacity above 400 MW, 1.013 tonne CO2e for plants with 100 MW-400 MW and 1.094 tonne for mine-mouth plants with the same capacity.

Further details of the trial were not available but a senior energy ministry official said the emission caps were not yet final. read more

($1 = 14,340.0000 rupiah)

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Reporting by Bernadette Christina Munthe, Fransiska Nangoy; Editing by Kanupriya Kapoor

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