Indonesia could push back carbon tax set to start next month

2 minute read

Coal is seen as a heavy machinery unloads it from the barges into a truck to be distributed, at the Karya Citra Nusantara port in North Jakarta, Indonesia, January 13, 2022. REUTERS/Willy Kurniawan

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JAKARTA, June 23 (Reuters) - Indonesia's carbon tax, due to take effect next month, could be delayed due to global economic conditions and to give authorities time to prepare for it, an official said on Thursday.

Among the top 10 carbon polluters globally and the world's largest exporter of thermal coal, Indonesia had already delayed the tax to July from April.

The much-anticipated tax is part of Jakarta's commitment to reach net-zero emissions by 2060 and comes as it prepares to host the G20 leaders summit in November.

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"Considering global economic conditions that have not been conducive and we also are continuing to perfect our carbon market scheme ... the government is considering to review again the implementation of the carbon tax this July," said Febrio Kacaribu, the head of the finance ministry's fiscal policy office.

He added, however, that Indonesia still aims to start charging a carbon tax on greenhouse gas emissions produced by coal-fired power plants in 2022 and this will be showcased as a strategic policy at the G20 summit.

Local clean energy think tank CERAH argued the government should apply the carbon tax as soon as possible to generate funds to finance green energy development.

"By applying a carbon tax, the state revenues can be diverted towards renewable energy which has been proven to encourage economic recovery after the pandemic in other countries," Mahawira Dillon, a CERAH researcher, told Reuters.

Indonesian authorities have faced criticism from environmentalists that the rate of its proposed carbon tax, at 30,000 rupiah ($2.02) per ton of CO2 equivalent, will be too low to discourage the burning of coal for power.

Government officials have said the rate would be kept low initially due to concerns over affordability of electricity but raised to match market prices for carbon once such trading is established.

($1 = 14,835.0000 rupiah)

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Reporting by Gayatri Suroyo and Stefanno Sulaiman; editing by Kanupriya Kapoor and Jason Neely

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