The effects of carbon taxes on firms^ carbon emission: Simulation model in Indonesia Andewi Rokhmawati
Universitas Riau
Abstract
This research examines the effect of taxes on carbon on firms^ carbon emissions. To examine the effect, this research used a manufacturing firm-level dataset from 2012-2019. The data were secondary data collected by Indonesian Statistics. The research did not include 2020 and 2021 because Indonesian Statistics did not survey those years because of the Covid 19 pandemic. It did not include the data in 2016 either due to the unavailability of data. The research data includes the types and numbers of energy consumed by the firms to calculate the firms^ carbon emission, investment, and value-added. By using the common effect approach, the study result indicates that increasing the marginal cost of carbon taxes increased firms^ carbon emissions. Thus, this result did not provide empirical evidence that the IDR 30.00 tariff of a carbon tax is an effective carbon pricing policy. This might be because the carbon tax tariff of IDR 30.00 per kilogram of CO2e is still low, so the tariff did not effectively push firms to consume fossil fuels more efficiently and adopt clean technology.
