CARBON TAX IMPACT SIMULATION: CARBON EMISSIONS ANALYSIS BEFORE AND AFTER IMPLEMENTATION IN INDONESIA
Andewi Rokhmawati, Vita Sarasi, Yusni Maulida, Ando Fahda Aulia, Lailan Tawila Berampu

Universitas Riau, Universitas Padjadjaran, Universitas Riau, Universitas Riau, Universitas Riau

Abstract

This study delves into the impact of implementing a carbon tax in Indonesia by comparing scenarios where the tax is applied and where it is not. Using a system dynamics (SD) model integrated with the STIRPAT model, the research simulates the effects of an IDR 30 per kg CO2e carbon tax on the country^s carbon emissions. The STIRPAT model is a widely used tool in environmental research that analyzes the impact of population, affluence, and technology on environmental degradation. The goal is to show how effective carbon tax policies might be in cutting emissions and helping Indonesia move closer to its environmental targets. The results show a noticeable difference in carbon emissions between the scenarios with and without the tax. Specifically, emissions are much higher when the carbon tax is not in place, highlighting the tax^s significance as a critical component in emission reduction strategies. Statistical analyses back up these findings, showing that the carbon tax is crucial in encouraging lower emissions by making carbon-heavy activities more costly. The study emphasizes the importance of continually refining and expanding carbon tax measures, as it is an ongoing process that will be vital for Indonesia to meet its broader environmental and economic goals, including its commitments under international climate agreements. In conclusion, implementing the IDR 30 carbon tax is a significant beginning in achieving Indonesia^s sustainability goals. Cutting emissions and using cleaner energy can help the country grow without harming the environment. This makes it clear that leaders should improve the carbon tax to fight climate change better while also helping Indonesia develop in the long run.

Keywords: Carbon Tax, Carbon Emission, Comparative Analysis, System Dynamics, STIRPAT

Topic: Financial management