Protecting the Environment Through Carbon Tax

Carbonium or what we are more familiar with as carbon with solid physical properties is very widely used in everyday human life. Carbon is used as a means of generating electricity, cleaning metals, and so on. However, the use of carbon does not mean that it has no side effects. The side effect in this case the negative effect resulting from the use of carbon is climate change.

Reporting from nationalgeographic.com, scientists have documented some of the effects of climate change such as melting ice at the Earth’s poles (the ice sheet covering West Antarctica and Greenland, as well as Arctic sea ice) causing rising sea levels.

Several ways are taken by humans to reduce the negative impact of using carbon, such as rejuvenating forests, using environmentally friendly transportation such as bicycles, bringing their own shopping bags and drink bottles, to the use of products that can be recycled.

However, these efforts are not enough to reduce the negative impact of using carbon. Economics, according to economists, need to be done, such as plastic packaging tax (plastic packaging tax) and carbon tax (carbon tax).

Through the page https://www.un.org/en/climatechange/net-zero-coalition released by the United Nations (UN), Indonesia is one of the top ten emitting countries of greenhouse gases in the world and produces more than two-thirds of global emissions. One of the greenhouse gas emissions comes from the negative impact of using carbon.

Important Things about Carbon Tax

In general, the definition of a carbon tax is a tax levied on the use of carbon-containing fuels. Indonesia has its own definition of a carbon tax in accordance with Law Number 7 of 2021 concerning the Harmonization of Tax Regulations (UU HPP). Carbon tax is defined as the imposition of a tax on carbon emissions that have a negative impact on the environment.

The background of Indonesia taking part in making carbon tax regulations is part of Indonesia’s commitment to reduce greenhouse gases in accordance with the Nationally Determined Contribution (NDC) in the Paris Agreement in 2016. With this Paris Agreement, Indonesia has an obligation to reduce emissions of at least 45 percent of total emission levels in 2010.

This carbon tax will later be subject to a tariff of IDR 30 per kilogram of carbon dioxide equivalent (CO2e) or an equivalent unit using a tax mechanism based on emission limits.

Not Only in Indonesia

Carbon taxes have been implemented in Canada, Colombia, Mexico, New Zealand, and several countries in Asia such as Singapore and China. According to the author, it is time for Indonesia to implement this rule. This is because coal is still the main source of electricity in Indonesia, with an estimated total installed power generation capacity from steam power plants (PLTU), for example, reaching 35,216 MW, equivalent to 49.67 percent of the total national capacity of 70,900 MW.

Each country that implements a carbon tax has its own rules regarding the types and amounts of carbon-containing fuels that are taxed. In Indonesia, starting April 1, 2022, the HPP Law states that a carbon tax will be imposed on entities operating in the coal-fired power plant sector. If Indonesia does not act immediately, the author is worried that Indonesia will not reach the world target in 2050, namely zero emissions.

Energy Transition to Environmentally Friendly Energy

The World Economic Forum released Energy Transition Index data in ASEAN countries in 2021 which showed Indonesia was still in sixth place with 56 points below the Philippines and still far from Singapore at 67 points.

With a carbon tax, carbon use will be reduced, resulting in reduced emissions and spurring the energy transition. Energy transition into environmentally friendly energy such as solar energy, geothermal energy, wave energy and ocean waves, wind energy, and biomass energy.

When the energy transition is maximized, according to the author, this carbon tax is no longer needed and Indonesia can enjoy a healthy environment and increase the life expectancy of the Indonesian people.

Need Support from All Parties

Protecting the environment through a carbon tax can be effective if all parties support and monitor the implementation of this carbon tax. This is because taxes are actually intended to increase state revenue which will be used to finance state expenditures.

People also need to be more aware and concerned about a clean and healthy environment. The author hopes that in 2050, the use of carbon as energy generator will be much reduced by the transition of energy that was previously based on fossil materials to zero emission and environmentally friendly energy.