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Experts say carbon tax’s benefits could outweigh costs
A planned carbon tax is expected to impact state-owned electricity firm PLN’s business, but experts say the levy could benefit the electricity sector overall, despite initially higher energy costs.
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President Joko “Jokowi” Widodo, Financial Services Authority (OJK) chair Mahendra Siregar and several cabinet ministers attend the launch of the Indonesia Carbon Exchange (IDX Carbon) on Sept. 26 at the Indonesia Stock Exchange (IDX) building in Jakarta. (Antara/IDX)
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planned carbon tax is expected to impact state-owned electricity firm PLN’s business, but experts say the levy could benefit the electricity sector overall, despite potentially leading to higher energy costs.
Energy and Mineral Resources Ministry official Ida Nuryatin Finahari said the proposed carbon tax would make it more costly for PLN to produce electricity, adding that the state-owned utility accounted for almost all of the country’s coal power generation.
The same would go for carbon trading, she added, which the government intends to implement alongside the carbon tax.
Ida did not detail the broader impact on the energy sector beyond PLN, saying the government was still studying the issue. She noted that the implementation of the carbon tax was awaiting the issuance of an implementing regulation from the Finance Ministry.
A representative from the Finance Ministry did not immediately respond to a request for comment.
Luthfyana Larasati, a manager at the Climate Policy Initiative, said the government would likely levy the carbon tax directly on electricity producers, including PLN and independent power producers (IPPs).
If the IPPs saw higher electricity production costs as a result, they would likely pass the burden on to PLN as the offtaker, she said, but whether the customer would feel the pinch remained unclear.
