Carbon pricing in Indonesia
Challenge
The UK PACT programme (Partnering for Accelerated Climate Transitions) is an initiative funded by the UK Government that supports the development of skills and capabilities in countries looking to meet carbon emissions reduction targets or launch climate change mitigation projects. Typical initiatives that are supported include low-carbon transport schemes, energy efficiency investments and climate policy development.
The programme facilitates knowledge sharing and secondments of experienced policy analysts, for example, to ensure local initiatives have access to all the specialist insight they require.
In July 2022, Ricardo was appointed to deliver a three-year assignment advising the Indonesian government's Co-ordinating Ministry of Maritime and Investment Affairs (CMMIA) on carbon pricing policy instruments, and the Ministry of Finance (MoF) on the design of a climate change tax.
Approach
Our work includes drafting ministerial regulations based on international best practice; economic modelling (using the Global Trade Analysis Project computable general equilibrium outputs); and designing carbon market infrastructure such as registry, Measurement, Reporting and Verification (MRV) requirements, and emissions trading.
For CMMIA, we are helping to prepare ministerial regulations in support of Indonesia’s Nationally Determined Contributions (NDCs) on climate mitigation targets and, in consultation with industry and civic representatives, are developing a roadmap towards market launch.
On behalf of the MoF, our teams are providing expert analysis on all aspects of carbon tax design – such as assessed impacts on industry sectors and stakeholder groups – and will deliver a bespoke training programme on carbon price modelling that enables government officials to respond to future market changes.
Result
The Government of Indonesia will benefit greatly from increased capabilities around carbon pricing policy. New regulations, for example, will be drafted on international best practice to ensure policies are both robust and workable.
Our ongoing stakeholder consultation work is ensuring a consensus is upheld between industry and civil society stakeholders, as well as increasing awareness amongst the general public, all of which will allow a smoother pathway for the implementation of carbon pricing.