It Is Fair To Act Now! The Distributional Impact Of A Carbon Tax Policy In Indonesia

It is widely acknowledged that the three dimensions of sustainable development economic, social, and environmental-are crucial, inseparable and inter- related. In many cases, however, their goals come into conflict with one another. This conflict often arises in the case of environment-related policies, the issue of climate change mitigation being no exception. Climate change mitigation policies to reduce carbon emissions from the energy sector by way of measures such as introducing a carbon tax have been widely known to be regressive i.e., the burden is borne more by lower income rather than higher income households, thereby making income distribution less equitable or fair. An expectation of such an adverse distributive effect may even prevent the policy from being implemented in the first place.