Challenges of Implementing Carbon Emission Taxes in Supporting the Economy and Renewable Energy

Global warming is a major issue caused by greenhouse gas emissions, with 74% originating from fossil fuels. Greenhouse gas effects can come from both natural and human-made sources. The implementation of a carbon tax is an effective option for reducing carbon emissions; however, its application in Indonesia requires further discussion, as it must be implemented gradually and with caution. This study employs a qualitative method using content analysis and a scoping review approach, involving an in-depth discussion of literature and content, as well as a thorough identification of research findings related to the study topic. The findings indicate that several interrelated aspects must be considered in the implementation of a carbon tax in Indonesia, namely labor, capital, and market prices. These three aspects are correlated, meaning that the introduction of a carbon tax may affect one or all of them, particularly public welfare. Therefore, in implementing a carbon tax, the government should formulate policies that maximize carbon tax revenue while preventing economic downturns for households by applying a low and gradual tax rate and optimizing tax revenues for the development of renewable energy.