Advancing the carbon pricing framework in Indonesia: A systematic review of policies, challenges, and global lessons

Abstract

Indonesia, the largest GHG emitter and carbon sink reservoir in Southeast Asia, faces the dual challenge of achieving net zero emissions by 2060 while sustaining economic growth. This research examines Indonesia's carbon pricing framework, focusing on two key mechanisms: a modest carbon tax and a nascent ETS. Using an SLR and bibliometric analysis, it evaluates implementation progress, including the introduction of a carbon tax at 2 USD per tonne of ${\text{CO}}_2$ and an ETS targeting coal-fired power plants, alongside persistent challenges such as limited sectoral coverage, low price signals, and institutional fragmentation. Drawing insights from both emerging economies (e.g., South Africa, Colombia) and advanced systems (e.g., Sweden, Canada), the analysis underscores the importance of phased implementation, strong governance, and international alignment. The paper proposes actionable pathways, including a graduated carbon tax roadmap, staged ETS expansion, and enhanced regional collaboration within ASEAN. This study offers a novel scientific contribution by conducting a multidimensional mapping of Indonesia's carbon pricing literature, which categorizes 65 studies by policy instruments, implementation phases, and sectoral coverage, and by identifying a critical disconnect between academic recommendations and real-world implementation. These findings provide an evidence-based foundation for designing more effective and internationally aligned policy reforms. By aligning these reforms with global best practices and leveraging domestic resources, Indonesia can strengthen its carbon pricing architecture and offer a replicable model for sustainable development in other emerging economies.