What it is
A carbon price changes what coal-fired power costs relative to renewables, and raises revenue that can be spent on the transition.
Indonesia already has the instruments: an emissions trading scheme for coal-fired power plants, a carbon tax written into law, the IDXCarbon exchange, and, since Perpres 110/2025, a revised framework for carbon pricing across sectors. How they are set determines whether they move investment, and where the revenue goes.
The project examines carbon pricing mechanisms that can facilitate the energy transition: the price levels and coverage that would shift power-sector investment, how allowances and offsets interact, and how revenue can be recycled. It is part of the work on Making Just Energy Transition Work in Indonesia.
Why it matters
A carbon price that is too low changes nothing; one that ignores who pays can stall the transition politically.
Higher electricity costs fall unevenly on households, industries and regions. The same revenue that a carbon price raises can protect the most exposed, fund early coal retirement and lower the cost of capital for renewables, which is what makes the transition just rather than only fast. The current state of the rules is tracked in Carbon Market Regulations.
Reform of Indonesia’s power market, where reliability, affordability, equity and decarbonization collide.
What the energy transition means for the economies, jobs and budgets of Indonesia’s provinces and districts.
Where the energy work is done, with the full list of active, incubating and completed projects.
The advisory practice this project sits within, with its programs, projects and team.