How Do You Turn the Coal Industry Green? - Tax Concepts in Germany and Indonesia: Best Practice, IDX Carbon and CBAM

Poster Abstract: Coal mining is one of Indonesia`s most important commodities. Indonesia plans to achieve its 2030 emission reduction goal and the Net Zero 2060 target. Carbon pricing is one of the focal instruments to combat climate change. However, the implementation of carbon taxes gets pushed back in Indonesia due to resistance from industry and politics.

Climate change is a global problem that goes beyond national borders. Therefore, the poster aims to be a starting point for a best practice analysis by means of comparison of the coal taxation in Germany with regards to climate change and the Indonesian plans concerning coal taxation. The poster will discuss advantage and disadvantages of the German taxation regime which is in line with the Framework of the EU Energy Tax Directive in comparison to strategic concepts discussed in Indonesia for the taxation of the coal sector, a first step being the state-backed carbon trading exchange platform (IDX Carbon).

Special focus will also be put on the Carbon Border Adjustment Mechanism concerning the carbon leakage process in Germany. CBAM aims to implement an equivalence of the carbon price of imports with the carbon price of domestic production. Therefore, CBAM will also have direct implications for coal producing countries like Indonesia. The poster will address how Indonesia can adjust to CBAM and how this is in line with the IDX Carbon. The poster will also address measures to increase public and industry acceptance in Germany and Indonesia.