Indonesia is the 6th largest carbon emitter in the world. It is also one of the most vulnerable countries to climate change, with a population of 250 million people spread across thousands of islands and lowlying coastal areas. This paper investigates the political challenges to introduce a carbon tax as a climate policy option in Indonesia. It is based on the analysis of 29 indepth elite interviews with key Indonesian stakeholders. It finds that, while political elites seem, in principle, to be open to the idea of a carbon tax, they are also cognisant of the impact of corruption challenges in the Indonesia context. Meanwhile, the business community opposes a carbon tax and fears the introduction of additional costs that may influence productivity and competitiveness. Non-government organisations, however, support its immediate introduction. Overall, this work makes an important contribution to the ever-growing academic debate on the introduction of carbon prices to assist carbon mitigation efforts. It also has important ramifications in terms of transparency, accountability and political pluralism in Indonesia.

This study observes the factors affecting the changes of energy intensity in Indonesia and five selected Association of South East Asian Nations (ASEAN) countries during the period particularly measuring its impact during 1997 financial crisis. By employing the Logaritmic Mean Divisia Index, this study summaries that the changes in energy intensity in the ASEAN-6 economies was a result of the changes within industry energy intensity (intensity effect). The intensity effects also provide a proxy measure of energy efficiency activity at the sectoral level. Overall, the general direction of the intensity effect in all ASEAN countries is downward. These decreasing intensity effects show that the trend towards technological changes in ASEAN countries has assisted significantly in increasing energy efficiency. Further, all the ASEAN-6 countries showed a change in the structure index indicates that the structure of economy periodically shifted away from less energy intensive sector to more energy intensive sector.