Carbon Tax Policy Toward Net Zero Emission

. The use of fossil fuels as a primary energy source aims to meet the supply of energy needs. However, it is causing detrimental impacts on the environment in the form of pollutants and emissions of carbon dioxide as a greenhouse gas that have the potential for global warming. The net zero emission targets of various countries in 2050 and 2060 are used as a driving force to reduce the use of energy sources that cause greenhouse gas emissions. Furthermore, using renewable energies such as wind, solar, water and biomass energy replace fossil energy in an effort toward net zero emission. The policies of various countries to implement a carbon tax encourage renewable energy use to reach the net zero emission target. Indonesia targets net zero emission to be achieved by 2060 or even earlier. Thus, by 2030, it is targeted to reduce greenhouse gas emissions by 41% from BAU (business as usual) with international assistance and 26% without international assistance. Sweden's success in implementing a carbon tax starting in 1991, which has reduced greenhouse gas emissions by 35%, can be an example for other countries to implement a taxation system on fossil energy. The carbon tax implementation in Indonesia gradually starts on July 1, 2022, limited to coal-fired power plants (PLTU). It uses a cap and tax scheme, with tariffs applied to the number of emissions exceeding the set cap. Therefore, taxpayers can also take advantage of carbon certificates purchased on the carbon market to reduce their tax obligations.


Introduction
Energy is used by various sectors of life, ranging from household needs, small industries, and transportation to extensive industrial activities.The increase in energy consumption is in line with a country's development and economic growth, so high energy consumption per capita corresponds to a country's progress.Various primary energy sources are used to supply energy needs derived from fossil energy sources as non-renewable energy and renewable energy such as wind, solar, geothermal, water and other forms of energy.The world's energy supply over the past 50 years has increased 2.6 times, with the dominance of energy sources derived from petroleum ranked first, followed by coal in second place and natural gas in third place [1].BP (2022) reported the use of fossil energy sources by 82% in 2021, down 3% compared to the previous five years.The proportion of renewable energy use that is still low compared to non-renewable energy is increasing due to the limited supply of fossil energy and environmental preservation.
Burning fossil energy can cause air pollution in the form of sulphur dioxide from the sulphur content in fuel and carbon monoxide from incomplete combustion, both of which are toxic to humans.Sulfur dioxide in the atmosphere can cause acidic rainwater that interferes with plant activity and causes building metal corrosion.Meanwhile, complete combustion causes carbon dioxide emissions as a greenhouse gas that causes global warming and climate change.Using fossil energy increases greenhouse gas emissions, so the earth's temperature has increased since the industrial revolution.
Reducing carbon dioxide emissions is related to the target to be achieved a limit on increasing the global temperature by 1.5 o C. Various efforts to reduce greenhouse gas emissions are achieved through a technological approach and energy mix by increasing the proportion of renewable energy, limiting the generation of greenhouse gas emissions with a net zero emission target, and the policy of imposing a carbon tax on the use of fossil energy.Pricing carbon emissions is essential for moving to carbon-neutral growth [3].This paper discusses the policy and imposition of a carbon tax associated with net zero carbon dioxide emissions.

Net Zero Emission For Green House Gas
According to the EPA (2022),various sources of greenhouse gases cause global warming.These include carbon dioxide (CO2) derived from burning fossil energy sources and land clearing activities, deforestation, methane (CH4) derived from agricultural activities, waste management, nitrous oxide (N2O) derived from agricultural activities due to the use of fertilisers and the combustion of fossil fuels, and fluorinated gases (F-gases) derived from industrial activities, including hexafluoride (SF6).In addition, solid particles of black carbon also contribute to global warming.ICPC (2014) reports that carbon dioxide accounts for 65% of global greenhouse gas emissions from fossil fuel use and industrial processes, plus 11% of carbon dioxide from deforestation and other land use activities.Meanwhile, methane, nitrous oxide and F-gases contributed 16, 6 and 2%, respectively or 24 %.In other words, the most significant contribution to global warming comes from carbon dioxide, as much as 76%.
Economic sectors contributing to greenhouse gas emissions, as written by ICPC (2014), include the electricity and heat production sector 25% of global greenhouse gas emissions recorded in 2010 come from the cultivation of petroleum, coal and natural gas, and the industrial sector that uses fossil fuels by 21%.The agriculture, forestry and other land use sectors account for 24% of global greenhouse gas emissions.Furthermore, the transportation sector contributes 14% of greenhouse gas emissions, with the use of energy coming from petroleum-based fuels, primarily gasoline and diesel.The building sector generates emissions of 6% from onsite energy generation and burning fuels for heat in buildings or cooking in homes and other energy sectors by 10%.
The EPA (2022) states that there has been an increase in carbon dioxide emissions from the use of fossil fuels since the industrial revolution of 1900.In 2011, the increase in CO2 emissions was 90% compared to 1970.Those with around 78% of emissions come from fossil fuel combustion and industrial processes.In the agricultural sector, deforestation and land-use change ranked second.The ever-increasing concentration of greenhouse gases results in global warming and climate change.The UNFCCC (2022) describes efforts to limit the generation of greenhouse gases, agreed upon through the Kyoto Protocol on December 11, 1997, and enacted on February 16 2005 (it entered into force on February 16 2005).The Kyoto Protocol sets an average emission reduction target of 5 per cent emission reduction compared to 1990 levels over the five years of 2008-2012 as the first commitment period.On December 8, 2012, the Doha Amendment to the Kyoto Protocol adopted a second period commitment valid for 2013-2020.The Kyoto Protocol Amendment was enacted on December 31, 2020 (The amendment entered into force on December 31, 2020).During the second commitment period, parties committed to reducing GHG emissions by at least 18 per cent below 1990 levels in the eight years from 2013 to 2020; however, the composition of Parties in the second commitment period is different from the first.COP26 (2021) held in Glasgow, agreed on the Glasgow Climate Pact on November 13, 2021.The Glasgow Climate Pact was to keep alive the hope of limiting the rise in global temperature to 1.5 o C. COP agreed on a position on phasing down unabated coal power.The driving action across the globe on Mitigation through reducing emissions, adaptation by helping those already impacted by climate change, finance to enabling countries to deliver on their climate goals and collaboration through working together to deliver even more significant action.
Efforts to limit global temperature rise to 1.5 o C without a temperature overshoot (with 50% probability) require commitments from all countries to limit greenhouse gas emissions poured in the NDC (Nationally Determined Contributions).This commitment in the energy sector globally is related to achieving zero CO2 emissions by 2050 as scenario EIA (2021) in net zero emissions by 2050 (NZE).

Implementing Carbon Tax For Ghg Reduction
The carbon tax relates to the tax on carbon dioxide gas emissions caused by using fossil energy sources as fuels, especially in the energy generation, industry, and transportation sectors.Energy provides benefits for development and economic growth but has impacts in the form of air and water pollution, global warming, and climate change [9].Costs related to fuel use are not only borne by the user but also related to his business.Losses due to negative impacts are also borne by the community so that it becomes an externality cost.
Therefore, a carbon tax is imposed on those who use the primary energy sources of fossil fuels.The carbon tax aims to discourage the use of fossil energy and use fossil energy as needed so that it is not excessive.Furthermore, Parry et al (2015) stated that the carbon tax could also increase revenue significantly with positive impacts in the form of improving environmental performance, increasing economic efficiency, and reducing tax subsidies.Some countries imposed carbon taxes, such as Finland, Norway, Sweden, and Denmark, in the early 1990s.The following countries were the Netherlands and Germany in the late 1990s, followed by the UK in 2001, the US in 2006, Canada in 2007 and Australia in 2011, followed by various countries in the world as reported by Parry et al. (2105) and the OECD (2018).
GoS (2022) writes about Sweden's experience implementing Carbon Tax as part of the "polluter pays principle".The energy source tax was first imposed in 1920, while the addition of the carbon tax was implemented in 1991.This carbon tax provides incentives to reduce energy consumption, increase energy efficiency and use renewable energy.Swedish experience shows that implementing a carbon tax can be done straightforwardly.Carbon dioxide emissions are comparable to the carbon content in fossil fuels, so there is no need to measure emissions directly.The amount of the EUR 25 carbon tax imposed in 1991 increased to EUR 118 by 2022, allowing the industry to adapt to reducing the use of fossil fuels by replacing renewable fuels.The carbon tax implemented in Sweden has reduced carbon emissions by 35%, while Sweden's GDP increased by 83% in 2020 compared to 1991 before the carbon tax implementation.Figure 1 shows the correlation between GDP development and GHG emissions.The OECD (2018) reported studies on the effective carbon rate (ECR) conducted in 2012, 2015 and 2018 as a measure of the carbon price, which is the sum of three components, namely specific taxes on fossil fuels, carbon taxes and prices of tradable emission permits.The study also measured the carbon pricing gap, which is the difference between actual ECR and benchmark rates.Two benchmark rates are EUR 30 as a low-end estimate of carbon costs and EUR 30 and EUR 60, a midpoint estimate of the carbon costs in 2020 and a low-end estimate for 2030.The existence of a carbon pricing gap shows the part of polluters that do not pay the cost of environmental damage from carbon emissions caused.A country's low carbon pricing gap indicates long-term competitiveness, including being well prepared for the low-carbon economy.Close the gap; it can be done by imposing a carbon tax on emissions that have not been subject to tax through emissions trading or tax reform.
Research on carbon tax in China conducted by Tong et al. (2022) using a dynamic general equilibrium model to analyse the feasibility of achieving a carbon peak discovered that carbon taxes are more effective in reducing pollution emissions than other mitigation efforts.In addition, the green finance approach can also be used to guide green investments, serve green industries, and implement a carbon tax and green finance transformation.
Moz-Christofoletti and Pereda (2021) studied the impact of implementing a carbon tax in Brazil, with a target of reducing GHG emissions by 43 per cent below 2005 levels by 2030, according to the NDC.The application of carbon tax can be used to achieve this target, but the obstacle encountered is the existence of an issue about the distributional impact.Researchers explained that applying carbon taxes in various sectors, including using fossil fuels in households, can reduce emissions in the short term but reduce welfare, especially for the poor.Our results indicate that the incidence of the carbon tax effectively reduces emissions in the short run but imposes welfare losses, especially on the poor.
Mardones and Cabello (2017) explained the application of environmental taxes in Chile, which include CO2, PM, NOx and SO2 emissions in generation and combustion with a power greater than or equal to 50 MW.Various tax scenarios will change industry behaviour to minimise the cost of tax payments, fuel change or installation of abatement

Implementation Of Carbon Tax In Indonesia
Reduction of greenhouse gas emissions with an NDC target by 2030 of 26% of BAU (business as usual) and 41% if there is international assistance.Thus, an increase in the use of renewable energy is carried out and reduces the proportion of fossil energy.A significant reduction in carbon emissions is expected to achieve the Net Zero Emission target by 2060.2022) developed a cost optimisation power sector model to assess the potential role of renewable energies in Indonesia's power sector.Their finding is that Indonesia's power sector planning may be significantly improved in terms of cost and climate protection.The application of carbon tax in Indonesia is stated in Law No. 7 of 2021 regarding Harmonisation of Tax Regulations [17].The carbon tax implementation in Indonesia gradually starts on July 1, 2022, limited to coal-fired power plants (PLTU).It uses a cap and tax scheme, with tariffs applied to the number of emissions exceeding the set cap.Therefore, taxpayers can also take advantage of carbon certificates purchased on the carbon market to reduce their tax obligations.IDR 30 per kg of CO2 is the lowest rate of countries implementing carbon taxes.
According to Shrestha and Marpaung (1999), adopting a carbon tax would increase the electricity system's load, dependability, and efficiency while lowering its capacity.At low tax rates, demand-side management programs would be more beneficial to CO2 abatement than supply-side programs.Additionally, it does not consider nuclear power or any other renewable choices and solely considers hydropower as a fuel source.Therefore, it is assumed that developing nations would have significantly more significant welfare losses because of high carbon taxes.

Conclusion
The increasing need for energy for development and economic growth is still largely dominated by fossil energy (petroleum, coal, natural gas).Burning fossil fuels creates CO2 greenhouse gas emissions that cause global warming and climate change.The limit on the increase in maximal temperature by 1.5 o C is used as a guideline towards net zero emissions by 2050, by significantly reducing the use of fossil energy.The application of carbon tax on the use of fossil energy has proven to be able to significantly reduce CO2 greenhouse gas emissions and GDP continues to increase.Indonesia has begun to apply carbon tax to the electricity generation sector that uses coal fuel, although the price imposed is still low compared to other countries.

Fig. 1 .
Fig.1.The results of the implementation of a carbon tax on GDP increase and a decrease in GHG emissions.Source: Sweden's carbon tax -Government.se /doi.org/10.1051/e3sconf/202344801022(2023) 448 The current scenario of implementing taxes can reduce CO2, PM and SO2 emissions by 11%, 48% and 49%, respectively, but NOx emissions increase by 5%.Applying environmental taxes on all plants can reduce CO2 emissions by 14%.The imposition of a tax on a single pollutant has a low impact on the emissions of other pollutants.
Raihan et al. (2022) investigated the influence of economic growth, fossil fuel energy use, renewable energy use, technological innovation, agricultural productivity, and forested area on carbon dioxide emissions in Indonesia.The empirical findings revealed that a 1% increase in economic growth and fossil fuel energy use would increase carbon dioxide emissions by 0.36% and 0.67% in Indonesia.Sambodo et al. (2022) used a combination of methods to investigate the obstacles preventing Indonesia from implementing low carbon development.It demonstrates that technological and governance constraints have significant and direct negative consequences on low-carbon growth, with governance being the essential barrier.Ordonez et al. (