A Conceptual Approach to Defining a Carbon Tax in the Transport Sector in Indonesia: Economic, Social, and Environmental Aspects

Diaz Pranita and Sri Sarjana ()
Additional contact information
Diaz Pranita: Applied Social Humanieties Department, Vocational Education Faculty, Universitas Indonesia, Kota Depok 16424, Indonesia
Sri Sarjana: Marketing, Innovation and Technology Department, Politeknik Transportasi Darat Indonesia—STTD, Kabupaten Bekasi 17520, Indonesia

Energies, 2025, vol. 18, issue 13, 1-33

Abstract: The implementation of a carbon tax in the transportation sector aims to reduce carbon emissions and encourage the transition to sustainable mobility amid increasing urbanization. The transportation sector is one of the largest contributors of carbon emissions in Indonesia, requiring effective policies to reduce its environmental impacts. Therefore, this study aims to find a more optimal carbon tax formula that is in accordance with Indonesia’s socio-economic conditions. The approach used includes analysis of transportation emission data, the economic impact of different carbon tax schemes, and tax revenue allocation strategies to support green infrastructure and sustainable transportation. The results of the study indicate that an adaptive carbon tax formula in the transportation sector is able to balance the economic burden, emission reduction targets, social justice, behavioral changes, and revenue allocation for green infrastructure, thus ensuring a just and sustainable transition. A progressive carbon tax, based on vehicle emission levels and fuel types, can encourage the transition to low-emission vehicles without excessively burdening low-income communities. With this approach, carbon tax policy functions not only as a fiscal instrument but also as a transformative strategy in creating an environmentally friendly and equitable transportation system.

Keywords: carbon tax; social cost of carbon; emission reduction; revenue for environmental programs; social justice and equity (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/1996-1073/18/13/3493/pdf (application/pdf)
https://www.mdpi.com/1996-1073/18/13/3493/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jeners:v:18:y:2025:i:13:p:3493-:d:1693231

Access Statistics for this article

Energies is currently edited by Ms. Agatha Cao

More articles in Energies from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().