UK and Indonesia launch carbon pricing programme and sign Memorandum of Understanding

14 Nov 2022

The governments of the United Kingdom and Indonesia launched a new collaboration on carbon pricing at the Investment & Partnership in Climate Action side-event at the G20 Leaders Summit in Bali on the 14 November 2022.

The signing of a Memorandum of Understanding between the British Embassy Jakarta and the Coordinating Ministry of Marine Affairs and Investment, Republic of Indonesia, on Cooperation on Climate Action and Carbon Pricing, marks the official launch of the Indonesia Carbon Pricing Programme.

The UK Government has committed £2.7 million for this programme as part of the UK’s “Partnering for Accelerated Climate Transitions” (UK PACT) programme. It will bring together international experts, including from the UK, with national experts to work with Indonesia on developing and implementing a domestic carbon pricing policy. Through this, it aims to help Indonesia to achieve real domestic emissions reductions in support of their NDC commitments.

It will support the Coordinating Ministry of Maritime Affairs and Investments by providing recommendations and policy studies relating to the implementation of Presidential Regulation number 98 (2021) on Carbon Pricing Implementation. It will also provide capacity and consensus building to improve knowledge and awareness around carbon pricing policy instruments across the government of Indonesia and relevant sectors, e.g. energy. Additionally, the programme will support the Fiscal Policy Agency and Directorate General of Taxation of the Ministry of Finance, by providing recommendations and policy analysis on the range of design and implementation options for a domestic carbon tax, as well as providing capacity building for policy makers.

Welcoming the portfolio, British Ambassador to Indonesia and Timor Leste, Owen Jenkins CMG said:

“I am very pleased to launch this new programme to support the Government of Indonesia in pursuing cost-effective climate change mitigation through a carbon pricing policy framework. I hope both countries can draw on each other’s experience and expertise on carbon pricing through technical assistance, capacity-building and knowledge exchange. The launch comes at the right time and underlines the importance of carbon pricing to support Indonesia’s commitment on energy transition as outlined in G20 commitments. I am really looking forward to deepening our partnership with Indonesia on this particular sector as we recover together and stronger.”

Leading the programme portfolio coordination, the Coordinating Minister of Marine Affairs and Investment, Bapak Luhut Pandjaitan, said:

“The UK is a close development partner of Indonesia. The launching of this program originated from various high level meetings between the UK and Indonesia, and I am happy that today it finally comes to a fruition. Indonesia is playing a pivotal role in climate mitigation, yet our government administration needs to maintain the pace of economic growth. I see carbon pricing instruments as one of the keys to make this happen: it could mobilise financing to strategic green projects, and thus enable green growth. I hope UK experience and expertise can accelerate this and I am happy to support and monitor the development of Indonesia carbon market and carbon tax.”

Read more about the portfolio of projects funded under Indonesia-UK PACT here.

Notes to editors

The lead organisation and partners responsible for implementing the Carbon Pricing in Indonesia project are:

   Lead organisation   Consortia partners
   Ricardo AEA Ltd.   Indonesia Research Institute for Decarbonisation (IRID)

  Tax Centre FIA Universitas Indonesia (Tax Centre)