Redefining Carbon Accountability: The Impact of Consumption-Based Accounting on Indonesia Climate Policy and Carbon Trading Potential
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Carbon Markets, Carbon Trading, Climate Policy, Consumption-Based Accounting (CBA), Export-Related Emissions
Abstract
Research Originality – This research distinguishes itself by pivoting from traditional carbon accounting to a more nuanced quantification of the fiscal implications inherent in export-embedded emissions. While the bulk of existing literature remains focused on the experiences of developed nations, this study explicitly links CBA to Indonesia’s domestic carbon trading potential and its strategic roadmap toward net-zero.
Research Objectives – This study aims to examine how a shift toward CBA might reshape Indonesia’s climate policy and carbon trading potential by quantifying emissions linked to international trade.
Research Methods – The study uses an environmentally extended Single-Region Input-Output (SRIO) analysis. The dataset spans two decades (2000-2022) and covers 35 industrial sectors. This approach was made possible by integrating two Input-Output datasets: World Input-Output Database and the Asian Development Bank, integrated along environmental accounts for CO₂ emissions.
Empirical Result – Roughly 24% of Indonesia’s total carbon emissions are actually embedded in its net exports. By transitioning from PBA to a CBA framework, Indonesia could convert these export-related emissions into tradable carbon credits. This could potentially unlock a revenue stream of approximately USD 6.89 billion per year.
Implications – These findings provide an evidence-based framework for the Indonesian government to strengthen its leverage in global carbon markets and meet 2060 net-zero emissions target more aggressively. Theoretically, this paper contributes to the expanding field of carbon responsibility, demonstrating that CBA can be a vital tool for strengthening equity and transparency in global emissions accounting.
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