...The optimal carbon tax reduces emissions from burning fossil fuel, both in the short and medium run. Furthermore, it brings forward the date that renewables take over from fossil fuel and encourages the market to keep more fossil fuel locked up. A renewables subsidy induces faster fossil fuel...

This paper, using a computable general equilibrium model with highly disaggregated household groups, analyses the distributional impact of a carbon tax in a developing economy. Indonesia, ont of the largest carbon emitters among developong countries, is utilized as a case study in this paper....