The Readiness of Energy and Basic Materials Sectors and Carbon Tax Plan Role in Improving Environmental Quality in Indonesia

The carbon tax plan in Indonesia can reduce environmental problems by triggering companies to formulate CO2 emissions reduction strategies, especially in the energy and basic materials sectors which have high emission levels. This research examined the relationship between energy consumption, environmental costs, carbon management systems, and foreign ownership on the environmental quality and to determine whether there are differences before and after the carbon tax plan. This study used a quantitative method with SEM-PLS and comparative analysis. The data were collected from companies in the energy and basic materials sectors listed on the Indonesia Stock Exchange in 2021 and 2022 to describe the situation before and after the implementation of a carbon tax plan in Indonesia. The findings showed that energy consumption has a negative relationship, while environmental costs, carbon management systems, and foreign ownership do not have a significant relationship with environmental quality, but environmental costs have an indirect positive relationship with environmental quality by reducing energy consumption. Other findings showed significant changes to the carbon management system following the envisaged introduction of a carbon tax. Meanwhile, environmental quality, energy consumption, and environmental costs had not changed significantly yet after the carbon tax plan in Indonesia.