Indonesia’s environmental politics are marked by a persistent contradiction: the state has adopted ambitious climate commitments while continuing to deepen coal dependency, expand downstream mineral industrialisation, and delay effective carbon pricing. This paper examines why carbon taxation and broader coal transition policies remain politically stalled despite mounting domestic and international pressure for decarbonisation. It argues that the central obstacle is not weak technical design alone, but a political-economic configuration in which extractive rents remain foundational to state revenue, business power, and elite coalition maintenance.
The paper develops an integrated framework that combines historical institutionalism and political settlements theory, while situating both within Indonesia’s broader political economy of extraction. Historical institutionalism explains how legacies of patronage, conglomerate influence, and bureaucratic nationalism have embedded extractive interests across regulatory and political institutions. These institutional legacies have not simply persisted; they have shaped the terms on which new climate policies are interpreted, negotiated, and constrained. Political settlements theory then clarifies why reforms that threaten coal rents, such as carbon taxation or accelerated coal phase-out, face structural resistance from actors whose political authority depends on preserving existing revenue flows and industrial privileges.
Taken together, these lenses show that Indonesia’s stalled carbon tax is not an isolated implementation failure, but a politically structured outcome of coal-dependent developmentalism and elite power. Climate ambition in resource-dependent states is repeatedly diluted, delayed, or repurposed even where formal commitments are strong because reform must pass through institutions that have long been organised around extractive accumulation and coalitional stability. By locating climate policy failure within the political economy of extraction, the paper offers a framework for analysing how entrenched rent relations constrain decarbonisation in fossil fuel-dependent settings beyond Indonesia.
