An Analysis of the Impact of Carbon Emission Policy on Project Economics in Indonesia

Abstract

The Paris Agreement is to limit global warming to well below 2, prefer¬ably to 1.5 °C, compared to pre-industrial levels. In light of the growing urgency of the climate crisis, some countries and regions such as Canada and EU imposed carbon tax or launched carbon trading market to tackle climate change. The oil and gas companies will face more challenges under the global energy transfor¬mation and the climate crisis. This paper uses SWOT analysis to evaluate the oil and gas project’s competitive position from the aspects of strengths, weaknesses, opportunities and threats. The economic evaluation model considering the carbon tax is proposed. This model analyzes the impact of carbon tax on project cash flow and tests the sensitivity of carbon tax. Finally, some suggestions are put forward for the oil company.