We combine the Environmentally-Extended Multi-Regional Input-Output (EE MRIO) analysis with a microsimulation analysis to estimate the distributional implications of carbon policy reform, a combination of carbon tax and revenue recycling initiatives, on households in Indonesia. We consider two relevant scenarios: an “economy-wide” carbon tax versus an “electricity-only” carbon tax. The impact of carbon policy reform is measured by the net impact of carbon tax and cash transfer relative to initial expenditure. Carbon policy reform in Indonesia tends to be progressive, meaning the relative net impact on households decreases as income increases. Carbon tax in Indonesia primarily affects households through the price increase in electricity and fuel products. The distributional impacts of a carbon policy reform are determined more by the percentage of tax revenue recycled and taxation scenario and less by the tax rate. In order to protect the poorest 40 % of Indonesian households from inflationary pressure, the Indonesian government needs to recycle 25 % of tax revenue.

We estimate the extent of emission offshoring at the country level in net terms. We define net emission onshoring as the difference between the emissions domestic producers generate by exporting and the emissions they avoid by importing. Using the multi-regional input–output (MRIO) model and the OECD Inter-Country Input-Output (ICIO) Table, we report levels and trends in net emission onshoring for 45 countries between 1995–2018. Service-oriented economies with trade deficits (USA, UK, India) are net offshoring emissions. China is net onshoring emissions. The scale of net onshoring is small relative to production-based emissions. National emissions and GDP have decoupled in many developed countries, even when accounting for trade. In a cross-section of countries, there is no robust association between net onshoring and per-capita income.