A decomposition model has been developed to examine the factors which affect the change in CO
2 emission due to considering energy tax in the Indonesian power sector during 2006-2025. There are two factors which affect the change in CO
2 emission due to energy tax, i.e., technological substitution effect and demand side effect. The results show that the reduction of
... [Show full abstract] CO2 emission would increase from 3.5% to 73.5% if the energy tax is increased from US10.0/Mbtu. At lower energy tax rates (i.e., at tax rate US2.0/Mbtu. The results also show that the SO2 and NOx mitigation would also increase from 3.5% to 85.0% and from 3.3% to 70.9% respectively if the energy tax is increased from US10.0/Mbtu.