Towards Quality Economic Growth: An Overview of the Green Economy Legal Framework in Indonesia

Abstract

This article reviews the legal and policy framework governing the relationship between economic growth and sustainable development in Indonesia through a qualitative literature review method. Rapid economic growth is often seen as conflicting with environmental conservation efforts, but the concept of decoupling indicates that separation between economic growth and environmental pressures can be achieved through appropriate regulation. Indonesia, as the ninth largest carbon emitter in the world, has ratified the Paris Agreement and set emission reduction targets based on the constitutional foundation in Article 33 paragraph (4) of the 1945 Constitution, which requires a sustainable economy with an environmental perspective. This article analyzes the evolution of the legal basis for sustainable development, environmental economic instruments such as carbon taxes and carbon trading (IDXCarbon), sustainable finance taxonomy, as well as legal approaches in the blue and circular economy. The findings indicate that although the legal framework has developed significantly—such as Presidential Regulation No. 98 of 2021 on the Carbon Economic Value—its implementation faces obstacles from regulatory fragmentation, the absence of standardized Measurement, Reporting, and Verification infrastructure, and weak environmental law enforcement. This article recommends the enactment of an umbrella law on climate change, the optimization of administrative sanctions based on strict liability, a revision of the Limited Liability Company Law to integrate climate risks as the responsibility of the board of directors, and the harmonization of inter-agency regulations to achieve sustainable quality growth