© 2016 Agung Sugiri and Imam Buchori. This open access article is distributed under a Creative Commons Attribution (CC-BY) 3.0 license. American Journal of Environmental Sciences Original Research Paper Towards Low Emission Development: Prospects of Applying MBIs in the Industrial Sector of Central Java, Indonesia Agung Sugiri and Imam Buchori Department of Urban and Regional Planning, Diponegoro University, Semarang, Indonesia Article history Received: 10-02-2016 Revised: 27-05-2016 Accepted: 04-06-2016 Corresponding Author: Agung Sugiri Department of Urban and Regional Planning, Diponegoro University, Semarang, Indonesia Email: agung.sugiri@uqconnect.edu.au Abstract: In dealing with pollution or emission, including in encouraging Low Emission Development (LED) as an acceptable strategy for climate change mitigation, Indonesia applies Command and Control (CAC) approach through regulations on environmental and pollution standards. However, the enforcement is characterized by weak monitoring and controlling due to aspects like non-compliant industries and lack of personnel and equipment of the corresponding agencies. Introducing Market Based Instruments (MBIs) can help better achievement in LED as evidenced in the USA, Australia, Taiwan, South Korea and Thailand. This study aims to answer the question "how can the Central Java Provincial Government (CJPG) facilitate better LED through the application of MBIs in the industrial sector?" The approach is qualitative through in-depth interviews with key persons from the CJPG and manufacturing industries with high rate of greenhouse gas emissions in Semarang and Surakarta metropolitans as the two largest industrial centers in Central Java. The results show that the CJPG cannot apply MBI approach in its purely theoretically forms. Instead, it is the principle, which is in accordance with the Equity-Based Development model that should be integrated into the CAC application, i.e., the polluters pay principle. The existing programs, like PROPER, should be refined conceptually and enforced more widely to accommodate ‘internalizing the externality’ principle better. More industries should be encouraged to participate in such programs. Keywords: Climate Change Mitigation, Command and Control, Equity- Based Development, Low Emission Development, Market-Based Instruments Introduction Indonesia is one of the countries committed to addressing the problem of climate change. The National Action Plan to reduce Greenhouse Gas (GHG) emissions (RAN-GRK) has been legalized as the Presidential Decree No. 61/2011. Emission reduction target is 26% if business as usual, which means no international help available and a maximum of 41% if the carbon market mechanism works well (Jupesta, 2010). Soon after, the Local Action Plan to reduce emissions of greenhouse gases, RAD-GRK 2010-2020, of Central Java province has also been completed and has been legalized as the Governor Regulation No. 43/2012. This plan focuses on mitigation of climate change, with the goal of reducing greenhouse gas emissions so that the environmental damage caused by climate change can be reversed in the long term. Unfortunately, a study initiated by GIZ concluded that the Central Java Provincial Government is not yet ready to implement RAD-GRK (Sugiri, 2015). The level of preparedness of Central Java Provincial Government in general is 3.47 (out of 5), which means a little more than half prepared and will require much assistance. Moreover, among the six main sectors (industry sector, the forestry sector, transport sector, energy sector, the waste sector and the agricultural sector), the industrial sector is the least prepared with a score of 1.75. The main strategy of mitigating climate change is generally Low Emission Development (LED). This approach seeks to keep economic growth high while reducing the GHG emissions. Thus, the industrial sector becomes a vital priority. Significant emissions, mainly from large- and medium-scale manufacturing industries