What is Indonesia's energy subsidy policy?

The ETP Forum helped coordinate support to Indonesia’s G20 Presidency in 2022 and ASEAN Chairship in 2023. This energy subsidy policy brief explores Indonesia's household subsidies for energy consumption, and lays out a pathway for reform that will be crucial for achieving a just transition in Indonesia.

What are the options for reducing energy subsidy?

Energy and Mineral Resources Minister Bahlil Lahadalia said that the government is currently considering two options: replacing the subsidy entirely with a direct cash transfer (BLT) for those deemed eligible, or partially reducing the subsidy alongside BLT for low-income earners.

What are the problems with the energy subsidy system?

This brief outlines five main problems with the current system: Reforming the household energy subsidy would not only create greater social equity, but would also lead to less overall demand for energy, and encourage greater use of renewables.

Is household energy subsidy policy achieving its goals?

Household energy subsidy policy is not only not achieving its policy goals but actively worsening inequality and fossil fuel dependence in Indonesia. This brief outlines five main problems with the current system:

Should the household energy subsidy be reformed?

Reforming the household energy subsidy would not only create greater social equity, but would also lead to less overall demand for energy, and encourage greater use of renewables. The over 50 trillion IDR saved by these reforms could also be spent on sustainable development priorities, including policies to facilitate greater take up of renewables.