Indonesia’s Energy Support Measures

Indonesia's energy subsidies peaked at IDR 886.1 trillion in 2022 and remained high in 2024 at IDR 713.5 trillion, with fossil fuel support accounting for 88.9% of the total. The report highlights three dominant costs: electricity compensation for the state utility PLN, 3-kg LPG subsidies, and fuel compensation payments to Pertamina. These measures often benefit higher-income households and create a 'net negative carbon price' that offsets the national carbon pricing scheme. While electric vehicle (EV) incentives have surged since 2020, they remain negligible compared to fossil fuel support. The document recommends a phased reform plan to redirect spending toward renewable energy, targeted social protection, and induction cooking to reduce import dependency and emissions.

• Energy subsidies in Indonesia reached a peak of IDR 886.1 trillion (USD 59.7 billion) in FY 2022 and were IDR 713.5 trillion (USD 45 billion) in 2024. Fossil fuel support remains the dominant expenditure, representing 88.9% of total support in 2024.
• Three specific measures exceed IDR 100 trillion (USD 6.3 billion) annually: fuel compensation payments to Pertamina (which peaked at IDR 275.3 trillion in 2022), electricity compensation for PLN, and the 3-kg LPG subsidy.
• The 3-kg LPG subsidy is poorly targeted, with over 68% of households in every income group consuming it, meaning the richest 10% use nearly as much as the poorest 10%. Transitioning the poorest 40%–60% to induction stoves could save between IDR 7 trillion and IDR 12 trillion annually.
• Fossil fuel subsidies act as a negative carbon price that counteracts the national carbon pricing scheme. In 2023, this resulted in a net negative carbon price of USD 7.8 per tonne of carbon, outweighing the impact of the emissions trading scheme and carbon tax.
• Electricity support is driven by tariff freezes since 2017 and the Domestic Market Obligation (DMO) for coal, which requires producers to sell 25% of production to PLN at a fixed price of USD 70 per tonne. In FY 22, the DMO's implicit support exceeded IDR 200 trillion (USD 13.5 billion).
• Electric vehicle (EV) subsidies rose to over IDR 22 trillion (USD 1.4 billion) in 2024, driving four-wheeler sales from 125 units in 2020 to over 43,000 by 2024. However, support for conventional transport fuels (IDR 17.1 trillion) and biofuels (IDR 25.8 trillion) in 2024 still far exceeds EV support.

APA

Maulidia,, A. S. B. W. (2026). Indonesia’s Energy Support Measures. International Institute for Sustainable Development. https://www.iisd.org/publications/digital-story/indonesia-energy-support-measures

Chicago

Maulidia,, Anissa Suharsono,Richard Bridle,Arzalia Wahida,Martha. Indonesia’s Energy Support Measures. International Institute for Sustainable Development, 2026. https://www.iisd.org/publications/digital-story/indonesia-energy-support-measures.

Wikipedia

{{cite report |last1=Maulidia, |first1=Anissa Suharsono,Richard Bridle,Arzalia Wahida,Martha |title=Indonesia’s Energy Support Measures |publisher=International Institute for Sustainable Development |date=9 February 2026 |url=https://www.iisd.org/publications/digital-story/indonesia-energy-support-measures |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{maulidia2026indonesias, author = {Maulidia,, Anissa Suharsono,Richard Bridle,Arzalia Wahida,Martha}, title = {{Indonesia’s Energy Support Measures}}, institution = {International Institute for Sustainable Development}, year = {2026}, month = feb, url = {https://www.iisd.org/publications/digital-story/indonesia-energy-support-measures}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }