Risalah Kebijakan Energi Indonesia | Februari 2021

This February 2021 briefing by the International Institute for Sustainable Development (IISD) examines Indonesia's energy policy landscape during the COVID-19 pandemic. It details the fluctuations in fuel and LPG subsidies, the government's strategic push for coal derivatives to reduce imports, and the challenges facing the renewable energy transition, including regulatory uncertainty and project delays.

• Indonesia's economy contracted by 2.07% in 2020 due to the COVID-19 crisis, leading to a budget deficit of approximately 5.7% of GDP for that year. The Ministry of Finance projected a recovery with GDP growth between 4.5% and 5.5% in 2021.
• Fuel and LPG subsidies decreased significantly in 2020 due to lower international prices and reduced domestic consumption. Transport fuel subsidies fell 41% from Rp30.06 trillion in 2019 to Rp17.70 trillion in 2020, while LPG subsidies dropped 56% from Rp54.15 trillion in 2019 to Rp23.50 trillion in 2020.
• The Indonesian government is prioritizing the development of coal derivatives, specifically dimethyl ether (DME), to substitute imported LPG. PT Bukit Asam and PT Kaltim Prima Coal are developing gasification projects expected to operate in 2023/2024, aiming to replace 30% of LPG imports.
• The coal sector has received substantial fiscal and non-fiscal incentives via the Omnibus Law and revised Minerba Law. These include the possibility of 0% royalties for producers expanding into derivative industries and business licenses that cover the entire life of the mine reserves, removing the previous 20-year limit.
• Renewable energy progress has been slow, with a significant number of projects failing to reach financial closing. Of 75 renewable energy power purchase agreements (PJBTL) signed between 2017 and 2018, 36% had not reached financial closing and nearly 7% were cancelled.
• Floating solar photovoltaic (PV) projects are emerging as a driver for renewable energy by bypassing land acquisition hurdles. One such project achieved a record low bid price for Indonesia at US$3.68 cents/kWh.
• The electricity sector faces stability issues as high global coal prices led to increased exports, causing some coal-fired power plants (PLTU) to face shortages. Additionally, PT PLN reduced its capital expenditure (CAPEX) from Rp100 trillion to Rp53.39 trillion, potentially delaying several power projects.
• Regulatory uncertainty continues to hinder renewable energy investment. A Presidential Regulation on the purchase price of electricity from renewable energy sources remains unfinished as it awaits approval from the Ministry of Finance regarding incentive schemes.

APA

International Institute for Sustainable Development (n.d.). Risalah Kebijakan Energi Indonesia | Februari 2021. https://www.iisd.org/system/files/2021-08/indonesia-energy-policy-briefing-february-2021-bahasa.pdf

Chicago

International Institute for Sustainable Development. Risalah Kebijakan Energi Indonesia | Februari 2021. n.d. https://www.iisd.org/system/files/2021-08/indonesia-energy-policy-briefing-february-2021-bahasa.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=Risalah Kebijakan Energi Indonesia | Februari 2021 |url=https://www.iisd.org/system/files/2021-08/indonesia-energy-policy-briefing-february-2021-bahasa.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopmentndrisalah, author = {{International Institute for Sustainable Development}}, title = {{Risalah Kebijakan Energi Indonesia | Februari 2021}}, institution = {International Institute for Sustainable Development}, url = {https://www.iisd.org/system/files/2021-08/indonesia-energy-policy-briefing-february-2021-bahasa.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }