A CITIZENS’ GUIDE TO ENERGY SUBSIDIES IN INDONESIA

The document examines Indonesia's energy subsidy regime, covering gasoline, diesel, kerosene, LPG, electricity, and coal. It argues that these subsidies are regressive, primarily benefiting wealthier households while straining the national budget and discouraging investment in clean energy. The guide details the economic and environmental risks of maintaining these subsidies and outlines strategies for reform, such as targeted cash transfers and gradual phase-outs, drawing on Indonesian and international experiences.

• The financial burden of energy subsidies is significant, often exceeding government spending on critical social sectors. Up until 2010, the Indonesian government spent more on energy subsidies than it did on the combined budgets for defense, education, health, and social security.
• Subsidies create economic vulnerabilities and market distortions. They make Indonesia's fiscal position highly susceptible to global energy price volatility, encourage the overconsumption of imported fuels, and discourage investment in energy infrastructure and cleaner alternative technologies.
• Price disparities between subsidized and non-subsidized energy products incentivize illegal activities. This includes fuel smuggling and the dangerous illegal transfer of LPG from 3kg subsidized tanks into 12kg tanks, which has resulted in explosions and casualties.
• Removing energy subsidies would have a positive impact on the environment by reducing greenhouse gas emissions. It is estimated that eliminating fuel and electricity subsidies could reduce Indonesia's national CO2 emissions by 6.66% by 2020.

APA

International Institute for Sustainable Development (n.d.). A CITIZENS’ GUIDE TO ENERGY SUBSIDIES IN INDONESIA. https://www.iisd.org/gsi/sites/default/files/indonesia_czguide_eng.pdf

Chicago

International Institute for Sustainable Development. A CITIZENS’ GUIDE TO ENERGY SUBSIDIES IN INDONESIA. n.d. https://www.iisd.org/gsi/sites/default/files/indonesia_czguide_eng.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=A CITIZENS’ GUIDE TO ENERGY SUBSIDIES IN INDONESIA |url=https://www.iisd.org/gsi/sites/default/files/indonesia_czguide_eng.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopmentndcitizens, author = {{International Institute for Sustainable Development}}, title = {{A CITIZENS’ GUIDE TO ENERGY SUBSIDIES IN INDONESIA}}, institution = {International Institute for Sustainable Development}, url = {https://www.iisd.org/gsi/sites/default/files/indonesia_czguide_eng.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }