Beyond Fossil Fuels: Indonesia’s fiscal transition

The report analyzes Indonesia's shift from a high fiscal reliance on oil and gas revenues to a more diversified economy. It highlights a critical imbalance where government revenues from fossil fuel production are largely offset by inefficient consumption subsidies that disproportionately benefit wealthy households. The document warns of the risk of stranded assets valued between USD 200–300 billion and argues for phasing out fossil fuel subsidies to create fiscal space for renewable energy and social development.

• Indonesia has significantly reduced its fiscal dependence on upstream oil and gas, with these revenues dropping from 35 per cent of total government revenues (7 per cent of GDP) in 2001 to just 6 per cent (less than 1 per cent of GDP) by 2016.
• Between 2014 and 2016, the Government of Indonesia's revenues from fossil fuel production averaged IDR 190 trillion (USD 16 billion) annually, representing 1.8 per cent of GDP or 13.6 per cent of total government revenue.
• Fossil fuel consumption subsidies in Indonesia are inefficient and regressive, with the share of subsidies enjoyed by the richest 20 per cent of the population increasing from 44 per cent in 2004 to 50 per cent by 2014.
• The government's decision to maintain stable retail oil prices until the end of 2019 effectively reintroduced subsidies, with an estimated cost of IDR 24 trillion (USD 1.7 billion) in 2018 borne by the state-owned company Pertamina.
• Indonesia faces a significant risk of stranded fossil fuel assets, estimated between USD 200 billion and USD 300 billion, with the majority of this value concentrated in the upstream sector.
• The government's target to increase the share of new and renewable energy (NRE) in the energy supply mix from 7 per cent in 2015 to 23 per cent by 2025 is facing implementation difficulties due to land permit issues, resistance from coal suppliers, and regulated energy prices.
• Regional governments in Bojonegoro, Musi Banyuasin, and Aceh are exploring or have introduced sovereign wealth funds to manage oil and gas resource rents for sustainable development and social purposes.
• Indonesia's fuel consumption taxes (VAT and motor fuel tax) are low compared to its subsidies, generating only 0.57 per cent of GDP compared to 1.7 per cent of GDP spent on fuel and electricity subsidies between 2014 and 2016.

APA

Braithwaite, D., & Gerasimchuk, I. (2019). Beyond Fossil Fuels: Indonesia’s fiscal transition. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/beyond-fossil-fuels-indonesia-fiscal-transition.pdf

Chicago

Braithwaite, David, and Ivetta Gerasimchuk. Beyond Fossil Fuels: Indonesia’s fiscal transition. International Institute for Sustainable Development, 2019. https://www.iisd.org/system/files/publications/beyond-fossil-fuels-indonesia-fiscal-transition.pdf.

Wikipedia

{{cite report |last1=Braithwaite |first1=David |last2=Gerasimchuk |first2=Ivetta |title=Beyond Fossil Fuels: Indonesia’s fiscal transition |publisher=International Institute for Sustainable Development |date=January 2019 |url=https://www.iisd.org/system/files/publications/beyond-fossil-fuels-indonesia-fiscal-transition.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{braithwaite2019beyond, author = {Braithwaite, David and Gerasimchuk, Ivetta}, title = {{Beyond Fossil Fuels: Indonesia’s fiscal transition}}, institution = {International Institute for Sustainable Development}, year = {2019}, month = jan, url = {https://www.iisd.org/system/files/publications/beyond-fossil-fuels-indonesia-fiscal-transition.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }