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Fossil Fuel Subsidies in Indonesia: Trends, Impacts, and Reforms

Author

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  • Asian Development Bank (ADB)
  • Asian Development Bank (ADB)

    (Economic Research and Regional Cooperation Department, ADB)

  • Asian Development Bank (ADB)

    (Economic Research and Regional Cooperation Department, ADB)

  • Asian Development Bank (ADB)

Abstract

Subsidized energy is provided to all Indonesian citizens as a public service obligation. This study measures the size of fossil fuel subsidies such as underpricing of petroleum products and electricity, tax exemptions, and subsidized credit; examines the potential economic, energy, and environmental impacts of reducing them; and discusses options for social safety nets to mitigate the impacts of the reforms. It shows that the short-term adverse impacts of subsidy reform turn positive in the long term as households and industry respond to changing market realities by adjusting energy demand, supply, and production capacity. Policy options for sustainable energy use are provided to aid policymakers in their current subsidy reform process.

Suggested Citation

  • Asian Development Bank (ADB) & Asian Development Bank (ADB) & Asian Development Bank (ADB) & Asian Development Bank (ADB), 2015. "Fossil Fuel Subsidies in Indonesia: Trends, Impacts, and Reforms," ADB Reports RPT157694-2, Asian Development Bank (ADB).
    • Handle: RePEc:asd:wpaper:rpt157694-2
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    Citations

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    Cited by:

    1. Vietha Devia SS, 2019. "Analysis of Crude Oil Price and Exchange Rate Volatility on Macroeconomic Variables (Case Study of Indonesia as Emerging Economic Country)," International Journal of Business and Administrative Studies, Professor Dr. Bahaudin G. Mujtaba, vol. 5(5), pages 257-271.
    2. Muhammad Iqbal Nugraha, 2019. "Analyzing the Energy Intensity Trend in Indonesia, using Econometric and Decomposition Analysis," Working Papers in Economics and Development Studies (WoPEDS) 201901, Department of Economics, Padjadjaran University, revised Nov 2019.
    3. Maulidia, Martha & Dargusch, Paul & Ashworth, Peta & Ardiansyah, Fitrian, 2019. "Rethinking renewable energy targets and electricity sector reform in Indonesia: A private sector perspective," Renewable and Sustainable Energy Reviews, Elsevier, vol. 101(C), pages 231-247.
    4. Moghaddam, Hussein & Wirl, Franz, 2018. "Determinants of oil price subsidies in oil and gas exporting countries," Energy Policy, Elsevier, vol. 122(C), pages 409-420.
    5. Setyawan, Dhani, 2020. "Energy efficiency in Indonesia's manufacturing industry: a perspective from Log Mean Divisia Index decomposition analysis," MPRA Paper 111800, University Library of Munich, Germany, revised 15 Dec 2019.
    6. Hadi Sasana & F. Salman & Suharnomo Suharnomo & S. B. M. Nugroho & A. G. Edy Yusuf, 2018. "The Impact of Fossil Energy Subsidies on Social Cost in Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 8(2), pages 168-173.
    7. Jessica Coria & Gunnar Köhlin & Jintao Xu, 2019. "On the Use of Market-Based Instruments to Reduce Air Pollution in Asia," Sustainability, MDPI, vol. 11(18), pages 1-23, September.
    8. Rus’an Nasrudin & Qisha Quarina & Teguh Dartanto, 2022. "Revisiting the Energy-Happiness Paradox: A Quasi-Experimental Evidence of Electricity Access in Indonesia," Journal of Happiness Studies, Springer, vol. 23(7), pages 3549-3576, October.
    9. Roman Mendelevitch, 2018. "Testing supply-side climate policies for the global steam coal market—can they curb coal consumption?," Climatic Change, Springer, vol. 150(1), pages 57-72, September.

    More about this item

    Keywords

    indonesia; fossil fuel; energy; fossil fuel subsidies; greenhouse gas emissions; energy use; economic impacts; social programs; developing asia;
    All these keywords.

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