Indonesia’s Energy Support Measures: An inventory of incentives impacting the energy transition

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Executive Summary
Access to affordable, reliable, and clean energy is critical for economic and social
development. Most governments—including Indonesia’s—therefore provide financial support
and incentives for energy production and consumption. Careful scrutiny of these policies is
necessary to determine whether they are helping or hindering the government’s objectives to
expand energy access, improve energy security, and promote the transition to clean energy.
The Government of Indonesia (the “government” or the “GoI”) provides a range of energy
support measures, incentives, and interventions that stimulate energy production and
consumption, some of which are directed to support and protect the vulnerable segments
of the population (e.g., poor households and small businesses). The COVID-19 National
Economic Recovery Program is one such support measure that, like many others provided
to the energy sector, disproportionately benefited the fossil fuels sector. There are also other
measures aiming to promote a transition toward clean and renewable energy, although today,
government support is still predominantly addressed to the fossil fuel sector.
This first-of-a-kind report has been developed to identify all the support measures and
incentives that are available and have been given to the Indonesian energy sector by the GoI.
This stocktaking report takes into account support provided for six types of energy: 1) oil and
gas, 2) coal, 3) electricity, 4) renewable energy,1 5) biofuels, and 6) electric vehicles (EVs) and
batteries for EV (EV and batteries). A substantial amount of support was provided for the
fossil fuels sector, comprising oil and gas, coal, and electricity.2
The definition of “support measure” used in this report is based on the definition of
“subsidy” from the Agreement of Subsidies and Countervailing Measures of the World Trade
Organization (WTO) (1994), while the estimation methods were based on the Methodology
for SDG Indicator 12.c.1 (Wooders et al., 2019).
The report covers the period from FY 2016 to FY 2020.3 Throughout the time period
observed, a total of 78 measures were identified. Out of those measures, 37% (29 measures)
were estimated, representing at least IDR 1,225 trillion (~USD 83.7 billion)4 of support to the
energy sector, distributed as follows (see Figure ES1):
• 94.1% of the total value estimated or IDR 1,153 trillion (~ USD 79 billion) has been
given to support the production and consumption of fossil fuels—oil and gas ( 38.8%),
coal (18%), and electricity (37.3%).

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