Phasing out the fossil fuel subsidy will level the playing field for renewables

Phasing out the fossil fuel subsidy will level the playing field for renewables

Indonesia needs to reform its fossil fuel subsidy programme. Policymakers should abolish fossil fuel subsidies by the Government of Indonesia to save an annual fiscal cost of IDR 100.9 trillion (US$7.1 billion). Indonesia's fossil fuel subsidies cover both the consumer-side energy subsidies and the generation-side financial support and tax incentives.

The table below summarises the subsidies programmes implemented in Indonesia and the subsidies removal considered across the ambitious scenarios, either partially or completely. Partial removal refers to the phasing out of consumer-side energy subsidies while complete removal refers to the phasing out of both consumer-side and and generation-side financial support. Specifically for this scenario, complete removal of subsidies is considered.