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Indonesia, ASEAN's Largest Fossil Fuel Subsidizer

Adi Ahdiat 19/06/2023 15:00 WIB

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According to a World Bank report, Indonesia was the largest provider of fossil fuel subsidies in ASEAN, and the eighth largest globally, in 2021.

Fossil Fuel Subsidies in ASEAN Countries (2021)

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Fossil Fuel Subsidies in ASEAN Countries (2021)

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Indonesia was the largest provider of fossil fuel subsidies in ASEAN and the eighth largest globally in 2021.

This is recorded in a World Bank report titled *Detox Development, Repurposing Environmentally Harmful Subsidies* (June 2023).

According to the report, throughout 2021, the Indonesian government disbursed fossil fuel subsidies worth USD 11.9 billion, or approximately Rp 170.6 trillion (assuming an exchange rate of Rp 14,269 per USD in 2021).

This figure includes subsidies for consumers and producers, for LPG, kerosene, natural gas, coal, fossil fuel electricity, and various petroleum products.

Meanwhile, neighboring countries disbursed smaller amounts of fossil fuel subsidies, as shown in the graph above.

Globally, the total value of fossil fuel subsidies disbursed by 191 countries in 2021 is estimated to have reached USD 577 billion.

The World Bank criticized this, arguing that energy subsidies have detrimental impacts on both the environment and public health.

"Governments worldwide are spending trillions on inefficient subsidies that worsen climate change," stated the World Bank in its report.

"Fossil fuel use, driven by subsidies, is a major contributing factor to 7 million premature deaths annually from air pollution," it continued.

In response, the World Bank recommended that countries redirect fossil fuel subsidy funds to programs supporting climate change mitigation and a just energy transition.

"Amidst constrained budgets, rising debt, widening inequality, and worsening environmental degradation, governments must prioritize comprehensive subsidy reforms," said the World Bank.

"The belief that subsidy reforms will affect the poor is not always supported by data. In some cases, such as with energy subsidies, wealthier groups benefit more due to their higher consumption," it continued.

"To protect vulnerable groups during subsidy reforms, we recommend providing compensation to the poorest through cash transfers or direct assistance," said the World Bank.

Editor : Adi Ahdiat

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."

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Indonesia, ASEAN's Largest Fossil Fuel Subsidizer

Indonesia, ASEAN's Largest Fossil Fuel Subsidizer

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