Governing Energy Subsidies: Toward a Just Transition

Energy subsidies absorb hundreds of trillions of rupiah yearly, yet benefits leak to the well-off. This report maps a reform path that protects vulnerable households.

For two decades, energy subsidies have been both a political instrument and a fiscal burden. Our study shows 60 percent of fuel subsidy benefits accrue to the richest 40 percent of households.

Successful reform requires three preconditions: well-targeted cash compensation, transparent public communication, and a price-adjustment schedule the market can predict.

We propose an energy resilience fund mechanism that channels subsidy savings directly into renewable energy investment and social safety nets, rather than into the general fiscal space.