A new OECD publication highlights notable economic and environmental benefits of phasing out fossil-fuel subsidies in Indonesia. Interestingly, the study is based on the context that pertained until mid-2014, when international oil prices where high and before the recent phase-out of subsidies by the government.
This report develops an analytical framework that assesses the macroeconomic, environmental and distributional consequences of energy subsidy reforms. The framework is applied to the case of Indonesia to study the consequences in this country of a gradual phase out of all energy consumption subsidies between 2012 and 2020.
Workshop on Green Growth Strategy: OECD Green Growth Strategy from the Perspective of Developing Countries, organised in Seoul, 28 October 2010.
The oil price hike in 2007-08 underlined the vulnerability of Indonesia’s energy subsidy policy to oil price volatility. In addition to entailing significant economic and environmental costs, energy subsidies put pressure on the public budget and benefit mostly rich households.