Subsidized Fuel Hampering Development of Renewable Energy Development

 
Christina Desy, Kartini Laras Makmur
 
As the Indonesian economy continues to grow, domestic energy needs are also increasing. To satisfy demand, Indonesia heavily relies on fossil fuels, such as oil, gas, and coal. Although the reliance on fossil fuels is dominant, the government is targeting the increased use of renewable energies.
 
Agus Cahyono Adi, Director of the Oil and Gas Program Development at the Ministry of Energy and Mineral Resources (ESDM), reiterated that Indonesia already has catur dharma (four policies) for its energy program.
 
“The government is targeting more oil and gas production to press energy imports to satisfy energy needs in Indonesia,” said Mr. Adi in Jakarta on Monday.
 
According to Mr. Adi, the Indonesian government will continue to encourage industries to use non-renewable energy efficiently, despite any increases in oil and gas production.
 
Furthermore, Mr. Adi explained that another objective of catur dharma is the development of more renewable energy. The government hopes that industry will gradually switch from using non-renewable energy to renewable energy.
 
Mr. Adi admitted, however, that this objective is difficult to achieve due to the fuel subsidy. By having subsidies, the fuel price is cheaper than the price of renewable energy, such as biogas and biofuel. As a consequence, industry still prefers to use less costly non-renewable energy.
 
Sharing this view, Marwan Batubara, Executive Director of Indonesia Resources Studies (IRESS), believes that subsidized fuel not only hampers the development of the renewable energy sector, but also harms Indonesia economically.
 
Mr. Batubara bases his argument on the fact that approximately 10% of the allocated subsidized fuel under the State Budget is believed to be smuggled. As a consequence, Mr. Batubara expects the government will allocate more budget to the development of renewable energy instead of increasing subsidies given the budget allocation will be misused anyway.
 
Mr. Batubara is also urging the government and renewable energy producers to find solutions to keeping prices down so that the use of renewable energy will increase in line with its development.
 
On the contrary, Kurtubi, an expert on energy and newly-elected lawmaker from the National Democratic Party, said that fuel fossils will continue to dominate global energy consumption, and as a result continue to affect all economic activities. Therefore, he has reservations as to whether renewable energy can replace fossil fuels in the near future.
 
“Even until 2030, the world still needs fossil fuels such as oil, gas, and coal,” added Mr. Kurtubi.
 
(hot/kc)