Indonesia spent IDR 713.5 trillion on energy subsidies in 2024, mostly for fossil fuels

Jakarta, February 10, 2026—Indonesia spent IDR 713.5 trillion on energy subsidies in 2024, with nearly 90% allocated to fossil fuels, according to a new analysis from the International Institute for Sustainable Development. While spending declined from its 2022 peak, subsidy levels remain high. 

The vast majority of this support—IDR 634.3 trillion—went to oil, gas, coal, and fossil-fuel-based electricity. By comparison, electric vehicle support remained a very small share of total energy subsidies, at under 1.5%.

One of the largest costs comes from efforts to keep electricity prices stable. Consumer electricity subsidies and compensation totalled IDR 176 trillion in 2024, equivalent to more than IDR 625,000 per person annually.

These visible subsidies, however, tell only part of the story. Much of the government’s support for fossil fuels is embedded in policies that never appear on consumer bills.

Indonesia’s coal price cap, for example, has helped limit electricity tariff increases but provided an estimated IDR 58.5 trillion in implicit support in 2024 alone—effectively masking the true cost of coal-fired power.

“Indonesia's coal price cap has kept electricity tariffs relatively stable over the years,  but it also conceals the real cost of coal-fired power and locks in fossil fuel dependence,” says Anissa Suharsono, lead author and senior policy advisor at IISD. 

Implications for public finances, climate policy, and equity

These pricing mechanisms also expose public spending to global energy market volatility. As international energy prices rise, compensation payments to the state electricity utility PLN and the national oil company Pertamina increase accordingly, exposing the state budget to external shocks and making subsidy costs difficult to predict, experts say.

Beyond fiscal risks, keeping fossil energy prices low weakens efficiency and clean investment incentives and, in some sectors, offsets Indonesia’s carbon pricing instruments.

Distributional challenges remain as well. Under the 3-kg LPG subsidy, the richest 10% of households consume almost as much subsidized LPG as the poorest 10%, indicating significant subsidy leakage.

“Indonesia needs a phased and well-communicated approach to subsidy reform. Better targeting and a gradual shift in public spending toward clean energy and social protection are essential,” says Anissa Suharsono.

Media contact:

Anissa Suharsono, associate, energy policy, IISD, [email protected] 
Sofia Strömgård, communications officer, IISD, [email protected]