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The impacts of fossil fuel subsidy reform on the uptake of sustainable energy in the ASEAN Region: A case study of Indonesia”

Sobok, Sandra (2020) The impacts of fossil fuel subsidy reform on the uptake of sustainable energy in the ASEAN Region: A case study of Indonesia”. Masters by Coursework thesis, Murdoch University.

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Fossil fuel subsidies are prevalent in many countries, with governments justifying these subsidies for a number of economic, political, and social reasons. These reasons include making energy affordable, promoting energy independence, improving access to affordable energy, curbing inflation, and fueling economic growth. However, fossil fuel subsidies have continuously received global criticism for being unsustainable, burdening national budgets, promoting energy overuse, hindering clean energy development and investment in other economic sectors. Fossil fuel subsidies lead to unintended outcomes such as air pollution, accelerated climate change, adverse environmental degradation, depletion of natural resources, and health problems. Though the Indonesian Government has implemented a level of subsidy reform, it still spends a substantial portion of the State budget on subsidizing electricity, fuel, and LPG for cooking.

This study aims to assess the economic, environmental, and social impacts of fossil fuel subsidy reform in Indonesia and on its ability to meet its Nationally Determined Contributions (NDC) targets by 2030. The findings reveal that phasing out electricity subsidies and increasing funding towards RE electricity production leads to a significant decrease in PM2.5, NOx, SO2 and CO2 emissions. As a result, Indonesia achieves its NDC targets with cost savings and benefits from improved air quality and better health. Given these findings, this study recommends building the new national capital, in East Kalimantan, on 100% renewable electricity; and recommends that the electricity business plan RUPTL 2021-2030 should focus on 100% RE power plant development.

Item Type: Thesis (Masters by Coursework)
Murdoch Affiliation(s): Engineering and Energy
Supervisor(s): Urmee, Tania and Zaman, Anis
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