A review of Indonesia's JETP through the dynamics of its policy regime
| Published date | 01 November 2024 |
| Author | Muhamad Rosyid Jazuli,Kate Roll,Yacob Mulugetta |
| Date | 01 November 2024 |
| DOI | http://doi.org/10.1111/1758-5899.13452 |
Global Policy. 2024;15:98 9–1006.
|
989
wileyonlinelibrary.com/journal/gpol
1 | COMPLEXITY OF INDONESIA'S
ENERGY POLICY REFORM
The United Nations' Sustainable Development Goals
(SDG 12c) strongly advocate for global CO2 emis-
sions reduction by reforming and reallocating fossil
fuel- based energy subsidies toward social support
and energy transition initiatives. However, govern-
ments, especially in the Global South, often hesitate
to undertake these reforms due to pertinent social and
political complexities (Skovgaard & van Asselt, 2019;
Sovacool,2017; Timperley, 2021). Starting during the
1998 Asian economic crisis, Indonesia's current fossil
fuel subsidy reforms (FFSR) reflect such complexity. To
date, the reforms remain incomplete with inconsistent
results for over two decades (Jazuli etal.,2021). While
still engaged in FFSR, in 2022, Indonesia committed
to the Just Energy Transition Partnership (JETP or
the Partnership). The Indonesian JETP is set to play a
central role, alongside other initiatives such as carbon
pricing and market mechanisms, and electric vehicle
development, in driving the country's energy transition
and net- zero agenda (Resosudarmo etal.,2023).
This paper aims to review the JETP through the
lens of a policy regime framework. It highlights how
political, social, and regulatory ‘realities’ influence
the outcome of the Partnership's implementation.
Regarding methodology, this paper presents a narra-
tive review that gathers and synthesizes the currently
developing body of knowledge, incorporating rele-
vant gray and academic literature (Cantarero, 2020)
in Indonesian and English. Searches were conducted
through Google for relevant news reports and experts'
opinions, as well as Google Scholar for relevant think
tank reports and peer- reviewed articles, using key-
words such as ‘fuel subsidies’ or ‘subsidi BBM’, ‘JETP’,
POLICY ANALYSIS
A review of Indonesia's JETP through the dynamics of its
policy regime
Muhamad RosyidJazuli1,2 | KateRoll3 | YacobMulugetta1
Received: 31 Octo ber 2023
|
Revised: 4 Septem ber 2024
|
Accepted: 5 Septe mber 2024
DO I: 10 .1111/17 58- 589 9.13 452
This is an open ac cess article under t he terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium,
provided the original work is properly cited.
© 2024 The Author(s). Global Policy published by D urham University and Jo hn Wiley & Sons Ltd.
1Department of S cience, Technology,
Engineering & Pu blic Policy (STEaPP),
University College London, London, UK
2Paramadina Public Policy Institute
(PPPI), Paramadina Univers ity, Jakarta,
Indonesia
3Institute for Innovation and Public
Purpose (IIPP), Universi ty College
London, London, UK
Correspondence
Muhamad Rosyid J azuli, Department
of Science, Technol ogy, Engineering
& Public Policy (STEaPP), Uni versity
College London, London, UK.
Email: muhamad.jazuli.20@ucl.ac.uk
Abstract
During its 2022 G20 presidency, Indonesia committed to reducing carbon
emissions through the Indonesia Just Energy Transition Partnership (JETP).
In addition to other policies, the Partnership is designed to drive the country's
broader energy transition and net- zero aspirations for dec ades to come. In addition
to technical challenges, the Partnership is expected to face social and political
resistance. Considering its impor tance for Indonesia's sustainable development
and gaining support from influential stakeholders, this paper examines the JETP
through the lens of a policy regime framework, drawing on insights from the
country's multi- decade fossil fuel subsidy reforms (FFSR) – a comparable effort to
drive significant changes in energy use. It highli ghts the critical role of navigating
political, social, and regulator y realities that have contributed to the successes or
failures of policy reforms. The policy appraisal suggests the need for significant
reconsideration of its broader policy- regime context, specifically political, social,
and regulatory factors, to ensure the succes sful implementation of the JETP and
Indonesia's energy transition in general. Furthermore, the paper offers relevant
policy recommendations to assist advocates and administrations supporting the
Partnership in broadening its appeal beyond environmental concerns to secure
stronger social and political backing.
990
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JAZULI etal.
‘energy transition’ or ‘transisi energi’ and ‘Indonesia’.
The case of the FFSR was used to help enrich and con-
textualize the framework, which enables the authors to
approach the existing FFSR efforts and the JETP as
policies that direct the government's broader energy
transition agenda. In practice, this analy tical approach
resonates with rapid yet robust policy reviews e.g.,
(Chisnell etal.,2017; Jazuli etal.,2021, 2022; Thoday
etal.,2018; Toppenberg- Pejcic etal.,2019) produced
to offer relevant decision- makers with prompt analyses
and forward projections of current policy reforms.1
The following section highlights the complex inter-
play between the FFSR and the JETP in the context of
the country's energy transition agenda. The next one
synthesizes the existing relevant literature and studies
regarding Indonesia's FFSR, which led to the formation
of the policy regime framework. This is followed by the
JETP's policy appraisal using the policy regime frame-
work. The penultimate section presents a concluding
discussion and offers policy recommendations. The
last section explains the paper's limitations and future
research opportunities.
2 | THE INDONESIAN FFSR AND
THE JETP
In the mid- 1960s, then a net oil exporter, Indonesia
started subsidizing fossil fuels, namely petrol, diesel,
and kerosene, to alleviate poverty and stabilize prices
(Savati c, 2016; Syeirazi, 2022). However, with intensi-
fying fiscal burdens due to the 1998 Asian economic
crisis, the government was forced to reform its long-
standing fuel subsidy regime (Bullard etal.,1998). Per
the country's political agreement with the IMF, the sub-
sidies were expected to be eliminated and reallocated
to rebuild the economy and boost Indonesia's strate-
gic sectors, such as education and health. However,
despite this political commitment, the FFSR remains
incomplete with successes and reversals (Beaton
etal.,2017; Jazuli etal.,20 21).
Illustrating this pattern, the FFSR moved for-
ward between 2005 and 2015 (Chelminski, 2018;
Kyle , 2018; Umoro, 2020). However, reforms were
reversed in 2009 and 2017, respectively, due to per-
sistent protests from the public and political oppo-
nents (Pasaribu,2 017; Sawitri, 2017 ).2 Furthermore,
thanks to the long overdue reform since 2017, in late
2022, the government suffered from a significant fis-
cal gap as the cost of remaining subsidie s kept rising.
In response, the administration spent significantly on
‘energy compensation’ and simultaneously increased
fuel prices (Dihni,2022).3 This prompted the overall
cost of fuel subsidies to reach an all- time high (see
Figure1), exceeding that of other supposedly more
strategic policy fields, such as health and defense
(Kemenkeu RI,2022). Concerns with foreign debt and
influence and political parties' susceptibility to public
FIGURE 1 Indonesia's energy su bsidies and compensation s (in billion USD). The compensation is gi ven to the (incumbent) state-
owned enterprise s, the Pertamina (for petroleum and ga s products) and the PLN – Perusahaan Listr ik Negara or National Electric ity
Company (for electri city). These figures are based on a conver sion rate of 14,500 Indonesian Rupiah to 1 US D. Source: (Kemenkeu
RI,2022, 2023).
2.1 1.0 1.1 1.0 1.6 1.8
3.7
2.3 4.7 6.9 6.3 6.0
3.6
3.4
3.3
3.9 4.9 5.2
0.5 6.3 3.3
20.2
11.5 9.7
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
2019 2020 20212022202
32
024
Fuel LPG Electricity Compensation
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