Energy Policies Beyond IEA Countries

International Energy Agency

2307-0897 (online)
2307-0889 (print)
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For many years, the International Energy Agency has been conducting comprehensive periodic  reviews of energy policy of its member countries. These reviews cover all major forms of energy produced, imported and consumed in the subject countries, and address such issues as the various markets, prices and taxes, regulation and competition, and environmental concerns. These reviews have been published under the series, Energy Policies fo OECD Countries.  Increasingly, however, non-member countries have been requesting these reviews and these have all been consolidated under the series, Energy Policies beyond OECD Countries. Unlike those done for the OECD countries, these reviews are only done on request, and are not done with a fixed periodicity.

Energy Policies Beyond IEA Countries: Indonesia 2015

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International Energy Agency

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17 Feb 2015
9789264065277 (PDF)

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Indonesia can claim many economic and political achievements over the last 15 years: the country posted consistently high economic growth rates, joined the G20, stabilised its young democracy, and devolved budgetary power and decision making. Extending this track record further depends on Indonesia’s ability to deliver sustainable and sufficient energy supply to markets and ultimately to consumers.

Even though it remains a net energy exporter due to the expansion of its coal and liquid biofuel production, the country is consuming more energy as a result of rising living standards, population growth and rapid urbanisation. Indonesia is already highly dependent on oil imports. Meeting demand growth and ensuring the environmental sustainability of energy supplies must remain key pillars of its economic and investment policies and strategies.

Indonesia has implemented important changes since the IEA published its first review of the country’s energy polices in 2008. Key milestones include the 2007 Law on Energy, the 2008 National Energy Policy, the 2009 Law on Electricity, and the 2009 Law on Mineral and Coal Mining. However, the government needs to continue this reform process vigorously and implement further improvements to Indonesia’s institutional set-up, alongside stronger policy planning and implementation, more investment in critical energy infrastructure, and continued movement towards regulated energy markets and cost-reflective pricing.

This review analyses the energy policy challenges facing Indonesia and provides critiques and recommendations for further policy improvements. It is intended to help guide the country towards a more secure and sustainable energy future.

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Table of Contents

1. Executive Summary and Key Recommendations 9
-Executive summary 9
-Substantial progress 9
-Improve and streamline institutions and policies 10
-Enhance the legal and regulatory environment 11
-Improve and extend infrastructure 11
-Phase out subsidies and move to market pricing 12
-Ensure the sustainability of the energy sector 13
-Establishing a domestic gas market 13
-Key recommendations 13
2. General Energy Policy 17
-Country overview 17
-Economy 17
-Institutions 18
-Supply and demand 19
-Institutions 22
-Energy policies 24
-Energy subsidies 30
-Infrastructure and land acquisition 33
-Energy security 33
-Assessment 34
-Recommendations 36
-References 37
3. Natural Gas  39
-Overview 39
-Supply and demand 39
-Institutions and regulation 44
-Government policies 46
-Industry structure 47
-Emergency preparedness 49
-Natural gas prices 50
-Assessment 51
-Recommendations 53
-References 53
4. Oil 55
-Overview 55
-Supply and demand 55
-Government policies 58
-Industry regulation 59
-Industry structure 61
-Pricing 63
-Oil supply structure 64
-Emergency preparedness and planning 65
-Assessment 68
-Recommendations 69
-References 70
5. Coal 71
-Overview 71
-Supply and demand 72
-Industry structure 76
-Environmental protection 77
-Institutions 78
-Government policies and programmes 79
-Assessment 81
-Recommendations 82
-References 82
6. Climate Change and Environment 85
-Overview 85
-Energy-related CO2 emissions 87
-Institutions 89
-Policies and measures 90
-Assessment 94
-Recommendations 96
-References 96
7. Electricity 99
-Overview 99
-Supply and demand 99
-Institutions 102
-Market structure 103
-Electricity prices 105
-Planning and forecasts 106
-Electrification 108
-Electricity security 109
-Assessment 110
-Recommendations 113
-References 114
8. Renewable Energy 115
-Overview 115
-Renewable energy supply and demand 116
-Institutions 117
-Policies and support measures 119
-Renewable energy electricity 121
-Assessment 126
-Recommendations 128
-References 129
9. Energy Efficiency 131
-Overview 131
-Final energy use 131
-Institutions 134
-Policies and measures 135
-Sector policies 136
-Assessment 139
-Recommendations 140
-References 141
10. Transport  143
-Overview 143
-Institutional framework 145
-Inter-urban transport 148
-Urban transport 148
-Vehicles and fuels 150
-Assessment 155
-Recommendations 156
-References 157
11. Energy Technology, Research, Development, Demonstration and Deployment 159
-Overview 159
-Institutional framework 159
-Training and human capacity 163
-Energy R&D strategy and programme evaluation 164
-R&D funding 165
-International collaboration 166
-Assessment 168
-Recommendations 168
-References 169
Annex A: Organisation of the review 173
Annex B: Energy balances and key statistical data 177
Annex C: Glossary and list of abbreviations 183

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