Fossil Fuel Subsidy SWAPs

This brief looks at how Indonesia can start actively promoting renewable energy by removing the existing hurdles to its deployment and switching public support from fossil fuels to renewables to meet the country’s clean energy targets.

This brief provides options on how the Government of Indonesia (GoI) can leverage public funding to incentivize private investment in renewable energy.

COP 25 nearly didn’t happen at all, on account of mass protests in Santiago, Chile, the planned host city; at the last minute, it moved to Madrid, Spain, forcing some who were planning to attend to instead watch from afar.

At the Asia Clean Energy Forum (ACEF) in Manila (Philippines), Richard Bridle and Balasubramanian Viswanathan from the International Institute for Sustainable Development (IISD) launched a report exploring how the expansion of subsidy swaps could accelerate the clean energy transition.

When governments reform fossil fuel subsidies, there are many competing demands for how to reallocate resources, including spending on public health, education and social protection. This report makes the case for placing the promotion of clean energy alongside these other priorities and describes the economic, social and environmental benefits that such a move would bring, through a “subsidy swap.”

Energy challenges are similar across the world. Fortunately, so are the solutions. In many cases, subsidy reform and energy efficiency are closely linked and mutually supportive.

A subsidy swap replacing subsidies to fossil fuels with renewable energy could allow the removal of fossil fuel subsidies and promote a transition to clean energy.