Environmental organisation 350.org has welcomed the decision by the government of Indonesia to introduce export duties and a windfall tax on coal, calling for the revenues generated to be directed towards renewable energy, rather than fossil fuel subsidies.
According to estimates, windfall taxes on coal companies in Indonesia are estimated to generate state revenues of up to Rp66.03 trillion, or around $3.79 billion.
However, using these funds to subsidise fossil fuel companies would be ‘counterproductive’, 350.org said, and will only reinforce dependence on costly fossil fuels, particularly at a time of energy instability due to the crisis in the Middle East.
In its 2026 state budget, Indonesia’s government has allocated more than Rp380 trillion in fossil energy subsidies and compensation payments to state-owned energy companies Pertamina and PLN. However, this was based on a lower oil price assumption – of around $70, rather than $100 – prompting the government to ‘plug the gap’ with debt or spending cuts.
Public impact
“Taxpayers are paying three times,” commented Sisilia Nurmala Dewi, 350.org Indonesia country manager. “First to keep fossil fuels artificially cheap, then through ever-increasing energy bills as non-subsidised fuel and electricity prices rise, and again to repair the climate damage these fuels will cause. Meanwhile coal companies are making obscene profits and getting a free ride. It’s high time these polluters pay their fair share.
“But the government must also ensure that public money is no longer used to support a collapsing fossil fuel system. Instead of subsidising fossil fuels, revenues from windfall taxes and export duties must be allocated for clean, affordable renewables that can bring down costs of living for good.”
Renewable investment
350.org pointed to global data that shows that more than 90% of new renewable projects are cheaper than fossil alternatives, while in Indonesia specifically, decentralised solar energy systems combined with battery storage has the potential to reduce electricity generation costs by around one fifth.
“By reducing our exposure to imported oil and gas and volatile global prices, we can stabilise the APBN (state budget) and free up fiscal space for social protection that we badly need,” Dewi added.
“Instead of locking Indonesians into an ever‑rising fossil fuel bill, we must stop fossil fuels from draining public finances and household budgets. Shifting to renewables is the only way to make life less expensive for everyone in the long run.” Read more here.
