Taxing coal is a simple and effective means to promote a clean energy transition in Indonesia, and the experience of India demonstrates that it is politically and economically feasible.
Indonesia’s comparatively low rate of taxation, exacerbated by falling revenues during the COVID-19 pandemic, has created significant fiscal problems. Well-designed transport fuel taxes can be an effective and efficient way to fill this gap, as demonstrated by experience in India.
A fuel price cut by India’s central government from October 2018 to June 2019 resulted in subsidies of INR 26,957 crore (USD 3.9 billion) for gasoline and diesel. This far overshadowed funding for the government’s flagship electric vehicles (EV) subsidy program of INR 10,000 crore (USD 1.4 billion) over three years.
Switching subsides from kerosene to off-grid solar would benefit the millions of Indian households that suffer frequent blackouts or that cannot afford grid electricity. A range of off-grid solar products is now cheaper than kerosene over the lifespan of the technology.
This report on Canada forms part of a multi-country effort by the Global Subsidies Initiative (GSI) of the International Institute for Sustainable Development (IISD) to characterize and quantify government support for liquid biofuel production, distribution and consumption. An overview of ethanol and biodiesel, the main fuels evaluated in this report.
