Indonesia’s coal windfall tax must be used to subsidize renewables, not fossil fuels
350.org today welcomed the Indonesian government’s plans to impose export duties and a windfall tax on coal, while urging that revenues be used to subsidize access to clean, affordable renewable energy, not fossil fuels.
350.org Indonesia is part of a growing civil society coalition calling for a windfall profits tax on coal companies, as global coal prices surge due to continuing tensions at the Strait of Hormuz. Windfall taxes on coal companies are estimated to generate state revenues of up to Rp66.03 trillion.
But 350.org Indonesia warned that using windfall tax revenues to increase spending for fossil fuel subsidies is “counterproductive,” and will reinforce dependence on costly fossil fuels.
The Indonesian government has set aside more than Rp380 trillion for fossil energy subsidies and compensation to Pertamina and PLN — roughly a tenth of total spending in the 2026 state budget—based on an oil price assumption of only US$70 per barrel. With oil prices jumping above US$100, the government is now scrambling to plug the gap with more debt or spending cuts elsewhere.
Sisilia Nurmala Dewi, 350.org Indonesia Country Manager said:
“Taxpayers are paying three times. 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 subsidizing 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.”
Globally, over 90% of new renewable projects are cheaper than fossil alternatives, including coal. Studies in Indonesia also show that decentralised solar plus battery storage can cut electricity generation costs by up to around one‑fifth.
“By reducing our exposure to imported oil and gas and volatile global prices, we can stabilize the APBN (state budget) and free up fiscal space for social protection that we badly need. 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.”
Media Contact:
Sisilia Nurmala Dewi, 350.org Indonesia Country Manager, [email protected]
Ilang-Ilang Quijano, 350.org Media Campaigner, [email protected], +639175810934