Indonesia in a Changing Energy Frontier: Challenges and Prospects

This articles aims to analyse the challenges and prospects energy frontier in Indonesia. The data for this analysis are derived from Indonesia -Energy Outlook and Statistics 1990 - 2025 and National Energy Blueprint 2005 – 2025. There are four major findings. First, rapid energy transition from crude oil has consequences on raising demand for natural gas and coal. Second, there is uncertainty about the long term prospects of energy prices because there is a possibility of conflicting targets among the energy price principles. In the future, this will have implications for the incentives for meeting domestic demand, especially if there is a huge price difference between the domestic and international markets. Third, decreasing oil supplies, mismatch between fossil fuel production and consumption, and a decreasing share of biomass in total energy consumption will lead to uncertainty about the prospects of energy security. Four, it is impossible for binding target on biofuel as far as Indonesia government gives fossil fuel subsidies. There are three implications from this study. First, demand management is the key for surviving. Second, binding targets on new and renewable energy need to be defined clearly and economically sound. This can be effective if government reduce subsidies on fossil fuel. Three, the government needs to revise the National Energy Blueprint because many of argument and policy setting do not sustainable under the current condition