THE POLITICAL ECONOMY OF INDONESIA’S RENEWABLE ENERGY SECTOR AND ITS FISCAL POLICY GAP

Abstract

Indonesia is a developing country with a high dependence on fossil fuels. To promote renewable energy, the government has implemented several policies, including a feed-in tariff system and tax incentives. However, the renewable energy sector in Indonesia still faces various challenges, including the fiscal policy gap. This paper aims to analyze the political economy of Indonesia’s renewable energy sector and its fiscal policy gap. We argue that the fiscal policy gap is the result of the interests of fossil fuel stakeholders who have managed to influence policy-making processes. We conclude that to overcome the fiscal policy gap, the government needs to establish a strong political will to promote renewable energy and reduce the influence of fossil fuel stakeholders. The article “The Political Economy of Indonesia’s Renewable Energy Sector and Its Fiscal Policy Gap” provides an analysis of the political economy of Indonesia's renewable energy sector and the gap in its fiscal policy. The study aims to understand the reasons for the slow progress of Indonesia's renewable energy sector and to propose a policy framework for accelerating its development. The study uses a qualitative research method and draws on data from a variety of sources, including academic studies, policy documents, and interviews with industry experts and policymakers. The findings reveal that the slow progress of Indonesia's renewable energy sector is due to a lack of political will, institutional fragmentation, and a lack of coordination among stakeholders. The study recommends that Indonesia adopt a comprehensive and integrated policy framework to overcome these challenges, including developing a national energy strategy, implementing effective fiscal incentives, and improving the regulatory environment.