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High oil prices renew calls to speed up energy transition
Energy researchers pointed to the impact of rising oil prices on the state budget and supply costs.
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Officials take photos of wind turbines in Sidrap in Sidenreng Rappang, South Sulawesi, on Oct. 26, 2021. With 30 turbine generators, this is the largest wind power plant in Indonesia in operation. (AFP/Zul Kifli)
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ising crude oil prices have renewed calls to speed up Indonesia's transition to clean energy as the issue underscores the risks of relying on the largely imported fossil fuel.
Energy researchers have pointed to the impact of rising oil prices on the state budget and supply costs, which jeopardize domestic energy security. They said the high prices were a good impetus to reallocate state resources to renewable energy.
“Our energy security vulnerability will remain high as long as we depend on fossil fuels,” said Institute for Essential Services Reform (IESR) executive director Fabby Tumiwa on Monday, adding that rising prices had made renewable technology more competitive than fossil fuel technology
“The question is whether the government would leverage rising fossil fuel prices to accelerate toward renewables."
Surging global oil prices have put fresh strains on the state budget as the government seeks to balance higher subsidy spending with fiscal consolidation plans. Indonesia is supposed to reinstate a budget deficit cap of 3 percent of GDP by 2023.
International oil benchmark Brent exceeded US$120 a barrel on March 13, double the $63-per-barrel assumption in the 2022 state budget, as the Ukraine crisis exacerbated rising oil prices stemming from the global economic recovery from the pandemic.
Global oil prices are one of six fundamental macroeconomic assumptions used to compile the state budget, along with inflation and oil and gas production figures.
