Publications

The energy crisis in Indonesia is driven more by the culture of consumption that people have, limited regulation, poor inter-departmental coordination, and a lack of implementation on any policies to diversify energy. Simply, people are very comfortable in the consumption of heavily subsidized fuel at a price that is significantly less than the costs associated with extracting that fuel in the first place. This is the primary factor in what will be a worsening of the supply-demand situation in the near future. The growth of energy consumption in Indonesia is outstripping economic growth. This is reflected by a higher Energy Elasticity Index (EEI) compared to other countries. For instance, in 2004 the EEI of Indonesia is 1.84, whereas Malaysia it was 1.69, Thailand it was 1.16, Singapore it was 0.73, USA it was 0.26, Canada it was 0.17, and Japan it was 0.10. The EEI is the ratio of energy consumption growth to economic growth. The balance of energy supply-demand becomes the most important factor in maintaining the countrys economic growth. The diversification of energy supplies or sources is one of many options for improving energy balance. By considering the age of non-renewable (fossil) energy that can be estimated by reserve-to-production ratio (R/P index) or by more complicated reservoir simulation work, it is possible to make a realistic plan for energy supply-demand and simultaneously create a comprehensive regulatory framework for developing renewable energy sources over the long term. The purpose of this paper is to highlight the degree of energy resources decline in Indonesia and discuss how to deploy a “depletion premium for improving efficiency of energy usage and finding new (alternatives) energy resources. The paper further elaborates how a shift from the old culture and lifestyle can be made to the new era of saving and diversifying energy in transportation, buildings, workplace, and household activities, among others.