This document discusses energy subsidies in several Southeast Asian countries. It notes that: 1) Producing electricity from solar power costs over 4 times as much as from coal due to subsidies that lower energy supply prices. These subsidies also fuel smuggling of cheaper fuels across borders, costing hundreds of millions annually. 2) Countries like Indonesia and Thailand rely heavily on fossil fuels for electricity production, but their reserves are dwindling rapidly. 3) Energy subsidies place a large fiscal burden on countries, costing billions annually and absorbing significant portions of GDP. They also contribute to greenhouse gas emissions.

1. Shikha Jha
Asian Development Bank
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2. Subsidies  lower energy supply
To produce 1 KWH of electricity
Solar plant costs $0.122 = 4 x Coal plant $0.032
Low price  fuel smuggling
Annual cost: Indonesia $862m
Malaysia $175m
Philippines $600-700m
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3. Electricity
produced
from fossil
fuels
Reserve life at current
rates of extraction,
years
Oil Natural gas Coal
Indonesia 86% 12 42 67
Thailand 93% 3 7 69
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4. 49
36
741
147
109
2.7%
4.1%
1.9%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
0
50
100
150
200
India Indonesia Thailand
US$ billion US$ per capita % of GDP

5. • Energy
access
• Market
distortion
• Fiscal
impact
• GHG
emissions
Energy
type
Size of
subsidy
Benefits
Distribution
Substitute
availability
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6.  Injection of the fiscal savings from reform into the
economic system is fundamental to allay the fears
 The poor most vulnerable to price shocks: Need for
social safety nets
 High prices reduce FF consumption but increase
biomass use: Availability of clean fuels is essential
 Energy /energy-intensive industries most impacted:
Stimulate energy efficient investment
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