The Impact of Fiscal Transfer on Energy Efficiency in Indonesia

IRSA-Indonesia 5, a bottom-up CGE model, was employed to analyze the impacts of fiscal support to the sub-national region to implement energy efficiency policy. By implementing several scenarios in Indonesia, it is suggested that to be more effective in the emission reduction efforts, the transfer should be distributed on lump sum basis. Furthermore, the lump sum transfer is more effective to boost the economy as well as households consumption. Moreover, to reduce poverty the fiscal transfer should be dedicated to the least developed region particularly.