Building Energy Welfare: From Subsidies to Sovereignty
In many countries, welfare is no longer simply understood as the state’s ability to provide aid to its people. It has evolved into the capacity to design the future systematically, measurably, and sustainably.
In the energy sector, this change is increasingly evident. The state is not only present to lower prices but to ensure energy access remains secure under any conditions, across generations, and resilient to global dynamics.
Indonesia is still at this transitional point. For years, the approach to energy welfare has been embodied through subsidies. Fuel prices have been kept affordable, electricity tariffs held steady, and global price fluctuations responded to with significant fiscal interventions.
In the short term, this approach has proven effective. It preserves purchasing power, curbs inflation, and protects society from sudden economic pressures. However, upon deeper examination, this approach has not addressed the fundamental issue: how to ensure energy remains available and affordable in the long term without continuously burdening the national finances.
This is where it is crucial to distinguish between welfare as aid and welfare as a system. The experiences of various countries show that sustainable welfare is not built on reactive policies but on well-designed systems.
Norway, for example, does not use all its oil and gas revenues for domestic consumption. It converts them into a sovereign wealth fund invested globally, creating fiscal buffers and broad policy manoeuvrability.
A different but equally strategic approach is seen in Denmark. After experiencing an energy crisis in the 1970s, the country did not expand subsidies but undertook structural transformation. It built a wind energy industry, strengthened domestic capacity, and gradually reduced import dependence. The resulting welfare does not rely on cheap prices but on a robust and adaptive system.
Germany offers another lesson. Through its Energiewende policy, the country has undertaken a major transformation in its energy structure, despite the costs and political courage required. In the process, society has shared the burden of the transition. Yet the outcome is energy diversification, industrial strengthening, and increased self-reliance. The long-term stability achieved is far more solid than merely keeping prices low.
South Korea presents a different perspective. Without natural resource advantages, this country has chosen the path of efficiency and technology. Every unit of energy is utilised optimally. This approach underscores that energy welfare is not always determined by resource wealth but by the ability to manage it intelligently.
Indonesia, of course, is in a different context. Its economy is large-scale, its energy needs are continuously growing, and its development structure is still evolving. In such a situation, blindly copying other countries’ models is not only ineffective but also risks creating new distortions.
What is needed is the ability to read principles and translate them according to the national context. The principles are simple: the state must manage uncertainty, convert resources into resilience, and balance short-term needs with long-term vision.
The first transformation required is to shift the state’s role from subsidy provider to future investor. So far, energy has often been positioned as a burden the state must bear to protect society from price fluctuations. As a result, budgets are exhausted on maintaining current stability without creating foundations that make such stability sustainable.
When the state acts as an investor, the logic changes. Expenditures are no longer seen as costs but as capital investments. Consumptive subsidies are redirected towards productive investments—for renewable energy development, network strengthening, and efficiency improvements. With this approach, every intervention not only preserves purchasing power but also reduces future vulnerabilities.
The second transformation is the change in the state’s role from shock absorber to system designer. So far, responses to energy crises have tended to be reactive. When prices rise, the state holds them back. When supplies are disrupted, the state intervenes. This pattern creates dependence on short-term responses without addressing root causes.
As a system designer, the state begins working at the structural level. Energy diversification is strengthened, strategic reserves are built, and infrastructure is developed for the future. The state no longer merely fixes disruptions but ensures they are less likely to occur. Denmark’s experience shows that proper system design can turn crises into turning points.
The third transformation is the shift from reactive to visionary. Reactive policies follow events, while visionary approaches shape direction. The state begins thinking in longer horizons, considering the needs of future generations, and daring to make decisions that may not always be popular in the short term.
These three transformations are interconnected. When the state becomes a future investor, it gains the capacity to design systems. When systems become stronger, the need for reactive responses decreases. And when short-term pressures lessen, space for visionary thinking opens up.
Indonesia is currently at a defining moment. Pressures to maintain short-term stability remain significant, but the need to build long-term resilience is increasingly urgent. Bridging the two requires a fundamental change in perspective.
Energy can no longer be viewed as