Jakarta, 23 September 2021 – The Institute for Essential Services Reform (IESR) studies entitled Deep decarbonization of Indonesia’s energy system shows that biofuels and hydrogen have a role in achieving deep decarbonization of the transportation sector. The dominance of electric vehicles using electricity sourced from renewable energy will be settled in 2050 especially for passenger vehicles, while biofuel and hydrogen will be potential in the heavy ground transportation

Julius Adiatma, Clean Fuel Specialist, IESR explained that in the short term, hydrogen has the potential to be used in the industrial sector by observing the economic development of hydrogen.

“For the land transportation sector, battery-based electric vehicles are the most suitable option because their efficiency is higher than other options. The price continues to decline, as the technology also keeps improving and it’s getting faster (to achieve the target by 2050),” he said on the fourth day of Indonesia. Energy Transition Dialogue (IETD) 2021 held by the Indonesia Clean Energy Forum (ICEF) and the Institute for Essential Services Reform (IESR), Thursday (23/09/2021).

Economically, he believes that biofuels, particularly biodiesel will have a significant role in Indonesia. He considers the availability of organic sources to produce biofuels.

“Unfortunately, currently biofuels are focused on palm oil. Meanwhile, the available land is getting fewer for developing palm oil. So we have to find other ways to produce biofuels other than palm oil, for example from waste or other plants,” he explained.

Referring to the National Research and Innovation Agency (BRIN) Outlook Energy 2021, Eniya Listiani Dewi, a BRIN researcher said the development of electric vehicles by using renewable energy will effectively reduce carbon emissions.

“We ask PLN (State Electric Company) to increase the penetration of new and renewable energy. If the electric vehicle has a limited range, we will extend it by using hydrogen fuel,” said Eniya.

In her opinion, the technology for developing green hydrogen fuel with the concept of electrolysis from a combination of Solar PV or wind turbines can make it energy carries.

“Currently, an electrolysis study of the Cirata Floating Solar PV is being carried out. Next, the excess energy from the Solar PV will be recommended for processing of electrolysis of water and producing hydrogen gas, “she said.

Alloysius Joko Purwanto, Energy Economist, Economic Research Institute for ASEAN and East Asia (ERIA) explained a scenario to support the development of hydrogen in the transportation sector, one of which is the use of hydrogen produced from gas (grey hydrogen) to create markets and build infrastructure that needed and subsequently switch to green hydrogen which is produced using renewable energy.

As part of the principle development of green hydrogen in Indonesia, he explained that it is also necessary to look closely at the market niche for hydrogen-fueled transportation.

“Hydrogen may be suitable for long-range vehicles or heavy equipment vehicles, such as commercial vehicles or busses. Then it must be adjusted to the area where renewable energy for electricity is sufficient,” concluded Joko.

Jakarta, 23 September 2021 – As the second-highest emitter in the energy sector after the power generation sector, electrification of the transportation sector based on renewable energy will be one of the significant pillars to reduce carbon emissions and prevent global temperature rise exceeding 1.5 degrees Celsius. There are at least three main drivers of accelerating the adoption of electric vehicles, such as the availability of supporting regulations, adequate infrastructure, and affordability of prices.

These main driving factors were presented by Rahul Gupta, Senior Expert at McKinsey & Company, on the fourth day of the Indonesia Energy Transition Dialogue (IETD) 2021. In his opinion, there is a big economic opportunity for Indonesia if it can create an electric vehicle ecosystem because Indonesia has the potential to become the largest market after China and India.

“We project two-wheeled vehicles to be the main driver in terms of significantly higher penetration (electric vehicles),” he explained.

Comparing the electric vehicle ecosystem in Indonesia, Zainal Arifin, Vice President of Technology Development and Standardization, PT Perusahaan Listrik Negara (State Electric Company), admits that electric vehicle infrastructure in Indonesia is still limited.

“We have built 32 electric vehicle charging stations in 14 cities. Based on the roadmap, we will have more than 2400 units for electric vehicle charging stations throughout Indonesia in the next 5 years,” he said.

Zainal added that to meet the needs of electric vehicle infrastructure, the construction of charging stations will be fulfilled by 40 percent by State Electric Company (PLN) while the remaining will be built by private companies. Furthermore, Zainal also said that the disparity in price with conventional vehicles made the demand for electric vehicles less attractive.

The price issue was also highlighted by Sony Sulaksono, Director of Maritime Industry, Transportation and Defense Equipment, Ministry of Industry. He stated that the Indonesian government has set a target of 1.6 million two-wheelers and 400 thousand four-wheel electric vehicles by 2025. However, the adoption of electric vehicles in Indonesia is currently under 2000 units.

In his opinion, the government has tried to reduce the price by issuing Government Regulation (PP) NO. 74, which regulates incentives and disincentives for electric vehicles and conventional vehicles.

“For instance (the government) is giving a 0% luxury tax for electric vehicles,” he said.

Furthermore, Sony highlighted that the higher price of electric vehicles is also influenced by the cost of batteries which cover 40-50% of the total cost of electric vehicles.

Sony said that the battery swap stations area is the solution as the research and development of electric vehicle batteries is still being developed in order to reduce costs. He explained that using this approach, transportation companies will be able to rent out electric batteries to the public. The fees are charged based on kilometers traveled by electric vehicles.

On another occasion, Idoan Marciano, a Researcher and Specialist in Energy and Electric Vehicles, IESR, said that to bridge the the price gap of electric vehicles is increasing the tax incentives from the government, the usage of more affordable electric vehicles models and meet with the preferences of the Indonesian community, as well as parallely accelerate the development of the domestic battery industry.

“The development of the domestic battery industry is important to support efforts to achieve deep decarbonization targets. Its existence will support the penetration of electric vehicles and is necessary for the electricity grids simultaneously with the increase in the renewable energy mix,” explained Idoan.

Toto Nugroho Pranatyasto, President Director of the Indonesian Battery Company (IBC) said that IBC is in progress to produce and develop electric batteries. IBC is also developing battery recycling to anticipate battery waste.

“This development is not something that can be done quickly, we need a large amount of investment. To develop 140 GWh of battery capacity, we need an investment of around USD 15.3 billion for three to four years,” Toto said at the IETD 2021.

Toto added that besides the electric battery development process, IBC also involved various partners to design the supply chain and technology. It is to prepare the electric vehicle ecosystem chain.

“The government needs to encourage electric vehicles into the middle-cost segment. The range price of two-wheeled vehicles also needs to be affordable, “said Toto.