IEVO 2023: Electrification of Transportation to Reduce GHG Emissions

February 19, 2023 – The Institute for Essential Services Reform (IESR) launched Indonesia Electric Vehicles Outlook 2023 for the first time. This report discusses the status of the development of electric vehicles for passengers and the supporting ecosystem for developing electric cars in Indonesia. IESR views that climate change mitigation with a significant reduction in emissions from the transportation sector can be carried out in a participatory way by the community to adopt electric vehicles.

The transportation sector is a source of pollution and contributes to greenhouse gas (GHG) emissions. There are 600 MtCO2-eq of Indonesia’s GHG emissions in the energy sector in 2021; 23% come from the transportation sector. Land transportation is the most significant contributor to GHG emissions in the transportation sector, with more than 90%. Emissions from the transportation sector are predicted to increase by 53% in 2030 compared to 2015 and almost double between 2030 and 2060. Decarbonization of the transportation system by accelerating the adoption of environmentally friendly and low-emission electric vehicles could be one solution, along with the transition to renewable energy in the power sector

“The government has included the use of electric vehicles as one of the mitigation action plans in the Nationally Determined Contribution (NDC). However, the target set still needs to be aligned with the Paris Agreement to limit the increase in the earth’s temperature below 1.5 degrees Celsius by 2050. According to the IESR study, to achieve zero emission by 2050, the number of electric two-wheelers and four-wheelers vehicles must reach 110 million units by 2030,” said Fabby Tumiwa, Executive Director of IESR.

To achieve the target, Indonesia should accelerate the adoption of electric vehicles by supporting fiscal and non-fiscal policies. Since 2019, the government has been intensively pushing for industrial development and the use of electric cars. However, at the same time, several pro-fossil energy policies are still implemented, making adopting electric vehicles less than optimal. For example, government policies continue to subsidize fuel oil (BBM) and extend fuel sales to Euro II standards. These policies have reduced the attractiveness of consumers to acquire electric vehicles and reduced the benefits of switching to electric cars in the form of reduced fuel cost savings.

“Dependence on fossil fuels in our energy system, especially the transportation sector, makes our energy sector vulnerable to price fluctuations. The government is trying to reduce dependence on fossil fuels in the transportation sector through battery-based electric motorized vehicles (KBLBB). However, it is still difficult to find electric charging infrastructure, expensive purchase prices, and limited performance and models are the main obstacles to consumer adoption of KBLBB. These various obstacles need to be resolved by the government,” explain Faris Adnan, IEVO writer who is also a researcher on Electricity Systems, IESR.

The IESR findings show that by 2022, the adoption of electric motorbikes increased five fold from 5,748 units in 2021 to 25,782 units. In addition, the adoption of electric cars has almost quadrupled from 2,012 units in 2021 to 7,679 units in 2022. The promotion of electric vehicles drove this increase through the G20 event, which made electric cars the official vehicle of the delegation.

“Even though there is an increase, the number is still far from the target set by the government. The population of new electric motorbikes is 0.2% of the total motorbikes in Indonesia. Meanwhile, new electric cars reached 0.4%. Therefore, for KBLBB to be more attractive and affordable to the public, several additional policy instruments that are right on target are needed,” said Faris.

One such policy instrument is a combination of incentives for producers and market creation to accelerate the economies of scale for electric vehicles, especially two-wheelers electric vehicles, which have significant market potential. For this reason, IESR recommends that the government encourage the implementation of the Presidential Instruction for the purchase of electric vehicles by government agencies and state-owned enterprises and encourage adoption by the ride-hailing business and logistics to accelerate the adoption of electric cars by the market in the next 2-3 years.

Furthermore, to get more significant GHG emission reduction and environmental benefits, an increase in the mix of new renewable energy generators in the electricity system is also needed so that the emissions produced by KBLBB are lower than those from internal combustion engines.

“The IESR study shows that it will obtain new emission benefits if the renewable energy mix in the PLN electricity system is above 20%,” continued Faris

IESR will launch and discuss the Indonesia Electric Vehicle Outlook (IEVO) 2023 on February 21, 2023, 09:30 – 12:00: 00 WIB online via Zoom Conference + Livestream Youtube (IESR). This event is an effort to encourage the acceleration of electric vehicles in Indonesia, bring together various relevant stakeholders, and accelerate Indonesia’s steps to make an energy transition. The event will be attended by the Chairperson of the Indonesian Transportation Society’s Environment and Energy Transportation Forum, Indira Darmoyono, Director of Business Development Strategy & Special Projects Grab Indonesia, Rivana Mezaya, and others.