A Brief Outlook on Euro 4 in Indonesia

By: Filda Yusgiantoro, Massita Ayu Cindy & Rahmantara Trichandi

In the process of responding to climate change, Indonesia as the 6th largest greenhouse gases (GHG) emitter in the world aims to reduce the national emission (International Energy Agency, 2015). As shown in Figure 1, the transportation sector is the 2nd highest GHG emitter sector in Indonesia, with about 90% of it comes from road transportation (Yudha, 2017). In particular in the capital city of Indonesia, Jakarta, the outdoor air population had already passed and even doubled the annual mean PM2.5 level from the World Health Organization (WHO) due to the high number of vehicles in 2010 (Thitiratsakul, 2016). Moreover, the total car sales per year has already increased by almost 100% in the last ten years (Trading Economics, 2018). All of the above facts show that it is important for the country to change its transportation emission as it would greatly impact total Indonesia’s emission simultaneously especially in the city. This could reduce the negative effect of the transportation emission in the long term in Indonesia.

Figure 1. Percentage of Energy Emission by Sector (Yudha, 2017)

To reduce transportation emission, developed countries such as countries in the European Union already had a systematical fuel quality improvement plan; shifting from low-quality fuel (Euro 1) to high-quality fuel (Euro 5) in 15 years since 1994 (Figure 2). However in Indonesia, after nearly 12 years of stagnancy since the implementation of Euro 2 in 2005, its government finally made a significant step of adopting Euro 4 as the new national emission standard (Ompusunggu, 2017). The implementation of Euro 4 would be done gradually and planned to be nationally implemented in 2021, and the next step is the adoption of Euro 5 nationally by 2025 (Yudha, 2017).

Figure 2. Systematic Fuel Quality Improvements in the European (Thitiratsakul, 2016)

Prior to the passing, Indonesia has been lagged behind than some other Asian countries, leaving the nation among the last three countries in the continent that have not made such a leap to Euro 4 (Ompusunggu, 2017). The idea of adopting the transition can actually be dated back to 2012. However, years of heated negotiations seem to impede its progress. The Environment and Forestry Minister, Siti Nurbaya Bakar, placed the regulation into effect on March 10, 2017, through the Minister of Environment and Forestry Regulation, No. P.20/MENLHK/SETJEN/KUM.1/3/2017 (Nayazri, 2017). In this regard, there will be two phases of realization. The first phase will start in September 2018 for gasoline-driven vehicles, while the second phase for the diesel-fuelled machine will start two years later.

For those who are not familiar with Euro 4, the Euro 4 required motorized vehicles to function on the fuel with emission that produces a lower number of sulfuric content, confined to only 50 parts per million (ppm) at the highest. This is a significant difference from the maximum of 500 ppm, outlined by previous Euro 2 standard. The Euro 4 is a globally accepted European standard and demand not only lower sulfur but also a smaller amount of benzene in the used fuel. For the case of benzene, the volume stipulated in Euro 4 would be limited to 1%, compared to the maximum of 5% for Euro 2 standard fuel. This move definitely calls for more than just signing on the paper. Euro 4 also entails the nationwide termination of current RON 88 gasoline that makes up the majority of the national fuel consumption. The current fuel has been dubbed to contribute significantly to the air pollution and has a lower quality thus leading to a high inefficiency in the engine combustion (Nayazri, 2017). For the case of Euro 4, the RON 92 will be the baseline for the fuel type, which can be compared, though not exactly on the same part to Pertamax that is widely available in the market nowadays. In addition to the fuel type change, at some cases, there will also be a significant alteration in terms of engine type as well as technical consideration inside the car with the lower standard to actually adapt to the new fuel specification.

Further Consequences

  • The implementation of Euro 4 can create better efficiency in the production cost of the domestic car marker. Ever since the Euro 2 came into effect, the domestic producer has always dealt with the double standard in the industry, lining up with Euro 4 standard or higher for export side and sticking with Euro 2 for products dedicated to the local buyer. There will be a major improvement in the case of qualifications and technologies in the car, leading to low emission and high engine efficiency.
  • The application of Euro 4 standard would encourage domestic producers to catch up to the world’s standard level, particularly for the case of exported supply to developed worlds such as Europe where the standard has been around for quite a while. This can be a major breakthrough and be seen as the door opening moment for the local competitors to raise the bar of their own game as well as to create more market targets in the future.
  • With the possibility of higher price both for the car and the fuel price after the implementation of Euro 4, people would tend to shift to the mass transportation so that the traffic density, which always be a problem especially in the big city, could be resolved. But behind all of these, the existence of global players especially from Europe whose products have all been technically equipped with the Euro 4 standard or even higher, is seen to disproportionately benefit in this situation (Purnama, 2017).
  • PT Pertamina recently requested a longer time span for analyzing the Euro 4 fuel type research and production scheme (Fauzi, 2017). This can take several years, and the transition would not go as swift as a lot of people want it to be. Given the status quo of societal mindset, financial capability and big dependency to subsidized Premium fuel, the whole things seem to be way more complicated than ever before.
  • The price increase for the new fuel is also inevitable. With the lingering problems in managing subsidy allocation inside the national budget, this transition would not appear simple at least for the next couple of years. The transition to Euro 4 standard also prompts the concerns on the scarcity of fuel supply amidst the limited number of available higher octane fuel and further feared to stimulate societal unrest as the effect. Plus, the improvement of engine efficiency and qualification would cost people more money to buy cars that suit the Euro 4 standard.

As the nation grows and prospers, the need to have a better transportation quality looks to be a mandatory part of the plot. The rise of car price and its fuel complements can increase the number of people looking for mass transportation; a condition that government, society, and environment will reap huge benefits from. While it might not seem easy at the outset, there will always be some hopes we can optimistically fight for as a nation.

Bibliography

Fauzi, Y. (2017, April 7). Pertamina Minta Tambahan Waktu Kaji BBM Standar Euro 4. Retrieved 2018, from CNN Indonesia: https://www.cnnindonesia.com/ekonomi/20170407173255-85-205860/pertamina-minta-tambahan-waktu-kaji-bbm-standar-euro-4

International Energy Agency. (2015). Indonesia 2015. Paris: International Energy Agency.

Jakarta Post Editorial. (2017, March 30). EDITORIAL: Cleaner but not good enough. Retrieved from The Jakarta Post: http://www.thejakartapost.com/academia/2017/03/30/editorial-cleaner-but-not-good-enough.html

Nayazri, G. M. (2017, April 3). Indonesia Resmi Tetapkan Standar Emisi Euro IV. Retrieved 2018, from Kompas: https://otomotif.kompas.com/read/2017/04/03/155106015/indonesia.resmi.tetapkan.standar.emisi.euro.iv

Nayazri, G. M. (2017, April 2). Mesin Standar Emisi Euro IV Wajib “Tenggak” BBM Ini! Retrieved 2018, from Kompas: https://otomotif.kompas.com/read/2017/04/03/175654015/mesin.standar.emisi.euro.iv.wajib.tenggak.bbm.ini

Ompusunggu, M. (2017, March 30). New emission standard sparks concerns of fuel shortages. Retrieved 2018, from The Jakarta Post: http://www.thejakartapost.com/news/2017/03/30/new-emission-standard-sparks-concerns-fuel-shortages.html

Ompusunggu, M. (2017, March 28). Regulation on EURO IV adoption signed. Retrieved 2018, from The Jakarta Post: http://www.thejakartapost.com/news/2017/03/28/regulation-on-euro-iv-adoption-signed.html

Purnama, R. (2017, April 12). Pabrikan Eropa Paling Untung jika Pemerintah Gunakan Euro 4. Retrieved 2018, from CNN Indonesia: https://www.cnnindonesia.com/teknologi/20170412115902-384-206944/pabrikan-eropa-paling-untung-jika-pemerintah-gunakan-euro-4

Thitiratsakul, R. (2016, February 23). Harmonization of Fuel Quality Standards in ASEAN. Retrieved from Clean Air Asia Website: http://cleanairasia.org/wp-content/uploads/2016/03/6.-RuengsakThitiratsakul_Thailand_FEB23-PRESENTATION1.pdf

Trading Economics. (2018, June 11). Indonesia Total Car Sales. Retrieved from Trading Economics Web site: https://tradingeconomics.com/indonesia/car-registrations

Yudha, S. W. (2017, April 20). Air Pollution And Its Implications for Indonesia: Challenges and Imperatives for Change. Retrieved from World Bank Publication and Documentation: http://pubdocs.worldbank.org/en/183201496935944434/200417-AirQualityAsia-Air-Pollution.pdf

* This opinion piece is the author(s) own and does not necessarily represent opinions of the Purnomo Yusgiantoro Center (PYC)

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