Illustration of electric vehicle. (IEC 2019/Wawan Wahjudianto)

By: Akhmad Hanan
Researcher at Purnomo Yusgiantoro Center (PYC).

Energy transitions are significant structural changes in energy systems. Or in other words, it is defined as the change in the composition (structure) of primary energy supply, the gradual shift from a specific pattern of energy provision to a new state of an energy system. This transition process increases global energy security, with the nature of energy sustainability (use of Renewable Energy/RE) and does not depend on fossil energy which is not environmentally friendly. The implementation of the energy transition in the world today uses EV in the transportation sector.

Until now, the majority of vehicles in Indonesia have still used fossil fuels. The total number of vehicles in Indonesia reaches 133 million units in 2019, which has increased to 5.3% of the 2018 total. From this figure, the largest percentage of vehicle types was a motorcycle with 84%. Secondly is passenger cara t 11.6%. The remaining 4.4% total is the combination of buses and cargo cars.

The use of fossil fuel-based vehicles also increases carbon emissions in Indonesia. Carbon emissions from the transportation sector are the second largest after the industrial sector in Indonesia. Data from the Ministry of Environment and Forestry in 2018 for the transportation sector, carbon emissions reached 157,522 Gg CO2e. If there is no immediate change in the transportation sector from fossil fuel-based vehicles to clean energy-based vehicles, Indonesia’s air pollution level will increase. One way is by using EVs to reduce carbon emissions from the transportation sector.

EV Challenge

There are several challenges to using massive EVs on Indonesian roads. First, EVs are indeed zero-emission vehicles. However, some people argue that it is not for the power plant. Currently, the majority of Indonesia still uses steam power plants (PLTU) from burning coal. It is a type of fossil fuel, which is not environmentally friendly. Therefore, currently, Carbon Capture and Storage (CCS) technology can be installed in power plant funnels. In developed countries such as China, Germany, the US, UK, Norway,  Australia, and the Netherlands have started CCS projects in power plants. Another solution for this is to build a Renewable Energy-based generator because of its clean energy type.

The second challenge is the lack of EV development in Indonesia. Current status, the Indonesian government has just prepared a road map for the battery-based EV program. Then prepare a road map for the EV charging station. Although currently there are about 101 public electric vehicle charging stations in several cities in Indonesia, these facilities have not been maximally utilized. Especially for producers, Indonesia does not have a large-scale producer of EVs at all. The dominance of the vehicle manufacturing industry in Indonesia is still dominated by fossil fuel-based vehicles.

Third, the government’s EV policy is still general and has not explicitly regulated upstream-downstream of the EV Industry. After the issuance of Presidential Regulation No. 55/2019 on the Acceleration of the Battery-Based Motor Vehicle Program for road transportation, the government has not optimal made the derivative regulations. For example, a policy concerning incentives for domestic EV manufacturing and EV battery industry player must be given by the government.  Thus to aim Indonesia’s EV industry to compete in producing EVs. Besides, incentives and subsidies policies for consumers who use EVs must also exist. People will switch to EVs if EV prices are cheaper than fossil fuel-based vehicles.

Finally, the fourth, the EV ecosystem in Indonesia does not exist. These conditions due to limited supporting infrastructure such as charging stations, EV maintenance centers, and battery recycling. It can be overcome if there is a collaboration between the regulator (government), PT PLN as an electricity provider, private EV business entities, academics, NGOs, and the community. These are shaping the EV ecosystem and creating opportunities for EVs to become part of Indonesia’s energy transition. Academics and NGOs have an essential role in community acceptability to educate and innovate future EV development research.

The Big Opportunities

The COVID-19 pandemic is an opportunity for the Indonesian transportation sector to transition to EV. Why, because at the time of COVID-19, people’s mobilization was drastically reduced by the lockdown policy. People do not have much activity on the highway using transportation. This condition makes the big oppportunities; the government can educate people to use environmentally friendly vehicles with healthy transportation campaign program. On the other hand, the government can also gradually replace public transportation previously based on fossil fuel with EVs. The first stage can be done in DKI Jakarta because the city is desenly populated. If it returns to normal, the public will also realize that EV is very important for human health, the environment and is more efficient than other vehicles.

Another big opportunity is to build an independent EV manufacturing industry. The First step of industrial independence can be started by creating the EV battery industry. Based on Benchmark Mineral Intelligence statistics data, Indonesia holds 26% of the global nickel supply (the world’s largest producer). Nickel is one of the main components that make up the EV battery besides lithium, manganese, and cobalt. The government seems to have started to seize the opportunity by forming a battery industry consortium called Indonesia Battery Holding (IBH). The hope is that the battery industry can be realized soon and become a “momentum for the Indonesian EV era”. This industry’s existence will also increase state revenue; the “trickle-down effect” will increase regional income and increase employment around industrial estates.

The last opportunity is the existence of a global energy transition agenda. Today, the global energy transition agenda is also focusing on EV use. The total number of Global EVs is around 7.2 million, with the largest users coming from The Peoples’ Republic of China (47% of Global EVs). Indonesia itself already has an EV target in the National Energy General Plan (RUEN). The government has set a target of using electric vehicles of 2,200 units for four-wheeled vehicles and 2.1 million for two-wheeled vehicles by 2025. Besides, the government has ratified the Paris Agreement and made it law No. 16 of 2016. With the Paris Agreement, Indonesia must reduce emissions, one of which is in the transportation sector.

Finally, it is hoped that all these opportunities can be captured by the government, industry, and society to develop EVs in Indonesia. The transportation sector’s transition is a must because the global strategic environment leads to clean energy for the transportation sector. Indonesia can secure energy security by increasing the sustainability aspect with the transition in the transportation sector with renewable energy and not depending on fossil fuels.

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

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