Rise of Electric Vehicles: Analyzing Indonesia’s Accelerating Climate Ambitions Amid the G20 Presidency

Illustration from FPCI UI.

The world is on fire—both figuratively and literally. As we all know, the ongoing conflict between Russia and Ukraine has severely affected the two nations, hindered global economic growth, and strained relationships between each of them with other states. While the world has its eyes set on the issue, we are actually distracted from the real silent threat that has been overlooked and underestimated for decades: climate change.

According to the latest report from Intergovernmental Panel on Climate Change (IPCC), unchecked greenhouse gas emission would possibly make the Earth uninhabitable for the next decade (IPCC, 2022). This situation is labeled as “code red for humanity”, meaning that we’re facing a serious threat of greenhouse gas emissions from fossil-fuel burning and deforestation, putting billions of people at immediate risk.

Global warming affects every region on Earth with many irreversible effects, such as the melting of ice sheets in both North and South Poles. This can cause global sea levels to rise, and if not acted upon quickly, can drown our coastal regions and cities in the coming years.

Greenhouse gasses have been the main contributor of global warming since the 1980s. Since then, governments of countries that are committed to fulfill their National Determined Contributions (NDC) have, arguably, taken action by planning an environmental agenda to take better control of fossil fuel industries and implement a change of main energy sources to clean, renewable energy sources, such as electricity, solar and wind power. This issue has also been brought up by many international actors who urged nations to join forces and fight back the climate change that caused disasters—one of them being the Group of Twenty (G20).

G20 is a strategic multilateral platform connecting the world’s major developed and emerging economies. It holds a strategic role in securing future global economic growth and prosperity. Together, the G20 members represent more than 80 percent of world GDP, 75 percent of international trade and 60 percent of the world population. Starting in 1999 as a meeting for the finance minister and central bank governors, the G20 has evolved into a yearly summit involving the state leaders of the 19 members along with the European Union.

G20’s work programs are divided into two categories: the Finance Track and Sherpa Track. Like its name, Finance Track meetings mainly focus on economic, financial, monetary and tax issues. Sherpa Track on the other hand, focuses on discussing non-financial economic issues and prepares various outcome document concepts that will be discussed at the Summit. In addition, the Sherpa meetings are in charge of carrying out negotiations and discussions about the issues and are carried out by relevant ministries of each member state. According to the official G20 website, the Sherpa Track will bring together 11 working groups, 1 initiative group, and 10 engagement groups to discuss and provide recommendations for G20 agenda and priorities.

This year, Indonesia’s presidency has taken “Recover Together, Recover Stronger” as its central theme. Members of the intergovernmental forum will work together within a collaborative and inclusive framework to focus on three issues: global health architecture, the digital transformation of the global economy, and energy transition. Therefore, as this year’s presidency holder, Indonesia has been given both a chance and challenge to deal with said energy transition issue in the Sherpa Track by making it one of the priority issues called “Sustainable Energy Transition”. This issue had also been brought up as one of the working goals during Japan’s presidency in 2019 that could be seen in the Karuizawa Innovation Action Plan on Energy Transitions and Global Environment for Sustainable Growth. These include but are not limited to implementing new laws that benefit the cause to fight climate change, such as the ratification of Presidential Regulation (Peraturan Presiden/Perpres) No. 55 of 2019 regarding the development of Electric Vehicles (EVs).

The law was made as a first step in establishing and welcoming the forthcoming era of EVs that will hopefully help lower greenhouse gasses and stop global warming that has caused many natural disasters and extreme climate changes. To support those commitments, the Indonesia’s G20 committee also promised to prepare a suitable ecosystem for the usage of EVs in Indonesia. For example, Indonesian state-owned electricity company PLN is preparing 12 units of the 25 kiloWatt (kW) type and 9 units of the 50 kW type of SPKLU (Sistem Pengisian Kendaraan Listrik Umum) or Public Electric Vehicle Charging System (PEVCS) to be installed in Bali. With this in mind, Indonesia’s presidency is expected to elevate the progress of establishing a world with clean and sustainable energy sources when they took sustainable energy transition as one of the priority issues. Ergo, the main questions are: (1) “Does Indonesia have the proper capabilities to accommodate the energy transition?”; and (2) “How does the energy trilemma become a hindrance in the incentives for the development of EVs?”.

It is undeniable that Indonesia is Southeast Asia’s frontrunner in economic development as well as the fourth most populated country in the world—which resulted in the country being honored as a part of the G20. With this identity in mind, it is expected for Indonesia to lead conversations on mitigating climate change since they have the most incentives to do so. This can be seen in Indonesia throughout 2020 and 2021 where the usage of fossil fuels, present in things such as crude oil or petroleum used to run vehicles, combined with the high emissions from forest and land use, together reached its peak in 82% as a contributor to greenhouse emissions (IESR, 2021)—giving Indonesia a reason to comply to the Nationally Determined Contribution (NDC) which was already updated as to realize climate change resilience by 2030 (Kementerian PPN/Bappenas, 2021). This updated goal was further emphasized when brought up in the Glasgow Climate Pact which was made in November of 2021.

The Glasgow Climate Pact is a testament of world leaders’ commitment in preventing global temperature increases and minimizing the impact of climate change with Indonesia and 196 other countries pledged their support to the agreement. While it is not perfect—with some activists disappointed with the incremental progress—the Pact remains a step forward as it is also the first document in a global climate change forum that provides specific references to reducing the use of coal or coal “phase down” (M. G., 2021). However, looking at the past, Indonesia has a pattern of not commiting to the goals and adhering with the previous recommendations enlisted in international agreements and treaties such as the Paris Climate Agreement in 2015. However, this lack of commitment was not without reasons. In any country around the world, the shift towards sustainable energy transition needs to take three things into consideration which, at its core, varies from nation to nation (Centurion, 2021).

The three major factors are called the Energy Trilemma which consists of security, sustainability, and equity. Each objective is crucial in determining whether energy policy proposals are feasible considering the country’s current infrastructure for production and distribution, accommodating in climate change mitigation, accessible and affordable for the current and future population, respectively (Kementerian PPN/Bappenas, 2020). These aspects are especially important to evaluate the implementation of new energy sources to reduce non-renewable energy usage. As Indonesia holds the G20 presidency with one of the working groups aiming for transition towards sustainable energy, President Joko Widodo had just recently announced the first electric car made in Indonesia (Sekretariat Kabinet Republik Indonesia, 2022) which is a huge step forward towards the plan to distribute EVs nationally. However, it raises the question as to what extent does the Energy Trilemma play a part in this goal.

Energy security is derived from the reality that each country differs in geographical and infrastructure circumstances which would present challenges in the implementation of energy policies. This is especially true for EVs that require a source of electricity—be it from the solar, battery, or charging stations. Charging stations have been distributed throughout some urban areas in big cities, yet not evenly so in rural areas or less crowded cities (IESR & Jati, 2021)—not meeting the security criteria. Furthermore, despite a decrease in the last few years, the cost of batteries is still exhaustive even after government subsidies (Kementerian PPN/Bappenas, 2020) and will not be worth the positive outcome EVs could offer on the environment. The price gap between a single electric car and a traditional gas-powered one far exceeds the economic capability for the middle to lower class (IESR & Jati, 2021)—hence, failing to fulfill the equity objective which aims to meet the demand of individuals no matter the socioeconomic background. Even if these prices get lower due to the higher demand in society or minimized by government’s subsidy, it should be taken into consideration for its effectiveness in reducing carbon emissions and slowing down climate change.

A report by Badan Perencanaan Pembangunan Nasional (2020) showed how EV has the potential to achieve an improvement in the sustainability aspect with the usage of renewable energy instead of fuel. However, a comparative study done by Nizam (2020) showed that electricity in Indonesia is mainly still produced from coal—a carbon-emitting non-renewable resource—making it counterproductive in carbon emission mitigation. On the other hand, if they decided to use batteries, since Indonesia is one of its biggest manufacturers worldwide (Yanwardhana, 2021), it would mean to produce more lithium and potentially increase consumption rate and carbon emission. Until Indonesia succeeds in maximizing alternative energy sources and lowering retail prices for electric cars, the adoption of EVs would not be feasible in the short-run. With its high impact in third-world countries where traffic is undoubtedly a problem caused by high ownership of personal vehicles—risking gas pollution at the same time—Indonesia should opt for energy transition in public transport services instead where the issue of gas emissions and high density of vehicles could be tackled at the same time.

Despite the challenges, the urgency of climate change is too significant to be ignored. There is no sign of global warming slowing down any time soon. Thus, we believe that Indonesia should be more assertive in actualizing real actions towards this issue. The government should fulfill its role as the key stakeholder towards a new era of the electric vehicles industry while taking the Energy Trilemma into consideration during Indonesia’s presidency in this year’s G20 summit. Implementing real life actions would motivate other developed and developing countries to adopt policies in favor of energy transition. Nationally, undertaking policies and measures to accelerate the penetration of EVs into the country—such as manufacturing more charging stations with cheap tariffs (Pribadi, 2021) and converting the energy used for public transportations into electricity—will bring Indonesia closer to the finish line of the climate race.

References

Centurion. (2021, December 13). The World Energy Trilemma Index: Africa’s Outlook and Growth – Centurion Law Group. CENTURION. https://centurionlg.com/2021/12/13/the-world-energy-trilemma-index-africas-outlook-and-growth/?utm_source=rss&utm_medium=rss&utm_campaign=the-world-energy-trilemma-index-africas-outlook-and-growth

DJIKP Kominfo. (2022). G20pedia — Informasi Presidensi G20 Indonesia 2022 (pp. 92-97). https://indonesiabaik.id/ebook/g20pedia.

Humas. (2022, March 16). Presiden Jokowi Luncurkan Mobil Listrik Pertama Indonesia. Setkab.go.id; Sekretariat Kabinet Republik Indonesia. https://setkab.go.id/presiden-jokowi-luncurkan-mobil-listrik-pertama-indonesia/

IPCC. (2022, February 28). Climate change: a threat to human wellbeing and health of the planet. Taking action now can secure our future — IPCC. IPCC. https://www.ipcc.ch/2022/02/28/pr-wgii-ar6/

‌Jati, G., & IESR. (2021, December 10). The Government’s Electric Vehicle Infrastructure Target is Still Creating Range Anxiety. IESR; Institute for Essential Services Reform. https://iesr.or.id/en/the-governments-electric-vehicle-infrastructure-target-is-still-creating-range-anxiety

Kementerian Luar Negeri. (2021, November 21). Glasgow Climate Pact Langkah Maju Yang Perlu Dikawal Bersama | Portal Kementerian Luar Negeri Republik Indonesia. Kemlu.go.id; Kementerian Luar Negeri. https://kemlu.go.id/portal/id/read/3185/berita/glasgow-climate-pact-langkah-maju-yang-perlu-dikawal-bersama

Kementerian PPN/Bappenas. (2020, May). Independent Assessment of Indonesia’s Energy Infrastructure Sector. Perpustakaan.bappenas.go.id. https://perpustakaan.bappenas.go.id/e-library/file_upload/koleksi/migrasi-data-publikasi/file/Policy_Paper/Independent%20Assesment%20of%20Indonesia_s%20Energy%20Infrastructure%20Sector.pdf

Kementerian PPN/Bappenas. (2021). Climate Festival Invites Communities to Participate and Safeguard Climate Actions. Indonesia Green Growth Program. http://greengrowth.bappenas.go.id/en/climate-festival-invites-communities-to-participate-and-safeguard-climate-actions/

M. G., R. (2021, November 26). Apa Sih Isi dari Glasgow Climate Pact? Indonesia Re. https://indonesiare.co.id/id/article/apa-sih-isi-dari-glasgow-climate-pact

Nizam, M. (2020). Comparative Study of Electric Vehicles in Urban Area in Indonesia. THE 5TH INTERNATIONAL CONFERENCE on INDUSTRIAL, MECHANICAL, ELECTRICAL, and CHEMICAL ENGINEERING 2019 (ICIMECE 2019), 2217(1). AIP Conference Proceedings. https://doi.org/10.1063/5.0000643

Pribadi, A. (2021, April 23). Indonesia to Accelerate Ecosystem of Battery Electric Vehicles, Says Energy Minister. Kementerian ESDM RI. https://www.esdm.go.id/en/media-center/news-archives/indonesia-to-accelerate-ecosystem-of-battery-electric-vehicles-says-energy-minister Yanwardhana, E. (2021, October 27). RI Mau Jadi Juara Baterai Mobil Listrik Dunia, Serius? CNBC Indonesia. https://www.cnbcindonesia.com/news/20211027200706-4-287079/ri-mau-jadi-juara-baterai-mobil-listrik-dunia-serius

Gracesya Eunike, Louise Arashel Sibuea, and Thalia Franceska Prasetyo are staffs of Research and Analysis Division FPCI Chapter UI Board of 2022.

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