Boosting intermodal rail for decarbonizing freight transport on Java, Indonesia: A model-based policy impact assessment

Abstract

This paper assesses the impact of a modal shift action program aimed at reducing CO2 emissions from surface freight transport on Java - Indonesia's center of economy and population. The action program combines fiscal measures and infrastructure development strategies which are designed through consultation with policy makers and relevant stakeholders. I test three ambition levels of the action program -basic, moderate, strong on CO2 emissions, using a 4-step freight transport demand model and a fleet emission model. For each of the ambition levels, I estimate the shift from road to rail freight and savings in CO2 emissions attained. I found that a significant transport demand could be shifted from road to rail where rail freight share could reach up to 20% of the total cargo transported by 2030. This shift to rail will also lead to a considerable reduction in the total annual CO2 emissions, up to 21.6% under the strong ambition scenario. In terms of economic benefits, the shift will also reduce total transport costs up to 7.6% under the most ambitious scenario.The high effectiveness of the measures to abate emissions substantiates the need for a comprehensive cost-benefit analysis to further assess the cost-effectiveness of the action program. Based on the modelling, several following key policy measures are identified to improve the share of rail freight: (1) improving service quality of rail freight, (2) building sufficient rail infrastructure capacity, and (3) setting up dedicated funding program for intermodal rail infrastructure.