Cost benefit analysis and environmental impact of fuel economy standards for passenger cars in Indonesia

Abstract

In Indonesia, passenger cars are the second biggest fuel consumer in the transportation sector. Like many other developing countries, Indonesia has experienced a dramatic increase in the number of passenger cars. The number of passenger cars has increased from 1,170,103 in 1987 to 9,859,926 in 2008 and expected to reach 38,869,926 in the year 2030. This increase in the number of cars will have an impact on fuel consumption and emission production. Therefore, fuel economy standards for passenger car have been suggested as a proper solution to reduce fuel consumption and emissions such as CO2, HC, NOx and CO. The first part of this paper presents an overview of the current fuel economy standards and test methods around the world besides ASEAN region to highlight the importance of this energy saving measure. The second part of this study attempts to estimate the amount of fuel saving and emission reductions in the Indonesian transportation sector by implementing fuel economy standards for passenger cars. The calculations were made based on the government, manufacturer and ownership data of passenger cars. The study found that fuel economy standards for passenger cars would save money, fuel and most importantly mitigate a significant amount of emissions to protect the environment. It has been found that, a total amount of 32 billion litres, IDR 190,640 billion (USD 19 billion), 1,457,918ton CO2, 32,587,345kg HC, 27,021,296kg NOx and 69,122,843kg CO could be saved between 2015 and 2023 due to implementation of fuel economy standards. As a conclusion, the author would like to emphasise the importance of adopting this policy in a highly populated and developing country such as Indonesia which will help it to save fuel and mitigate emissions.