Green vehicle policy and demand in Indonesia

Abstract

The world, including Indonesia, is facing the continuous increase of private vehicle ownership and usage as well as the increasingly apparent challenge of combating greenhouse gas emissions. In addition to the attempt to provide sustainable public transportation services as an alternative to private modes, particularly the automobile, promoting the shift from conventional to sustainable fuel technology is equally important. This chapter aims to map out the gaps between the existing condition of green vehicles policy and demand in Indonesia and other countries. The objectives of this article are twofold. First, to describe policy development in Indonesia regarding green vehicles. Second, to analyze the preferences of Indonesian people, particularly people in Bandung and Jakarta, toward those vehicles. This article hypothesized that the policy, as well as the demand, might be driven more by economic productivity rather than environmental motivation. The evidence from the user preferences model seems to confirm the hypothesis by demonstrating that for the users, especially private mode users, the economic motive – put simply, being low-cost – is more substantial. The result of the electric vehicles (EV) study shows that Indonesian, particularly Bandung and Jakarta commuters, are sensitive to congestion time, travel time and travel cost in all transportation modes except public bus; and to vibration and noise level only in the public bus or the private EV. Emission level in public transportation is more concerning for commuters than in private transportation. This may indicate that, in terms of public transport modes, there is a promising indication of an intention to use green vehicle public transport. From the policy perspective, it can be seen based on the prevailing regulations that the fiscal incentives favor national industry development. The policy leans toward economic productivity by promoting national industry first rather than environmental protection. To prove otherwise, the Indonesian government is required to provide a regulatory framework for tightening fuel efficiency standards as an integral part of EV regulation. This is important to direct the course of technology development and to accelerate the shift of supply to more sustainable vehicles. Finally, the last but critical gap that both Indonesia and other countries are facing is limited government intervention in infrastructure provision and common standardization. In terms of infrastructure provision, especially for EVs, common standardization and sufficient distribution of charging infrastructure globally are required. This would make integration possible and incentivize consumers to use EVs without encountering difficulties in operating them on a daily basis. Government collaboration with industry and power companies would be essential.