Indonesian Institute of Energy Economics (IIEE) Study: Cleaner Fuels for a More Sustainable Future
In this ‘In Focus’ newsletter we would like to focus on the “Cleaner Fuels for a More Sustainable Future” study published by the Indonesian Institute of Energy Economics (IIEE) in 2021. The study forms part of a larger research study titled “Strategy to Fulfil Fuel Supply in Indonesia to Comply with Euro 4 Vehicle Standards” conducted by the IIEE last year, which identified three major issues as reasons for the delay in the rollout of the plan and made some recommendations on how to tackle the issues. The Asian Clean Fuels Association contributed to the study.
A corresponding media release on the topic has been issued in November 2021:
Cleaner Fuels for a More Sustainable Future
Jakarta (26/11) Since 2003, Indonesia has been a net importer of gasoline to meet its growing energy demand – but the nation is facing a severe environmental challenge. According to the Air Quality Live Index (AQLI), air quality in Indonesia has been steadily deteriorating over the last two decades. Considering the ongoing and future challenges, it is timely for Indonesia to achieve energy security through a sustainable and more environmentally friendly supply of energy.
According to Asian Clean Fuels Association (ACFA) Executive Director Clarence Woo, the continuous use of low-octane fuel in Indonesia is a concern: “Almost all Asian countries are already having a minimum of RON 92 grade, with Europe requiring a minimum RON 95, and already targeting RON 102 minimum. The world is moving to higher octane grades to improve fuel efficiency as an excellent means to achieve GHG reduction. Also, to achieve net zero emission target by 2060, Indonesia needs to accelerate the application of cleaner fuel standards.” Moreover, Indonesian Institute for Energy Economics (IIEE) Foundation Secretary Hakimul Batih added, “Efforts to use cleaner fuels (in transportation) will contribute to reducing CO2 emissions and air pollution.”
In 2021, IIEE conducted a research study titled “Strategy to Fulfil Fuel Supply in Indonesia to Comply with Euro 4 Vehicle Standard”, which outlined three major issues in Indonesia:
The lack of awareness on the importance of using better quality fuels
Indonesian Motor Association (IMI) Jakarta Chair Eko Anando highlighted that low-octane fuel does not fit with the specifications of modern vehicles as “long-term use of Premium could result in unwanted consequences such as knocking.” Likewise, Mr. Woo cited a test conducted by the Japan Automobile Manufacturers Association (JAMA) which revealed that improving octane from 90 to 95 RON can improve the fuel economy by 2% - 10%, depending on the engine type, thus reducing fuel consumption using higher octane. Therefore, it is critical to foster people’s awareness and drive behavioural change to encourage a transition towards cleaner fuels.
Inadequate oil refinery capacity
Modernization is unavoidable, but building new refineries takes time and requires large sum of investment. This is a challenge for Indonesia as demand for Euro 4-equivalent gasoline is expected to surge, while the country is still dependent on imports. To fulfil future gasoline demand, Indonesia needs to increase the capacity of high-technology refineries to meet short- and medium-term supply.
Inability of the current blend-stock to effectively meet Euro 4 and environmental standards
Pertamina currently uses High Octane Mogas Components (HOMC) in producing gasoline, an oil component used to increase octane levels. However, the IIEE study reveals that Methyl Tertiary Butyl Ether (MTBE) could be a far better alternative as it contributes to a better reduction in emissions than any other blend-stock. MTBE is a component of gasoline blends that does not contain metals and does not form peroxide compounds that are harmful to the environment. To produce high-RON gasoline, Indonesia could consider using quality, high-yield, cost-efficient blend-stock with less harsh impacts on the environment. Currently, Indonesia through Chandra Asri Petrochemical (CAP) is already producing MTBE. The plant has started operating in 2020.
The IIEE study on “Cleaner Fuels for a More Sustainable Future” addresses the issues Indonesia is facing today. The rapid economic growth and increased mobility has led to a rise in the number of passenger vehicles, which is partly responsible for Indonesia’s high GHG emissions, making Indonesia one of the most polluted countries globally.
The study identified the same issues as listed in ACFA’s media release as the main challenges to implement Euro 4 gasoline standards in Indonesia, while the government has committed to several ambitious goals, including the decarbonisation of its transportation sector. The country’s continuous degradation in air quality has been recognized as a significant risk to public health, turning this into a growing burden for Indonesia’s GDP, but fiscal and political obstacles amid an underdeveloped industry and the lack of public awareness are challenges at present. Key milestones in the roll out of the strategy have also been affected by the COVID-19 pandemic, which plagued the country over the last two years, as the gradual phase out of RON88 gasoline, which was supposed to come into effect on 01-Jan 2021, has been postponed.
The summary points out the steep, >40% growth in gasoline consumption as well as in passenger vehicle ownership scheduled for the 2018-2030 time period, during which life expectancy could decline by as much as 2.5 years, caused by Indonesia inability to reduce GHG emissions.
In its strategy, the IIEE recommends the following three major interventions to urgently tackle the situation:
Prioritise the use of quality, high-yield, cost-efficient blend-stock with less impact on the environment
Increase capacity of high-technology refineries
Strengthen knowledge-base, foster awareness and drive behavioural change
MTBE features strongly in the IIEE recommendations by referring to its widespread use in China, Malaysia and Singapore, as a technically feasible, environmentally friendly solution to achieve the fuel quality improvements and by pointing out that the use and production of MTBE could increase state revenues and boost economic growth.
Underneath the reader will find the published summary of the IIEE study. The full report of the study is available on request by contacting firstname.lastname@example.org
Cleaner Fuels for a More Sustainable Future
Healthy, clean air is the individual right of every person. However, this is not the case in Indonesia which continues to experience the highest pollution concentrations in Southeast Asia, coupled with elevated levels in greenhouse gas (GHG) emissions.
Indonesia’s rapid economic growth and increased mobility has led to the rise in the number of passenger vehicles which is partly responsible for its high GHG emissions.
Between 2005 and 2016, vehicle emissions expanded by an average of 10% each year. In 2017, 26% of total GHG emissions from the energy sector came from the transport, with land transport contributing up to 90.8% of emissions. In 2018, GHG emissions rose to 28%, with the highest emissions from the road transport (mainly cars and motorcycles). The continuous degradation in air quality will not only result in significant health threats, but also losses equivalent to more than 6% of its GDP.
 The Role of Electric Vehicles in Indonesia. 29 March 2020. https://www.climate-transparency.org/new-paper-the-role-of-electric-vehicles-in-decarbonizing-indonesias-road-transport-sector
Identifying Indonesia’s Euro 4 Gasoline Implementation Issues
Cognisant of the social, economic and ecological implications of climate change, the Indonesian Government has committed to several ambitious goals, including the decarbonising of its transportation sector. In fact, one of them was the gradual phase out of RON 88 that was supposed to come into effect on 1 January 2021 but was postponed due to the COVID-19 pandemic.
Mobilising Effective Interventions towards Higher Quality Gasoline
Accelerating the Decarbonising of Indonesia’s Gasoline Supply
It is a race against time for Indonesia as 2030 is less than a decade away. Undoubtedly, the next few years will be critical as Indonesia will need to balance development (economic growth and mobility) and maintain high air quality standards (reduction in emissions).
Nevertheless, the challenge is clear - to ensure that all of Indonesia’s passenger vehicles will be using Euro 4-standard gasoline or higher to achieve the net zero emission target by 2060. The transition of this scale will require concerted multisectoral collaborations and decisive actions on many fronts - government institutions and agencies, businesses, civil societies, and relevant organisations. In fact, it is the responsibility of each and every individual to work towards this goal, or suffer the consequences. As such, every opportunity must be taken to accelerate the transportation sector’s smooth transition to clean gasoline, and eventually, net-zero emissions.
A carbon-neutral future is not impossible. By taking actions to encourage the transition to clean gasoline, Indonesia has nothing to lose, but everything to gain.
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