Indonesia’s development of truck fuel economy standards is a key step towards its net zero objectives

Indonesia, a member of the IEA family since 2015, has committed to reach net zero emissions by 2060 or before – and tackling emissions from its trucking sector is key to achieving that goal. 

At the request of the Government of Indonesia and to coincide with its Presidency of the G20, the IEA in 2022 prepared a comprehensive Energy Sector Roadmap to Net Zero Emissions by 2060 for the country, charting a path for its energy transition over the coming decades. The report analyses the transport sector in detail, analysing energy demand and carbon dioxide (CO₂ emissions) by mode and laying out opportunities for mitigation, including fuel economy standards for trucks. The project was conducted in close collaboration with the Ministry of Energy and Mineral Resources of Indonesia.

The Ministry has recently announced plans to introduce fuel economy standards for trucks, with the IEA providing policy guidance and analytical support for these efforts. Freight transport by road plays a central role in Indonesia’s economy and is a major source of energy demand, in particular oil. Heavy trucks1 account for almost 40% of total energy consumption by the country’s road transport sector, and trucks are currently responsible for emitting 50 million tonnes of CO₂ a year, which is around half of all CO₂ emissions from transport in Indonesia.

Energy demand from trucks in Indonesia has already grown 60% over the past decade, outpacing the growth of overall transport demand.  Indonesia is set to become the world’s fourth largest economy by mid-century, and expanding industrial, commercial and agricultural output goes hand‐in‐hand with rising transport needs. The use of heavy trucks is set to triple by 2060 compared with current levels. 

Trucking’s share of overall emissions is set to increase even further as passenger cars become increasingly decarbonised through electrification powered by renewables. Road freight transport is also a major contributor to transport-related air pollutant emissions, with adverse health consequences for local populations. Trucks can be responsible for over 50% of tailpipe emissions of two key air pollutants, NO_X and PM_2.5, in urban areas.   

Trucks rank among the sectors where emissions are most challenging to reduce. While technological options to decarbonise heavy trucks are being developed and some are commercially available, the markets for them are not yet mature. This is particularly the case for the heaviest trucks, which are the most difficult to electrify. Fuel economy and CO₂ emissions standards therefore play a particularly important role in driving forward efficiency gains and CO₂ emissions reductions, especially in the short to medium term. 

The IEA has identified standards as a principal policy tool to help Indonesia to achieve the levels of efficiency and electrification in transport needed to advance towards its net zero objectives. IEA analysis highlights that countries with a mix of regulations or efficiency-based purchase incentives improve their efficiency 60% faster on average than countries without such policies.

Correspondingly, alongside the development of the Net Zero Roadmap and again at the request of the Government of Indonesia, an exploratory study on the implementation of fuel economy standards for trucks was undertaken by the IEA in close collaboration with the Ministry of Energy and Mineral Resources. The final study was presented in July 2022. The study reflects the Indonesian Government’s recognition of the importance of this sector and its commitment to considering mitigation options for the short and longer term. The findings are informing the next phase of the work programme of IEA support – in relation to the development of the standards.  

In terms of energy savings, improved energy efficiency from trucks could help decouple Indonesia’s transport activity from energy consumption, with energy demand increasing 50% slower than the rate of increase in tonnes transported per kilometre. Correspondingly, the adoption of fuel economy and CO₂ emissions standards could result in fleet-wide average fuel consumption of heavy trucks in Indonesia being around 17% lower by 2030.  

In terms of energy security and benefits for the wider economy,  fuel economy standards for cars and trucks combined with accelerating electrification could cut the country’s demand for oil by more than 70 million barrels of oil equivalent in 2030. By 2050, the savings would in the region of 420 million barrels of oil equivalent. At current oil prices, this is equal to cutting around USD 5.6 billion and USD 33.6 billion, respectively, from the country’s fuel bill.