Output 1AB - 23 Wheeler Baseline

Supporting E-mobility focusing on Electric

Two- and Three-wheelers and Policies on

Urban Traffic Integration in Indonesia
Baseline Assessment of 2&3W in Indonesia
The International Climate Initiative (IKI) is an important part of the German government's international
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Institute for Transportation Development Policy (ITDP) is a non-profit organization that works
in cities worldwide in realizing a sustainable urban transit system as a way to cut greenhouse gas
emissions and improve the quality of urban life. Founded in 1985, the Institute for Transportation
and Development Policy (ITDP) has become a leading organization in the promotion of environmentally
sustainable and equitable transportation policies and projects worldwide. ITDP Indonesia has been
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other cities for more than ten years on mass public transportation, parking systems and improving
pedestrian facilities.
Executive Summary
The transport sector significantly contributes to greenhouse gas emissions in Indonesia,

prompting the government to prioritize emission reduction and energy efficiency. This includes
promoting non-polluting transport modes such as walking and cycling, promoting public
transport, and accelerating the adoption of cleaner vehicles, such as electric two- and
three-wheelers (E2&3W). In the project titled “Supporting E-Mobility Focusing On Electric Two-
And Three-Wheelers And Policies On Urban Traffic Integration In Indonesia” " the Institute for
Transportation and Development Policy (ITDP) Indonesia supported by the United Nations
Environment Programme (UNEP) developed three main outputs as follows:
1. Baseline Assessment of Two- and Three-Wheelers in Indonesia

2. Development of National Policies And Standards on Two- and Three-Wheelers
Electric Mobility Transition in Indonesia
3. Guidelines On The Integration Of Electric Two- and Three-Wheelers In Urban Traffic
The "Baseline Assessment of Two- and Three-Wheelers in Indonesia" offers insights into the
country's 2&3W fuel economy using GFEI methodology, E2&3W adoption's impact on fuel
efficiency and emissions, and an overview of Indonesia's current ICE and renewable energy
policies. Serving as the first of three reports, it lays the foundation for subsequent policy
recommendations to enhance E2&3W integration and sustainability in Indonesia's
transportation sector.
Indonesia's transportation landscape is predominantly shaped by motorized two-wheelers

(2W), which account for 85% of the motorized vehicle market with around 113 million registered
vehicles. The widespread preference for motorized ICE 2W is largely driven by affordability,
convenience, and supportive policy frameworks, including tax incentives, low prices, financing
options, and a lack of transport demand management measures.
Based on the assessment of the trends, sales figures, engine displacements, body types, and
fuel economies of 2W vehicles in Indonesia between 2017 and 2021, Internal Combustion Engine
(ICE) 2Ws show an overall increase in fuel consumption, reaching 1.94 l/100 km in 2021, worse
compared to Vietnam's 2020 2W fuel economy of 1.76 l/100km and India’s 2018 2W fuel
economy of 1.74 l/100km. Nevertheless, when compared to the light-duty vehicle (LDV) fuel
economy in Indonesia at 8.1 l/100km in 2019, the 2W fuel economy still fares better.
The adoption of E2W has a significant impact on improving fuel economy and emissions.
Despite a very low adoption rate (less than 1.5% market share in 2021), E2W improves national
fuel consumption by 0.01 l/100km and lowers the fleet emission factor by 0.3% from 63.55
gCO2/km to 63.34 gCO2/km. Under the Business-As-Usual (BAU) scenario of vehicle growth and
carbon density factor improvement target from the government, transitioning to 100% E2W
penetration by 2035 could slash emissions by almost 50% compared to 2021 levels. The same
result can be achieved without any additional E2W adoption only if the ICE fleet emission
Institute for Transportation and Development Policy | Baseline Assessment of 2&3W in Indonesia
factor is improved by 44.8%. Nevertheless, to achieve a 2W emission factor of 20 gCO2/km (65%
improvement), the carbon intensity of the electricity network would have to be increased by
40% compared to the 2035 BAU scenario.
To seize this opportunity, policies must promote E2W adoption, enforce stricter emission
standards, and address carbon intensity in electricity generation. However, certain policies, like
high domestic content requirements, may hinder E2W adoption in the early market,
necessitating temporary relaxation and reduced access barriers. Additionally, to accelerate E2W
and E3W adoption, both fiscal and non-fiscal disincentives for ICE 2W and 3W vehicles are
essential, including emissions-based taxes and stricter standards. Local-level vehicle
disincentives, like those in Jakarta, frequently exempt 2W and 3W vehicles from traffic
restrictions and other push policies. Therefore, providing preferential incentives for E2W and
E3W compared to ICE 2W and 3W vehicles is challenging without reforming the current push
policy framework. Navigating Indonesia's 2W sector demands a multi-faceted approach to
achieve sustainable mobility goals, blending regulatory frameworks, technological innovations,
and stakeholder partnerships for a cleaner, greener, and more efficient transportation future.
Table of Contents
Introduction 1
Context 1
Project Relevance 1
Part A:
Baseline Assessment On 2&3 Wheelers in Indonesia 3
Current 2W Market in Indonesia 4

Brands 5
Engine Displacement 5
Body Type 6
Methodology 7
GFEI Methodology 7
Data Collection 7
Fuel Economy Baseline Calculation 8
Fuel Economy Baseline of 2W in Indonesia 10

National 2W Fuel Economy Between 2017-2021 10
Fuel Economy By Brand, Engine Capacity, and Body Type 11
Motorized 2W Fleet Emission Factor 13

2021 Emission Factor Baseline 13
2035 Emission Factor Projection 17
Business-As-Usual (BAU) Scenario 17
E2W Penetration and ICE Emission Factor Improvement Scenario 18
Sensitivity Analysis on the Carbon Intensity of Electricity Generation 19
Conclusions 21
Part B:
Overview of 2&3 Wheelers and Renewable Energy Policies in Indonesia 23
Current Policies and Standards for 2&3W 24

Vehicle Operations 25
Vehicle Specifications and Standards 27
Demand-side Fiscal Regulations 28
Supply-side Fiscal regulations 29
Other Policies and Regulations 30
Enforcement of the Policies and Regulations 30
Current Policies for Renewable Energy 32

General Policies 33
Demand-side Policies 34
Renewable Energy Policies in the Electricity Sector 34
Renewable Energy Policies in the Transport Sector 36
Supply-side Policies 36
Conclusions 40
2&3W Policy Framework and Anchors for E2&3W Adoption 40
Renewable Energy Policy Framework and Anchors for Integration to EV
Charging Infrastructure 42
Notes on Renewable Energy Alternatives in the Transportation Sector 44
Introduction
Context
Air pollution and greenhouse gas emissions have become global problems with very significant
impacts. In Indonesia, 27% of the country's greenhouse gas emissions in 2020 were contributed
by the transport sector1. Transport emissions are one of the main contributors - vehicle
emissions increased rapidly between 2005 and 2016, at the rate of about 10% annually. While
the exponential growth of vehicles, especially motorized 2Ws which is growing around 12%
each year, is a major factor, the current use of poor quality fuels in most Indonesian cities in
Indonesia also exacerbates transport sector emissions. Given Indonesia's commitment to
reduce emissions (an unconditional 29% reduction in GHG emissions by 2030 compared to a
business-as-usual scenario, based on Indonesia's Nationally Determined Contribution),
emissions from the transport sector are one of the key sectors to be addressed.
Apart from reducing emissions, Indonesia is also seeking to improve fuel and energy efficiency
in the transport sector. In 2019, the transport sector consumed nearly 200 million barrels of
gasoline2. Two main approaches can be taken to reduce emissions and energy consumption in
the transport sector: promoting the transition to non-polluting and energy-efficient modes of
transport, such as walking, cycling and public transport, and promoting cleaner vehicles, such
as through the adoption of stricter fuel emission standards, as well as accelerating the
adoption of electric vehicles or other low-emission vehicles.
In the National Energy General Plan (Rencana Umum Energi Nasional/RUEN), Indonesia has set
a target of 2.1 million E2W electric vehicles and 2,200 E4W by 2025, and to electrify 10% of the
national public transport fleet. The plan goes hand-in-hand with the target to increase the
country's new and renewable energy mix to 23% in 2025 and 31% in 2050 as well as reduce oil
consumption to less than 25% in 2025 and 20% in 2050
1
Climate Transparency. (2021). Laporan Climate Transparency: Membandingkan Aksi Iklim G20 Menuju Net Zero.
[Online]. [Accessed 2022]. Available from https://www.climate-transparency.org
2
Kusdiana, Dadan. 2021. Kebijakan Energi Alternatif di Sektor Transportasi [Webinar]. Indonesian Ministry of Energy and
Mineral Resources.
Institute for Transportation and Development Policy | Baseline Assessment of 2&3W in Indonesia 1
Part A:
Baseline Assessment On 2&3 Wheelers in Indonesia
1. Current 2W Market in Indonesia
Motorized 2W is the most popular transport mode in Indonesia. There are 113 millions
motorized vehicles currently registered in Indonesia, or around eighty-five percent of
motorized vehicles registered as private and public vehicles (see Figure 1). At least 8 out of 10
Indonesian households have one motorized 2W. This number continues to grow at an annual
rate of 4.5%. As a result, Indonesia is ranked as one of the largest growing markets for
motorized 2W worldwide.
Figure 1. Private vehicle ownership in Indonesia, 2015-2019
Figure 2. New motorized 2W Sales in Indonesia
The total number of motorized 2Ws in Indonesia is directly related to the number of motorized
2Ws sold each year. The number of new motorized 2Ws sold domestically from 2017 to 2019
increased on an annual basis. In 2020, motorized 2W sales dropped significantly, possibly due
to the impact of the COVID-19 pandemic, and sales fell by up to 44% year-over-year. Sales in
2021 are up, but lower than the annual sales of the last three years before the pandemic.
1.1. Brands
National sales figures3 show that Honda dominates the motorized 2W market in Indonesia.
Honda's annual market share has remained above 73% since 2017. Its closest competitor,
Yamaha, hovers between 18% and 23%, with 2020 being the lowest.
1.2. Engine Displacement

From the engine displacement (capacity), even though the small motorized 2W segment below
150cc is shrinking year by year, it still dominates the market. On the contrary, big motorized
2Ws with displacements of 150-250cc and above are slowly gaining popularity, especially
150-250cc. Interestingly, the E2W is also gaining market share. E2W represents more than 1.5% of
total sales in 2021, compared to less than 0.1% in 2017.
Figure 3 (left). New motorized 2W Sales Based on Brand

Figure 4 (right). New motorized 2W Sales Based on Engine Capacity
3
Motorcycles Data. 2022. Electric Scooter and Motorcycles Archives - Motorcycles Data. [online] [Accessed 2 September
2022]. Available from https://www.motorcyclesdata.com
1.3. Body Type
Scooter-type motorized 2Ws using automatic transmission dominate the market, growing from
72.5% in 2017 to 83.7% in 2021. While manual transmission motorized 2Ws are steadily declining,
underbone motorized 2W (with semi-automatic transmission) also continues to lose market
share significantly. Its total share in 2021 is slightly lower than 5.5%, compared to 13.6% in 2017.
Figure 5. Motorized 2W Body Types From left to right: Underbone, Scooter, and Motorcycle
(source: astra-honda.com)
Figure 6. New motorized 2W Sales Based on Body Type
2. Methodology
2.1. GFEI Methodology

The Global Fuel Economy Initiative (GFEI) has developed a methodology to analyze trends in
global average fuel consumption. The methodology has been established to standardize the
calculation of baseline fuel consumptions in all countries. The formula for calculating the
baseline fuel consumption according to the GFEI method is as follows:
Figure 7. GFEI Fuel Economy Calculation
Generally, the data required for this calculation are the number of newly registered vehicles,
vehicle composition, fuel type, engine type, year of manufacture, emission technology, and
energy efficiency rating (fuel economy) of each type of vehicle.
2.2. Data Collection

In developed countries, fuel economy baseline calculations are usually supported by an
extensive publicly available fuel economy database for all vehicle segments. Meanwhile, in
developing countries, data availability is often a major issue in monitoring and evaluation
activities, including establishing fuel consumption baselines. In Thailand, for example, the
baseline fuel consumption is calculated from the number of vehicles sold over a three-year
period (from 2013 to 2015). Meanwhile, the Philippines’ baseline is calculated from 2013 data
only.
Indonesia is no exception: there is publicly available 2&3W sales data, including exports and
imports between 2011 and 2020, but is limited at an aggregated level. Official sources such as
the Ministry of Transport also do not have 2&3W data at the level of detail required for the GFEI
calculation methodology. Therefore, while it is indeed ideal to have official national statistics
to calculate baseline fuel economy, the data used in this calculation was obtained from a paid
source (motorcycledata.com). The dataset contains the following information:
1. Vehicle brand
2. Vehicle model
3. 2&3W engine types (ICE or electric)
4. 2&3W engine displacement/capacity (cc)
5. 2&3W year of vehicle registration (2017-2021)
The scope of calculation in this report is to identify the fuel economy baseline of the national
2&3W fleet in Indonesia between 2017 to 2021.
2.3. Fuel Economy Baseline Calculation

To calculate fuel consumption, annual fuel efficiency data for selected motorized 2W electric
models was first collected. The selected models are in the top 95% of motorized 2W sold in one
year, exceeding the minimum of 85% required by the Global Fuel Economy Initiative (GFEI)4. The
sales of the selected models, grouped by brand, are shown in the table below.
Table 1. Motorized 2W type for calculation sample grouped by brand
Number of Motorized 2W Sales
Parameter Sales 2017 Sales 2018 Sales 2019 Sales 2020 Sales 2021
Total Sales (unit) 5,930,698 6,452,156 6,627,203 3,734,047 5,182,787
Top 95% Sales (unit) 5,642,789 6,135,571 6,304,979 3,552,209 4,931,947
Top 95% Sample Breakdown
Brand Sales 2017 Sales 2018 Sales 2019 Sales 2020 Sales 2021
Gesits 22,600 26,522 45,561
Honda 4,285,689 4,667,429 4,805,428 2,836,058 3,783,514
Kawasaki 60,552 33,464 33,016 44,293 76,796
Piaggio 16,079
Suzuki 32,420 35,390 28,575 12,149 53,632
Viar 19,680 25,200
4
GFEI. Draft Guideline for Fuel Economy Baseline-Setting.[Online]. [Accessed 2022]. Available from: GFEI
Yamaha 1,244,448 1,374,088 1,415,360 633,187 956,365
Sample Percentage 95.15% 95.09% 95.14% 95.13% 95.16%

from Total
Is not part of the top 95% and thus not taken into account in the calculation
The annual fuel consumption of each model was collected from secondary data sources such
as official brand websites, news websites, and review websites. Please note that measurement
methods may vary between each model due to limited data sources. If available, official
website or brand specifications are preferred. The ECE R40 Euro 3 compliant method is the
most commonly used fuel economy test method.
The collected fuel consumption (km/l) of the selected model is respectively converted into fuel
economy (l/100km) to get a better idea of the average energy required to drive a certain
distance. The fuel consumption value is inverted and multiplied by 100 to get the l/100 km
value. In order to obtain the average annual fuel economy, the weighted average method is
adopted and the average value is calculated proportionally according to the sales volume of
each model. The energy consumption of E2W in kWh/km is converted to l/km using a
conversion factor, assuming that 1 liter of gasoline is equivalent to 8.9 kWh of electricity5.
5
Nrcan.gc.ca. 2022. Understanding the tables. [online]. [Accessed 2 September 2022] Available at:
<https://www.nrcan.gc.ca/energy-efficiency/transportation-alternative-fuels/personal-vehicles/choosing-right-vehicle/
buying-electric-vehicle/understanding-the-tables/21383>
3. Fuel Economy Baseline of 2W in Indonesia
3.1. National 2W Fuel Economy Between 2017-2021
Figure 8. Motorized 2W Weighted Average Fuel Consumption
The national 2&3W fleet baseline fuel economy, as in the weighted average of the fuel economy
of various 2W models, from 2017 to 2021 is presented above. Overall, the weighted average fuel
economy of the motorized 2W (the ICE 2W in particular) continued to increase each year and
only decreased in 2020. From 1.9 l/100 km in 2017, the fuel economy of the ICE 2W increased to
1.95 l/100 km in 2021 – a five-year increase of 2.7%.
Dividing the data into two groups, namely 1) a fuel economy baseline that only includes ICE
motorized 2W data, and 2) a fuel economy baseline that includes E2W sales, clearly shows that
the adoption of electric vehicles can improve fuel economy. In 2021, the adoption of E2W
improved the national 2W fleet fuel economy has improved by 0.5%, although their market
share has not even reached 1% of the top 95% sold models.
3.2. Fuel Economy By Brand, Engine Capacity, and Body Type
The fuel economy of small motorized 2W under 150cc 2W is second only to E2W, while the fuel
consumption of 250cc 2W and above is the worst. However, the sales share of the small
motorized 2W is gradually decreasing, although it still holds a market share of more than 65%.
Conversely, sales of the 2W 150-249cc 2W increased substantially. Albeit there is also a
year-on-year increase in 150-249cc 2Ws fuel economy, the overall annual fuel economy
continued to increase.
Figure 9. Motorized 2W Fuel Consumption Based on Engine Capacity
Figure 10. Motorized 2W Sales Share Based on Engine Capacity
It is worth mentioning that each brand and body type of motorized 2W has its own unique fuel
economy. Honda has the lowest fuel economy of all brands, second only to Gesits which
represents the E2W segment. Meanwhile, Kawasaki which mainly markets large motorized 2W
has the highest average fuel economy.
Based on the body type, in 2017 scooters consume more fuel on average than the underbone
motorized 2Ws. However, the fuel economy of the scooter segment continues to improve and
became better than the underbone segment in 2021. At the same time, motorcycle type
motorized 2Wa consume more fuel than other motorized 2W body types.
Figure 11 (left). Motorized 2W Fuel Consumption Based on Brand

Figure 12 (right). Motorized 2W Fuel Consumption Based on Body Type
`
4. Motorized 2W Fleet Emission Factor
4.1. 2021 Emission Factor Baseline

To take the analysis a step further, the baseline GHG emissions of Indonesia's 2W motorized
vehicle fleet were also estimated for 2021. To better represent CO2 emissions from motorized
2W use, a life cycle analysis was used to track emissions from vehicle production to vehicle
use.
For ICE motorized 2W, life cycle analysis includes vehicle production, fuel production, fuel
combustion, and vehicle disposal. Slightly different, the E2W life cycle analysis begins with
vehicle production, battery production, power generation, and vehicle disposal. Fuel
consumption rates will determine emissions from fuel production and combustion, so better
fuel consumption can lead to reduced emissions. Table 2 below presents the assumptions
used for the life cycle emissions calculations.
Table 2. Energy and Carbon Assumption for Life Cycle Analysis
Life Cycle Stage Emission or Energy Factor
Vehicle Production 41.8 MJ/kg vehicle6
Fuel Production 225 g CO2/litre7
Fuel Combustion 2416.8 g CO2/litre8
Battery Production 500 MJ/kWh9
Electricity Production Vary between each year10
Vehicle Disposal 852 g CO2/kg vehicle11
6
Sato, F. E., & Nakata, T. (2020). Energy consumption analysis for vehicle production through a material flow approach.
Energies, 13(9), 2396. https://doi.org/10.3390/en13092396
7
ITDP Indonesia (2021). Timetable and Roadmap for Ride Hailing Fleet Electrification.
8
Ibid
9
Romare, Mia and Dahllöf, Lisbeth (2017). The Life Cycle Energy Consumption and Greenhouse Gas Emissions from
Lithium-Ion Batteries, IVL Swedish Environmental Research Institute.
10
ITDP Indonesia (2021). Timetable and Roadmap for Ride Hailing Fleet Electrification.
11
Ibid
Figure 13. Regression for Jamali Electricity Grid Carbon Intensity to 2035
Emission factor of the energy source was firstly identified in order to calculate the emissions in
the production stage. The energy mix of the electricity network is determined according to the
forecasts of the RUPTL 2021-2030. Natural gas, coal, and oil are used as energy sources for
electricity After 2030, carbon intensities are interpolated using linear regression, as shown in
Figure 13.
Table 3 below shows the basic assumptions for the ICE 2W and E2W. Battery capacity
assumptions are based on the current most popular model in Indonesia.
Table 3. Assumptions for motorized 2W Lifecycle Analysis
Assumptions Value
General Variables
Motorized 2W Lifetime 10 years
Annual VKT 10,620 km12
ICE motorized 2W Fuel Consumption Improvement 0.5% annually13
Electric motorized 2Ws
Battery Capacity 1.44 kWh/battery14
Battery Replacement during Lifetime 3 times15
12
Daily distance travelled of 36 km and 295 active days annually
13
Kimura, S., Suehiro, S., & Doi, N. (2018). An Analysis of Alternative Vehicles’ Potential and Implications for Energy
Supply Industries in Indonesia. Economic Research Institute for ASEAN and East Asia
14
Gesits. 2020. Gesits G1. [Online]. [Accessed 2022]. Available from: gesitsmotor.com
15
Anshori, Luthfi. 2019. Setelah 3 Tahun, Baterai Gesits Bisa Ditukar Tambah. Detik.com. [Online]. [Accessed 2022].
Available from https://oto.detik.com/motor/d-4690998/setelah-3-tahun-baterai-gesits-bisa-ditukar-tambah
Assumptions Value
Electric motorized 2W Fuel Consumption 0.2% annually16

Improvement
For this calculation, the motorized 2Ws are categorized based on their body type and engine
displacement class. Motorized 2Ws under 150 cc are defined as small motorized 2Ws and those
beyond 150 cc are defined as large motorized 2Ws. Since it is assumed that the electric
motorized 2Ws all have the same battery capacity, they do not have size classification as such.
Table 4 below presents the classification and market share in 2021, as well as their
characteristics to determine each group’s emission factor.
Table 4. motorized 2W Classification Based on 2021 Data
Average Weighted Average Fuel

Body Type Class Market Share
Weight (kg) Consumption (2021)
E-Scooter 0.92% 94.5 0.029 kWh/km
Scooter Small Scooter 65.6% 96.7 0.018 l/km
Large Scooter 29.88% 129.8 0.023 l/km
Motorcyle Large Motorcyle 8.79% 130.8 0.026 l/km
Small Underbone 2.44% 105.9 0.017 l/km

Underbone
Large Underbone 2.36% 121.3 0.022 l/km
Table 5. Motorized 2W Emission Factor Calculation for 2021
2021 ICE variables Electric variables General variables

Emission
Body Type Class Fuel Fuel Battery Electricity Vehicle Disposal factor
Prod. Comb. Prod. Prod. Prod.
Scooter Electric - - 5.05 25.75 9.24 0.76 40.79
Small 4.55 43.12 - - 9.45 0.78 57.90
Large 5.74 54.42 - - 12.68 1.04 73.89
16
Kimura, S., Suehiro, S., & Doi, N. (2018). An Analysis of Alternative Vehicles’ Potential and Implications for Energy
Supply Industries in Indonesia. Economic Research Institute for ASEAN and East Asia
2021 ICE variables Electric variables General variables
Emission
Body Type Class Fuel Fuel Battery Electricity Vehicle Disposal factor
Prod. Comb. Prod. Prod. Prod.
Motorized 2W Large 6.55 62.06 - - 12.78 1.05 82.44
Underbone Small 4.30 40.73 - - 10.35 0.85 56.23
Large 5.55 52.61 - - 11.86 0.97 70.99
Weighted Average for All 2W (g CO2/km) 63.34
Weighted Average for ICE 2W only (g CO2/km) 63.55
Overall, the emission factor of the overall motorized 2W in 2021 reach 63.34 gCO2/km.
Meanwhile, if E2Ws are excluded from the calculation, the emission factor becomes slightly
higher at 63.55 gCO2/km. Although the E2Ws consist less than 1% of the market sample, their
adoption brought the national fleet emission factor lower by 0.3%.
Figure 14. Motorized 2W Emission Factor by Body Type
From the life cycle emissions assessment, it appears that the emission factor of underbone
2Ws and small scooters, which are 56.23 and 57.9 gCO2/km respectively, is second only to E2Ws.
In contrast, large motorized 2Ws have the worst emission factor at 82.44 gCO2/km, 75% of which
comes from fuel combustion. The E2W has the best emission factor at 40.79 gCO2/km, of which
63% comes from electricity production. Life cycle emission analysis of other types of motorized
2W shows that fuel combustion contributes around 73-75% of the emission factor. This clearly
shows that the transition to a cleaner grid will have a significant impact on reducing 2W
lifecycle emissions.
4.2. 2035 Emission Factor Projection

For emission factor calculations, the 2021 fuel economy was used and then projected to 2035,
as the target year of a GFEI has a target to reduce 2W and 3W CO2 emissions by 80% by 2035
compared to the reference from 2005.
4.2.1. Business-As-Usual (BAU) Grid Carbon Intensity Improvement

a. No improvement in E2W Adoption
Without any improvement in E2W adoption, BAU improvement in emission factor based on
the RUPTL projection, and BAU improvement in fuel economy rate, the overall emission
factor for the national motorized 2W is expected to increase from 63.34 gCO2/km to 57.6
gCO2/km or only a 9% improvement compared to 2021.
Table 6. Motorized 2W Emission Factor Calculation for 2035
2035 ICE Electric General

Total
Body Type Class Fuel Prod. Fuel Comb. Battery Electricity Vehicle Disposal
Prod. Prod. Prod.
Scooter Electric - - 4.00 19.84 7.32 0.76 31.92
Small 4.24 40.20 - - 7.49 0.78 52.70
Large 5.35 50.74 - - 10.05 1.04 67.18
Motorized Large 6.10 57.85 - - 10.13 1.05 75.14

2W
Underbone Small 4.01 37.97 - - 8.20 0.85 51.03
Large 5.17 49.04 - - 9.40 0.97 64.59
Weighted Average ALL (g CO2/km) 57.60
Weighted Average ICE (g CO2/km) 57.84
b. 100% E2W Penetration

The previous analysis above shows that the emission factor of E2W fleet is estimated to be
31.92 gCO2/km by 2035 under BAU grid improvement (based on the plan in RUPTL), meaning
that a 100% E2W fleet penetration will improve the national fleet emission factor up to
49.6% compared to 2021. The same result can be achieved without any additional E2W
adoption only if the ICE fleet emission factor is improved by 44.8%.
c. RUEN Target: 13 Million Units of E2W by 2030

Nevertheless, 100% E2W fleet penetration by 2035 might not be a realistic target to pursue,
given the current uptake of E2W. Indonesia’s 2030 E2W adoption target is 13 million units.
Assuming a 5% CAGR (compound annual growth rate) of motorized 2W population, the
target will be equivalent to 5% of the total fleet. With BAU grid and ICE fuel economy
improvements, it will only result to 10.7% emission factor improvement compared to 2021.
d. 40% Emission Factor Improvement

A study by ICCT mentioned a target of improving Indian 2W fleet emission factor of 2W fleet
by 38% in 2030. Targeting a 40% improvement of emission factor (38 gCO2/km) in 2035
compared to 2021 BAU, almost 76.5% E2W penetration will be needed. On the other hand, if
there is no improvement in E2W penetration, around 34% increase in ICE 2W fleet emission
factor is required. Figure 15 below shows the trade-off between E2W penetration rate and
required ICE 2W emission factor reduction to achieve 40% emission factor improvement
target.
Figure 15. E2W Penetration and ICE Emission Factor Improvement Impact
4.2.2. Sensitivity Analysis on the Carbon Intensity of Electricity Generation
Figure 16. Sensitivity Analysis of the Carbon Intensity of Electricity Generation
Carbon intensity of electricity generation, which is the amount of CO2 emitted per one unit of
electricity at one kilowatt-hour (gCO2/kWh), is another determining variable for lifecycle
emission factor, especially for electric vehicles.
With the BAU scenario of 708 gCO2/kWh carbon intensity in 2035, even a 100% E2W penetration
would still result in a fleet emission factor of 31.92 gCO2/kWh. Several emission factor
improvement scenarios are assessed with reduction intervals of 5 gCO2/km, up to 20 gCO2/km
(more than 65% improvement than the estimated overall emission factor) to understand how
the grid carbon intensity should be improved to reach the targets.
Assuming an all-electric fleet, it would need at least 10% grid carbon intensity improvement
(638 gCO2/kWh) compared to BAU grid improvement target to reduce the emission factor to 30
gCO2/km in 2035. Carbon intensity of 531 gCO2/kWh (25% improvement) is needed to reach 25
gCO2/km emission factor and last, to reach 20 gCO2/km emission factor, a 40% grid intensity
improvement (425 gCO2/kWh) will be needed.
The calculation above is based on 100% electric motorized 2W adoption with rounded carbon
intensity improvement. If the electrification is less than 100%, Figure 16 shows the need for ICE
improvement with the desired electrification level.
Table 7. ICE Combustion Technology Improvement and E2W Penetration
ICE Combustion Technology Improvement and E2W Penetration
In 2021, ICCT published a study regarding the cost-effectiveness of ICE combustion improvement and
E2W penetration increase to reach certain emission reduction17. The study examined large motorized
2W, small motorized 2W, and scooters as the cost-effectiveness would differ between each type.
However, in this section, only scooter type-2W would be discussed as it represents over 60% (small
scooter) of the motorized 2W market.
ICCT exercises the compliance cost of E2W adoption and ICE technology improvement. The CO2
compliance cost was analyzed using two approaches the first being ICE technology exhaustion and the
second being cost-beneficial penetration of E2W. Using the first approach, the maximum level of CO2
reduction by implementing ICE technology improvement was assessed before the transition to E2W is
being considered. While the second approach evaluates the possible CO2 reduction from increasing
E2W market penetration. It is assumed that no E2W vehicles would be sold until the cost parity with the
ICE technology improvement is achieved.
Figure 17. Compliance cost in 2030 for a scooter, ICE, and E2W packages18
Figure 17 shows the compliance cost explained before for the scooter model in 2030. ICE technology
improvement would allow CO2 reduction to above 25 gCO2/km but with a high cost of more than 20,000
INR. On the other hand, to reach the same level of CO2 emission, electric motorized 2W adoption would
only require less than 4,000 INR. After the introduction of electric scooters, the overall compliance cost
would rapidly decrease.
Based on the second approach, the cost-benefit analysis, the penetration of e-scooter would be
started beyond the emission of 44 gCO2/km. It is evident that the escalation of electric scooter
adoption would be more cost-effective, especially for lower CO2 emission rates.
17
Anup, S., Deo, A., and Bandivadekar, A. (2021). Fuel Consumption Reduction Technologies For The Two-Wheeler Fleet In
India. Washington: International Council on Clean Transportation.
18
Ibid.
5. Conclusions
A number of key takeaways from the assessment are as follows:
1. In 2021, the 2W baseline fuel economy in Indonesia is 1.94 l/100 km. It is worse compared
to Vietnam's 2020 2W fuel economy of 1.76 l/100km19 and India’s 2018 2W fuel economy of
1.74 l/100km20. Nevertheless, when compared to the light-duty vehicle (LDV) fuel economy
in Indonesia at 8.1 l/100km in 2019, the 2W fuel economy still fares better.
2. The adoption of E2W has a significant impact on improving fuel economy. Even with a very
low adoption rate (less than 1.5% market share in 2021), E2W improves fuel consumption by
0.01 l/100km. This is due to the fact that the fuel economy of the most popular E2W model
in Indonesia is currently 0.32 l/100km, far better compared to 1.78 l/100km for a typical
small scooter.
3. Small scooters and small underbones, or motorized 2W with smaller engine displacement
in general, have better fuel economy than other ICE 2W models. The market decline of
these models in recent years and the rise of 2Ws with larger engine displacement (>150 cc)
are increasing the national fuel economy of 2W fleets. Limiting the allowed engine
displacement, or providing disincentives such as additional taxes for 2W with 150 cc engine
capacity or more, could help achieve lower fuel economy in the near term.
4. The national emission factor for the 2W fleet in 2021 is 63.34 gCO2/km. Given this value,
the contribution of 2W to greenhouse gas emissions for a given area can be estimated. For
example, assuming an annual vehicle kilometer traveled (VKT) by 2W fleets in Jakarta of 1.2
billion kilometers21, the GHG emissions from 2W in Jakarta can be estimated at
approximately 76 million tons of CO2.
5. According to the life cycle emissions analysis based on 2021 data, E2W currently has the
lowest emissions at 40.79 gCO2/km, while the large ICE 2W (>150cc) has the worst
emissions level at 82.44 gCO2/km. For E2W, electricity production accounts for 63% of total
emissions, and fuel production accounts for 73-75% of life cycle emissions for ICE 2W.
Under the BAU grid carbon intensity and ICE 2W fuel economy improvement scenario, the
life cycle emission factor of the 2W fleet will be reduced to 58.90 gCO2/km by 2035. To
further reduce the emission factor, increased E2W penetration should be combined with
better ICE combustion. For example, to achieve a 40% improvement to 35.4 gCO2/km, ICE 2W
fuel economy would need to be improved by 40% if there is no increase of E2W market
19
Tran, D. S., Le, H., & Yang, Z. (2022). Two-wheelers in Vietnam: A baseline analysis of fleet characteristics and fuel
consumption in 2019 and 2020. Working Paper, (2022-08).
20
Global Fuel Economy Initiative. (n.d.). Vehicle types. Global Fuel Economy Initiative; www.globalfueleconomy.org.
Retrieved September 2, 2022, from https://www.globalfueleconomy.org/toolkit/vehicle-types
21
Assuming an annual km travelled per vehicle of 10,620 km and the total national population of motorized 2W of 113
million
share. Otherwise, E2W adoption up to 87.3% is needed if there is no fuel economy
improvement of ICE motorized 2W.
6. Even 100% E2W penetration will not achieve a 20 gCO2/km (65% improvement) emission
factor by 2035 without a more aggressive grid carbon intensity improvements. To achieve
a 2W emission factor of 20 gCO2/km, the carbon intensity of the electricity network would
have to be increased by 40% compared to the 2035 BAU scenario.
Part B:
Overview of 2&3 Wheelers and
Renewable Energy Policies in Indonesia
1. Current Policies and Standards for 2&3W
As the most popular mode in Indonesia, there are numerous policies to regulate and manage
2&3W, especially the motorized 2W. This chapter aims to provide an overview of the main
policies and regulatory standards for 2&3W in Indonesia, organized into the following groups:
● Vehicle operations
● Vehicle specifications and standards
● Demand-side fiscal regulations
● Supply-side fiscal regulations
In Indonesia, vehicles are classified into two general categories: motorized vehicles and
non-motorized vehicles. Based on the vehicle type, motorized vehicles are further classified
into motorized 2&3Ws, passenger cars, buses, logistic cars, and special vehicles. With the
introduction of electric vehicles, a new category has been introduced to accommodate electric
personal mobility devices such as e-bikes, e-kick scooters, hoverboards, and e-unicycles.
Figure 18. Vehicle classification in Indonesia
The “motorized 2W” vehicle group is further divided into L1, L2, L3, L4, and L5, based on the
number of wheels, wheel configuration, maximum design speed, and cylinder capacity for ICE
vehicles
.
Table 8. Motorized 2&3W classification in Indonesia
Motorized 2Ws
Classification E-bikes
L1 L2 L3 L4 L5
Regulation MOT Regulation No. Government Regulation No. 55/2012 on Vehicles

45/2020 on Certain MOT Regulation No. 86/2020 and No. 44/2020 on Electric Vehicle Type Test
Vehicles with MOT Regulation No. 30/2020 and No. 33/2018 on Motorized Vehicle Type
Electric Motors Test
Defining characteristics
3W with 3W with
asymmetrical symmetrical
Type 2W 2W 3W 2W
wheel wheel
configuration configuration
Power source Electric ICE, electric, or combination (hybrid)
Max. design
< 25 km/h < 50 km/h < 50 km/h > 50 km/h > 50 km/h > 50 km/h
speed
Cylinder
- < 50 cc < 50 cc > 50 cc > 50 cc > 50 cc
capacity for ICE
1.1. Vehicle Operations

Related regulations: Law No. 22/2009 on Road Traffic, Government Regulation No. 55/2012 on
Vehicles
The operations of 2&3Ws are regulated as follows:
Table 9. 2&3W Operational Regulations
Operational
Bicycles E-bikes Motorized 2Ws (L1-L5)
regulations
● Cycle lanes
● Designated lanes for
Allowed ● Cycle lanes e-bikes and other vehicles
Operational ● Outermost lane (left) on in the Certain Vehicles Motorized vehicle lanes
Areas motorized vehicle lanes with Electric Motors
category
● Certain areas: residential
Operational
regulations
area, tourism area, office

area, area around transit
points where the vehicle
class is integrated as a
first-last mile mode
system, and off-roads
● Sidewalk with sufficient
capacity for pedestrians
(only when cycle lanes or
designated lanes are not
available)
● Vehicular lanes (only at
car-free day events)
80 km/h on intercity roads

Maximum
Not specified 25 km/h 50 km/h on urban roads
Speed
30 km/h on residential roads
Minimum Age No minimum age 12 years old 17 years old
● Mandatory
● Motorized 2W driving
Driving license Not needed Not needed
license is different with
car driving license
● Every motorized 2W must

be registered to the
vehicle database managed
by the National Police
Vehicle
Department
Registration Not needed Not needed
● Every motorized 2W that is
(License Plate)
operated on public roads
must have a vehicle
number certificate (STNK)
and a license plate
Helmet
No Yes Yes
Obligation
Pillion Allowed with pillion Allowed with pillion

Allowed
Passenger passenger seat passenger seat
Regarding the requirement for driving license for motorized 2W, the license is further classified
into three categories22:
a. Driving license (SIM) C: Required to drive motorized 2W with <250 cc engine
b. Driving license (SIM) C1: Required to drive motorized 2W with 250-500 cc engine
c. Driving license (SIM) C2: Required to drive motorized 2W with >500 cc engine
22
Police Department Regulation No. 5/2021 on Driving License
In order to apply for a C1 driving license, a driver must have obtained a C driving license for at
least a year. Likewise, to be able to apply for a C2 driving license, a driver must have obtained a
C1 driving license for at least a year.
1.2. Vehicle Specifications and Standards

Related regulations: Government Regulation No. 55/2012 on Vehicles, MOT Regulation No.
45/2020 on Certain Vehicles with Electric Motors, MOT Regulation No. 86/2020 and No. 44/2020
on Electric Vehicle Type Test, MOT Regulation No. 30/2020 and No. 33/2018 on Motorized Vehicle
Type Test
There are several specification and standards for 2&3Ws as follows:
Table 10. Specifications and Standards for 2&3W
Specifications
and standards
● Maximum width: 1,300 mm

Maximum ● Maximum height for goods: 90 cm above
Maximum
WidthxLength: Not specified the seat
Dimension
550x2100 mm ● Maximum width for goods: Not exceeding
the width of handlebar
Maximum
Not specified Not specified Not specified
Vehicle Weight
Mandatory, with testing parameters as

follows:
1. Electric accumulator
2. Charging equipment, including
waterproofing protection
3. Electrical safety (touch protection), for
vehicles that:
a. Have a voltage >60V and < 1500 V DC or
b. Have a voltage >30V and < 1000 V DC or
Vehicle Type
Not specified Not specified 4. Functional safety
Test
5. Hydrogen emission
6. All vehicle type test parameters
applicable for ICE E2&3W are specified in
MOT Regulation No. 30/2020 and No.
33/2018 on Motorized Vehicle Type Test
Further details on the testing parameters can
refer to MOT Regulation No. 86/2020 and MOT
Regulation No. 44/2020 on Electric Vehicle
Type Test
Acoustic
Vehicle
Not specified Not specified Not specified
Alerting
System (AVAS)
Other remarks None Any modification to None
Specifications
and standards
increase motor power

is prohibited
1.3. Demand-side Fiscal Regulations

Related regulations: Law No. 1/2022 on Financial Relationship between the National
Government and Local Governments, Government Regulation No. 74/2021 on Luxury Tax Rate for
Motorized Vehicles, MOF Regulation No. 26/PMK.010/2022 on Goods Classification and Import
Tax
There are several taxes or fees applicable to owning 2&3W, which are elaborated in the Table 11
below.
Table 11. Taxes and Fees for 2&3W in Indonesia
Motorized 2&3Ws
Tax or fee Description Bicycles E-bikes
(L1-L5)
Value added tax Tax for every goods or 11%

11% 11%
(VAT) services transaction
● Up to 2% for first
Annual and vehicle ownership,
five-yearly tax for and progressive
Motorized motorized vehicle tax up to 10% for
Not applicable Not applicable
vehicle tax ownership, the value the next
is determined by local ● E2&3W is
governments exempted from
the tax
● Up to 20%
Tax imposed upon the
Title transfer fee ● E2&3W is
transfer of vehicle Not applicable Not applicable
(BBNKB) exempted from
ownership
the tax
60% for 2&3W with

Luxury goods tax Tax for luxury goods engine capacity
Not applicable Not applicable
(PPNBM) sales 250-500 cc, 95% for
>500 cc
Tax for imported

Import tax 25% 40% 10-40%
goods
1.4. Supply-side Fiscal regulations
Related regulations: BKPM Regulation No. 7/2020 on Pioneer Industries and Tax Allowance, MOF
Regulation No. 130/PMK.010/2020
A. Tax Allowance
For the capital investment, according to the Government Regulation No. 78/2019, tax allowances
are given for the motorized 2&3W industry.
Income tax reduction
Income tax reduction of as much as 30% from the capital investment in form of fixed assets for
the main business, would be given throughout six years with 5% for each year. Income tax for
dividend payments to international taxpayers is as much as 10% or lower according to the tax
treaty.
Accelerated depreciation and Amortization
Accelerated depreciation for tangible fixed assets and amortization for intangible assets are
given with varied utilization periods.
Loss Compensation
In addition to tax allowance facilities, the government also provides preventive facilities for
motorized 2&3W industries in the form of loss compensation. Compensation for losses applies
longer than five years but not more than ten years.
B. Tax Holiday
Through the regulation of BKPM 7/2020 and No. 130/PMK.010/2020, eligible Pioneer Industries,
which include the motorized vehicle and its components, are granted with tax holiday or
corporate income tax deduction.
According to No. 130/PMK.010/2020, The provision of corporate income tax reduction facilities is
given to pioneer industries, which include motorized 2&3W industries and their components,
that meet the following criteria:
● Fulfill the industrial gaps, which means the number of competitors in Indonesia is still
small.
● Mainly use domestic produce for their raw materials.
● Production results are used domestically (import substitution).
● The number of similar companies in the same area/region is small.
● Employ a large number of workers.
● Investment locations are prioritized for those located outside of Java.
● Using environmentally friendly technology.
● Using new technology on production equipment.
● Support national strategic projects.
● Production results contribute greatly to the global supply chain.
● Build infrastructure facilities independently.
1.5. Other Policies and Regulations

A. Subsidized Fuel
Indonesia is one of the countries which still subsidizes fuel. Pertalite, a RON-90 fuel
distributed by Pertamina, a state-owned enterprise in the oil and gas business, is sold at 55%
below its market price while Pertamax, a RON-92 fuel, is sold at 30% below market price in July
202223. Due to its affordability, most motorized 2Ws are using Pertalite.
There is indeed a plan from the national government to reduce subsidized fuel consumption
by limiting the consumption of Pertalite only for cars below 1,500 cc and motorized 2Ws under
250 cc. Nevertheless, even if the plan has been implemented, the limitation will only affect the
minority of motorized 2W users since more than 95% of the market share is contributed by
vehicles under 250 cc.
B. Transportation Demand Management (TDM) “Push” Policies
In general, there is a lack of transportation demand management (TDM) policies, especially

from the “push” strategies implemented to disincentivize the use of motorized 2&3W. For
example, current parking fares for motorized 2W are typically24 less than half the parking fares
for cars, which is by itself still relatively low compared to other countries. In Jakarta, for
instance, the hourly parking fare for motorized 2W is set between IDR 2,000-6,000 or around
USD 0.14-0.42, and most parking facilities apply the minimum fare. Most other cities have lower
parking rates than Jakarta.
1.6. Enforcement of the Policies and Regulations

Traffic policies and regulations
Traffic violations by motorized 2W happen frequently and are causing safety and accessibility
issues for other road users. Enforcement is often a problem due to the huge volume of
23
Oswaldo, I., 2022. Di Bawah Harga Pasar, Ini Daftar Harga Pertalite dan Pertamax di Seluruh SPBU. [online]
detikfinance. [Accessed 2 September 2022]. Available from:
https://finance.detik.com/energi/d-6178390/di-bawah-harga-pasar-ini-daftar-harga-pertalite-dan-pertamax-di-seluruh
-spbu
24
In Indonesia, parking fares are loosely regulated by the local governments which typically set a maximum minimum
range for parking fares in their administrative areas.
motorized 2W and the shortage of enforcement officers. Furthermore, some violations are often
regarded as commonplace and thus regulators are turning a blind eye toward them.
The most typical violations include:
● Sidewalk encroachment: Motorized 2Ws are frequently driven on the sidewalks to bypass
traffic jams or one-way traffic. They are often parked on sidewalks.
● Disobey the traffic lights: Many motorized 2W drivers violate traffic lights or stop at
pedestrian crossings at intersections.
● Illegal parking: As mentioned above, illegal parking of motorized 2W is a common issue
in many Indonesian cities. Not only on sidewalks but also there are many illegal on- and
off-street parking facilities organized by informal organizations or individuals.
● Young riders: Although there is a minimum age threshold of 17 years old for riders,
motorized 2Ws are often used by children, even starting from elementary school. This
case more often happens in secondary cities in Indonesia.
● Driving license: Driving licenses can be quite easily obtained without following the
regulated procedures.
The use of motorized 2&3W as shared transportation
Legally, the use of motorized 2Ws as commercial passenger vehicles is not allowed. Hence, the
massive population of motorized 2W ride-hailing fleets is currently a huge political dilemma.
Since the number of drivers has reached millions, decision-makers are aversed to ban or even
impose stricter regulations, e.g. higher base fares, to avoid public backlash.
2. Current Policies for Renewable Energy
Indonesia today, like many countries around the globe, is on a path of decreasing its carbon
footprint. The shift to electric vehicles can be one of the paths to decarbonize the
transportation section, but this is not without caveats. As assessed in the Part A of this study,
given the carbon intensity in Indonesia, the electricity production itself accounts for 63% of the
total lifecycle emissions of an E2W. Hence, improving the renewable energy mix in Indonesia’s
electricity grid becomes a crucial factor in optimizing the environmental benefits of transport
mode electrification in the country.
In Indonesia, the national government has an important role in formulating regulations and
programs to ensure the growth of renewable energy in the future. Policies regarding energy and
renewable energy in Indonesia refer to the Law of Republic Indonesia No. 30/2007. The law
stated that the government set the goal of energy management as obtaining energy
independence, ensuring the availability of domestic and non-domestic sources of energy,
ensuring optimal, integrated, sustainable energy resources management, energy efficiency use,
guaranteeing the access of individuals to energy, and improving the capacity of domestic
energies.
The energy system in Indonesia can be broken down into three areas: primary sources,
consumption, and intermediary energy form. Primary energy sources are basically the supply
which consists of petroleum, natural gas, coal, and renewables. On the opposite, consumption
lists the sectors that demand energy to be utilized. This includes transportation, industrial,
residential, and commercial. Finally, the intermediary energy form is electricity that is
converted from the primary energy sources to power the end-use sectors such as listed above.
2.1. General Policies
This section covers the overarching policies that govern the energy system in Indonesia,
especially the ones related to renewable energy demand creation and supply of renewable
energy technologies.
A. Law No. 30/2007 on Energy
This regulation establishes the legal basis for the National Energy Policy (KEN) and the
National Energy General Plan (RUEN), which are the foundation of energy system development
in the country. More importantly, it also provides the basis for the provision of facilities and
incentives to support renewable energy policy objectives provided in KEN and RUEN.
B. National Energy Policy (KEN)
Government Regulation No. 79/2014 on National Energy Policy (KEN) is an energy management
policy based on the principles of justice, sustainability, and environmental insights in order to
create energy independence and national energy security. Hence, renewable energy is part of
the strategy discussed in the document. It contains the target of the Indonesian government in
2025 to achieve a 23% renewable energy mix and at least 31% by 2050. This gives the basic
demand for renewable energy to be fulfilled. Meanwhile, the rest of the portion will be filled
with petroleum, coal, and natural gas resources.
The subsidies for fuel oil and electricity will be reduced gradually until the people's purchasing
power is achieved and diverted to subsidies for renewable energy. Renewable energy price
subsidies are given if the price of renewable energy is more expensive than the price of energy
from unsubsidized fuel oil. Meanwhile, the utilization of renewable energy resources is
prioritized for electricity, transportation, and industrial needs, with the following uses:
● Electricity: Energy flows and waterfalls, geothermal energy, energy movement and
temperature differences in the ocean layers, and wind energy, energy from sunlight,
renewable energy from biomass and waste types.
● Transportation and industry: Renewable energy sources from biofuels, biomass and
waste, natural gas energy, and liquefied coal.
C. National Energy General Plan (RUEN)
Following up on the dissemination of the National Energy Policy, the government stipulated
Presidential Regulation No. 22/2017 on the National Energy General Plan (RUEN). This regulation
set up the detailed national-level energy management plan that refers to the KEN targets. With
this regulation, the government settles a strategy to achieve future energy policy goals, by
utilizing energy resources as capital for national development in a sustainable manner, for the
purpose of providing accessible and reliable energy, increasing energy utilization efficiency,
guaranteeing energy security, and developing technological, industrial and domestic energy
service capabilities, as well as to improving job creation.
RUEN is developed based on energy supply-demand modeling projections from 2015 to 2050.
According to this plan, Indonesia should provide 92.2 MTOE (Million Tonnes of Oil Equivalent) of
renewables by 2025 (45.2 GW of electricity as indirect use and 23 MTOE as direct use) and 315.7
MTOE of fossil fuels (167.7 GW of electricity as indirect use and 79.4 MTOE as direct use). With
regards to direct use for transport or industrial purposes, the strategy focuses mainly on
utilizing biogas, followed by biofuel, Coal Bed Methane, and biomass.
Meanwhile, in order to achieve the renewable target in the power sector, the strategy initially
relies heavily on the utilization of hydropower, amounting to 17.9 GW, which accounts for 40% of
the total projected capacity of renewable electricity by 2025. However, by 2050, solar power is
predicted to be the main renewable electricity source, amounting to 45 GW, contributing to 27%
of the total planned capacity. According to IESR, achieving 45 GW of solar capacity only tapped
between 0.2-2% (depending on land-use exclusions scenario) of total theoretical solar capacity
in Indonesia25. Other renewable energy sources included in the plan are wind, geothermal,
bioenergy, micro and mini hydro, etc.
2.2. Demand-side Policies

Demand-side energy policy refers to government policies for managing energy consumption in
order to meet environmental and energy security objectives. This could encompass energy
transformation, energy efficiency, demand response, and storage. Therefore, renewable energy
demand is naturally a central part of this section. There are several national regulations that
cover the entire renewable energy development.
This section specifically dives into the regulations that control the power sector. As the single
buyer of electricity in Indonesia, PLN (Perusahaan Listrik Negara/State Utility Company)
controls the transmission and distribution network. Moreover, the firm also owns more than
75% of the generation capacity in the country26. It can be said that under such a market design,
Indonesia still holds an artificial monopoly over the electricity sector. Therefore, the demand
for renewable energy generators is governed by the plan of the government and PLN for the
future. Several documents that affect the demand for renewable energy generators are
discussed as follows.
25
IESR. 2021. Beyond 207 Gigawatts: Unleashing Indonesia’s Solar Potential. Institute for Essential Services Reform.
[Accessed 20 September 2022]. Available from:
https://iesr.or.id/en/pustaka/beyond-207-gigawatts-unleashing-indonesias-solar-potential
26
Maulidia, M., Dargusch, P., Ashworth, P., & Ardiansyah, F. (2019). Rethinking renewable energy targets and electricity
sector reform in Indonesia: A private sector perspective. Renewable and Sustainable Energy Reviews, 101, 231-247.
1. National Electricity Business Plan (RUPTL) 2021-2030
The newly released RUPTL by PLN outlines the plan to increase renewables capacity up to 20.9
GW, more than half of the total additional capacity planned over a 10-year period. This RUPTL
is claimed as Green RUPTL, which incorporates strategies that will help the government achieve
the target of a 23% share of renewables by 2025.
According to the plan, PLN aims to increase the mix of biomass and waste in co-firing
operations. Regarding this, PLN has selected several CFPPs with a total capacity of 19 GW, that
have the potential to be operated with biomass and waste as a substitution for coal. PLN also
intends to add 4.2 GW of pumped Hydro Energy Storage. The planned capacity for solar power
plants increases significantly amounting to 4.7 GW, a fivefold increase compared to RUPTL
2019-2028 with merely 0.9 GW of planned solar power capacity. More on the demand side, this
RUPTL indicates a prospective solar market for the private sector with 63% of the planned
capacity allocated for IPPs. Hence, this creates more renewable energy demand for the private
sector to fulfill.
However, regardless of the improved priority on renewables, coal is still the main electricity
source for Indonesia, at least until 2030. Share of coal generation in the power grid is expected
to reach between 59% and 64%, depending on the scenario used to replace coal with biomass
or waste.
2. Development of Rooftop Solar PV
Replacing MEMR Regulation No. 49/2018, MEMR Regulation No. 26/2021 stipulates general
requirements and procedures for rooftop solar PV installation. Under this regulation, several
bottlenecks on the preceding regulation are addressed and amended. For instance, the net
metering scheme was updated to 1:1 (previously 1:0.65), which means rooftop solar PV users
can now receive 100% credit for their excess electricity. The net metering scheme is also
eligible for rooftop solar PV systems coupled with battery energy storage systems. In addition
to it, the credit accumulation period is extended from three months to six months. These
positive changes are expected to yield significant reductions in users’ electricity bills, thereby
creating a more attractive rooftop solar PV investment with a shorter payback period time.
MEMR Regulation No. 26/2021 also eases the application process by introducing an integrated
digital application, services, and reporting system. Besides, potential customers are able to
receive approval for installation in five days, much shorter than the previous approval period
which was 15 days. With this regulation, customers can also sell their excess electricity to other
Power Supply For The Public Interest Business License27 holders outside of PLN, known as
private power utilities (PPUs). This regulation is therefore not only putting concern off from the
27
IUPTLU (Izin Usaha Penyediaan Tenaga Listrik untuk Kepentingan Umum)
customer's side, but also for private sectors that are interested to increase their renewables
portfolio through rooftop solar power purchases.
3. Infrastructure Building for Utilizing Renewable Energy and Energy Conservation
Based on the MEMR Regulation No. 12/2018 and No. 4/2020, PLN is required to buy electricity
from renewable energy power plants. The purchase price of electricity from renewable energy
power plants is a maximum of 85% of the operating costs of generating local electricity
systems. In addition, the Ministry of Energy and Mineral Resources encourages regional and
provincial governments to improve renewable energy demand in the form of construction,
procurement, and/or installation of electricity supply installations, installations for the supply
of non-electrical bioenergy fuels, energy efficiency equipment, revitalization/rehabilitation of
energy utilization installations, and other activities using renewable energy. The national
government also assigned PLN to accelerate the construction of renewable energy power
plants in Presidential Regulation No. 194/2014. The government provides full support for the
acceleration of the licensing process related to environmental documents, land acquisition,
and compensation for transmission lines.
2.3. Supply-side Policies

In contrast with demand-side policies, supply-side renewable energy policy focuses on
supporting the deployment of renewable energy technologies, such as financial incentives and
local content requirements and/or restricting the rollout of fossil fuel technologies, for
instance through moratoriums, output caps, and other constraints. There are several national
regulations that cover the entire renewable energy development.
Several regulations that affect the supply of renewable energy technologies are discussed as
follows.
1. Purchase Scheme and Tariff for Indonesian Renewables IPPs
MEMR Regulation No. 04/2020 is the second amendment of MEMR Reg No. 50/2017 that
regulates the utilization of renewable energy for electricity production, including renewable
electricity tariff and purchase scheme under the Power Purchase Agreement (PPA) between
renewables Independent Power Producer (IPP) and State Owned Electricity Enterprise (PLN).
One of the main points of the amendment is the removal of the Built Own Operate Transfer
(BOOT) policy. This requirement adds complexity to the procurement scheme and induces
transfer costs, leading to financial disadvantages for the IPP. This regulation amendment then
enables the Built Own Operate (BOO) scheme and thus, eliminates the transfer cost.
Through this regulation, PLN now is allowed to carry out direct appointments for its tendering
scheme. This scheme was once provided by MEMR Regulation No. 14/2012 which regulates
electricity supply business activities but was removed with the issuance of MEMR Regulation
No. 50/2017. The government then put back the scheme to overcome the heavy criticism by the
IPPs concerning several situations, such as where the locations are resource-specific. Thereby,
the direct appointment is permitted but limited to the situation such as if only one candidate
is available for the relevant area and the local electricity system suffers a crisis or emergency
situation.
However, this regulation has not addressed modifications to renewable tariffs. The purchase
price paid by PLN to renewables IPPs still relies on PLN power generation cost (BPP) and is
capped at 85% of local BPP in a condition in which local BPP exceeds national BPP (except for
hydro, geothermal, and waste-to-energy which can be priced up to 100% BPP). When national
BPP is higher than local BPP, the price will be based on the B2B agreement between PLN and
IPPs.
2. Tax Incentives
Several tax incentives are available to support renewable energy industries, including
suppliers, manufacturers, and developers in Indonesia.
● Import Duty Exemption
Import Duty Exemption Incentives are regulated in PMK No. 66/2015 and BKPM
Regulation No. 4/2021. Exemption of import duties on machinery and equipment,
goods, and raw materials for production. Incentives are in the form of two years of
exemption from import duty on raw materials, then an additional two years of
exemption from import duty for raw materials if the company uses at least 30% of local
production machines and equipment.
● Value-added tax (VAT) exemption
Based on Minister of Finance Regulation (PMK) No. 21/2010, there is an exemption from
VAT for imported strategic taxable goods of machinery and equipment, excluding spare
parts, used by entrepreneurs in renewables projects.
● Income tax reduction

One of the fiscal incentives for new and renewable energy developers is the tax
allowance for capital investment. This is regulated in Government Regulation No.
78/2019, BKPM Regulation No. 4/2021, and Minister of Energy and Mineral Resources
Regulation No. 16 of 2015. The government provides a six-year net Income Tax (PPh)
reduction for capital investment of 5% annually or 30% of the investment value.
Table 14. Income Tax Reduction for New and Renewable Energy
Business Sector Product Coverage Eligibility Criteria
1. Exploration
Petroleum and Natural Gas and
2. Drilling Investment Value of at least 100
Geothermal Mining (Geothermal
3. Converting Geothermal Energy to Billion Rupiah
Energy Enterprises)
Electric Power
Converting new energy (hydrogen, CBM, 1. Investment value of at least

Procurement of Electricity, Gas, liquefied coal, or gaseous coal) and IDR 30 billion; or
Steam/Hot Water, and Cold Air renewable energy (hydropower and 2. Workforce of at least 100
(Power Generation) waterfalls; solar, wind or ocean currents, people.
biomass, biogas, waste) into electric power
● Tax Holiday
Through the regulation of BKPM Regulation No. 7/2020 and No. 130/PMK.010/2020,
eligible Pioneer Industries, which include manufacturers and infrastructure for
renewable energy power generations, are granted with tax holiday or corporate income
tax deduction. Corporate Income Tax deduction is given as follows:
a. 100% of the total amount of Corporate Income Tax for new investment with a
minimum value of IDR 500 million. Given the following period and after the
expiration of the period can be given a reduction of 50% for the next 2 years:
● For 5 years for New Investment of at least IDR 500 billion and less than IDR
1 Trillion
● For 7 years for New Investment at least IDR 1 Trillion and less than IDR 5
Trillion
Trillion
Trillion
● For 20 years for New Investment at least IDR 30 Trillion
b. 50% of the total amount of Corporate Income Tax for new investment with a value
of at least IDR 100 million and a maximum of less than IDR 500 million, is given
for 5 tax years and can be extended for the next 2 years in the amount of 25% of
the payable Corporate Income Tax.
● Loss Compensation
Based on PMK No. 21 of 2010 concerning the Provision of Tax and Customs Facilities for
the Utilization of Renewable Energy Sources, one of the facilities provided as part of
the income tax incentive is compensation for losses that are longer than 5 years but
not more than 10 years. This compensation is provided with the following conditions:
a. New investment is carried out in certain fields in industrial estates.

b. Employs 500 Indonesians within 5 years
c. New investment in the economic and social infrastructure of approximately IDR 10
billion
d. There are research and development expenses of at least 5% of the total
investment within a period of 5 years
e. Utilization of domestic raw materials or components at least 70% since the 4th
year.
3. Acceleration of Electricity Infrastructure Development
In order to increase the fulfillment of electricity needs and meet the national energy policy
target to achieve an energy mix of 25% renewable energy of the total energy used, a policy in
the form of Presidential Regulation No. 4/2016 concerning the acceleration of electricity
infrastructure development was issued. To succeed in accelerating the improvement of
electricity infrastructure, the central and regional governments provide support in the form of
fiscal incentives, ease of licensing and non-licensing, determining the purchase price of
electricity from each type of renewable energy source, establishing a government-owned
business entity in the context of providing electricity to be sold to PLN, and providing
subsidies.
3. Conclusions
Based on the policy and regulation overview of the 2&3W landscape and renewable energy in
Indonesia, key takeaways and the ways forward are summarized in this section.
3.1. 2&3W Policy Framework and Anchors for E2&3W Adoption

1. The popularity of motorized ICE 2W as an affordable and convenient door-to-door
transport mode is attributable to the current policy framework.
a. Affordable by design
A number of policies, such as the tax incentives for motorized 2W industries and low
end-user taxes especially for domestically produced motorized 2W, the lack of luxury
tax applied for most motorized 2W, and the widely available financing programs from
banks and other financial institutions result in the affordability of motorized 2W.
b. Convenient by design
Motorized 2W is usually exempted from currently applied TDM measures such as the
odd-even policy in Jakarta, so practically no restriction on motorcycle usage or supply.
Furthermore, such an exemption is causing the increase of motorized 2W due to shifts
from cars to motorized 2W28.
In addition There are no dimensions, engine capacity, or speed limitations for

motorized 2W. Therefore, many people use motorized 2W as it is more affordable,
convenient, and reliable especially in urban traffic compared to cars or public
transportation.
2. The electric 2W is not currently growing as rapidly as the ICE 2W. The current policy
framework might hinder E2W adoption.
a. Domestic content level

Indonesia has set minimum domestic content levels for electric vehicle production
and restricted CBU imports. Drafting these regulations in the early stages of EV market
development could hinder EV adoption, including by leading to higher costs. However,
allowing large imports of CBUs in the long term could also hamper the domestic
electric vehicle industry. Therefore, it is important to develop a comprehensive policy
that balances domestic content levels and import regulations to protect the growth of
local manufacturing while meeting local demand. Temporarily relaxing domestic
content levels and reducing access to CBUs, IKDs, or CKDs may be necessary to ensure
28
Maulana, A. 2019. Selain Mobil, Muncul Wacana Motor Kena Ganjil Genap. [online]. Kompas.com. [Accessed 2022].
Available from: Kompas.com
that EV market growth at this early stage is not solely dependent on the domestic
industry.
b. Limited direct incentives

2&3Ws have enormous potential to be catalysts for vehicle electrification. However,
there are no other preferential fiscal policies for E2&3W other than the annual vehicle
tax and title transfer fee exemption. Although the price gap between E2&3Ws and their
ICE counterparts is less than the gap in the 4W segment, the price differences are still
hindering potential users to procure E2&3Ws. Aside from limited incentives, financial
institutions have yet to implement a low down payment program, unlike ICE 2Ws. Many
financial institutions are reluctant to implement such policies since electric vehicles
still are considered a nascent technology..
c. Lack of disincentives for ICE 2&3Ws

To further accelerate the adoption of E2&3W, fiscal and non-fiscal disincentives for ICE
2&3Ws are needed. In fiscal form, an emissions-based tax could be an option in
addition to increasing emissions standards for ICE 2&3W. Emission taxes are not
directly included in the annual vehicle tax but are applied to luxury tax calculations,
which most 2&3Ws are exempted from. Raising 2&3W emission standards for both
domestic production and import, while giving more taxes to older 2&3W, could also
further discourage the use of ICE 2&3W. Additionally, given the current high ownership
of ICE 2&3W, a scrappage program can accelerate the adoption of E2&3Ws.
Vehicle disincentives at the local level, such as in Jakarta, often already exempt 2&3Ws
from traffic restrictions and other push policies, so there is a limited opportunity to
provide preferential incentives for E2&3W compared to ICE 2&3Ws without any reform
in the current push policy framework. Measures such as an odd-even policy,
congestion charging, or a low-emission zone, could be applied to limit the ICE 2&3W
while also improving the air quality and reducing GHG emissions.
3. There is a need for a comprehensive urban traffic guideline to effectively and equitably
govern E2&3W and 2&3W in general.
The introduction of E2&3W which has different characteristics compared to ICE 2&3W and the
wide variety of E2&3W models have led to various traffic issues. E-bikes and e-mopeds are
currently in a gray regulatory area, somewhere between conventional bicycles and motorized
ICE 2W, since they are faster than a conventional bike but not as fast as a typical motorized 2W.
The existing urban traffic policies for e-bikes are not sufficiently comprehensive thus resulting
in the overall banning of e-bikes in some cities.
In addition to clear regulations on E2&3Ws operating areas, policies on vehicle registration and
required safety equipment should be made as clear as possible. Most of the current
regulations only apply to medium and high-powered motorized vehicles without clear policies
for the lower-powered motorized vehicles, which should include most e-bikes.
3.2. Renewable Energy Policy Framework and Anchors for

Integration to EV Charging Infrastructure
To optimize the emission reduction benefit of the shift to electric vehicles, including E2&3W,
improvement of renewable energy mix in national grid as well as integration of renewable
energy sources in local grids are needed.
1. Several challenges still persist to improve renewable energy mix in Indonesia
In the electricity sector, there are still several challenges related to renewable power
development that need to be overcome:
a. Coal-fired power plants plug the penetration hole of renewable power

With the oversupply of electricity in Indonesia, renewable energy supply cannot be
increased significantly without shaving off coal plants' capacities. However, current
regulations still open opportunities for CFPP to dominate the power system.
b. Improved regulations are needed to encourage renewable energy investment

Several regulations that exist today actually hinder the investment stream for
renewable power. A prime example is the determination of renewables tariffs that are
based on the power generation cost (BPP) of PLN and the high local content
requirements (LCRs), especially for solar PVs. Tariff setting has been an issue for the
IPPs. The renewable tariff is not attractive to investors due to the small amount of BPP.
Furthermore, the tariff is changing annually following the change in BPP. For the latter,
while the government imposes high LCRs for solar PV developers, the local industry
has not scaled significantly, thus creating high costs and subpar quality products. Also,
BPP does not reflect a true cost of generation and thus, is not a reliable benchmark for
renewable prices. This issue has been hindering the bankability of renewable projects
and lessening their commercial attractiveness.
On the other hand, various incentives may not work effectively in practice. For
example, where tax incentives are offered, companies can benefit from a 100%
reduction in corporate income tax for a period of 5 to 20 years. Nevertheless, in the
first five years, a typical company has still not made a profit on the project to build the
renewable energy power plant, so even without the tax exemption, the company is not
required to pay corporate income tax.
In order to tackle the issue, the government has developed the Presidential Regulation No.
112/2022 which includes the notion of renewable tariffs to replace the MEMR Regulation No.
04/2020 that determines renewable tariffs to be based on local BPP. However, instead of
implementing Feed-in-Tariffs (FiT) which has long been awaited by industry players, the
government imposes a ceiling tariff that varies based on the types of renewable energy power
plants and its locations. Under the ceiling tariff scheme, the tariff offered and negotiated
between an IPP and PLN must not be higher than the ceiling tariff for that particular type of
renewable energy power plant. Even though the tariff is now no longer benchmarked against
the generating BPP for non-renewable energy, the tariff is still lower than what is expected
from the Feed-in-Tariffs (FiT) mechanism. Along with several incentives provided in the
presidential regulation as well, more incentives or better renewable tariffs are still needed to
increase the profitability and bankability of renewable energy projects, thus boosting the
development of solar PV and other renewable power.
2. Fossil fuels still dominate power system planning in the “Green” RUPTL
Even though there is a renewable energy mix target from the Central Government for
renewable energy mix in 2025 and 2050, it is still not addressed and derived properly to the
technical documents in the electricity sector. While the 2021-2030 RUPTL is claimed to be the
greenest RUPTL, PLN only targets to raise the current share of renewables to 23% by 2025 from
the current status of 15%. However, to achieve a 23% share of renewables in the primary energy
mix, the country would need around 34% share of renewable power capacity in the power
sector. Furthermore, the renewables share will only increase to 24.8% in 2030, noting a tiny
progress during 2025-2030. On the other hand, coal-fired power plants are still considered
crucial and will play a major role in the power sector. The coal generation will have around 59%
to 64% of the share by 2030 depending on the scenario, therefore holding back the penetration
of renewable power and putting the electricity sector at risk of stranded coal-fired power plant
assets.
3. More supporting policies are needed to boost solar PV adoption for renewable energy
integration in charging infrastructure
A study estimated that installation of solar PV at a typical 12 slots battery swap station in
Greater Jakarta area can provide around 3.35% charging demand on an annual basis29. The
financial viability of solar integration increases as the electricity tariffs charged by PLNs
increase. The highest assessed electricity price is IDR 1,447.9 with an estimated return on
investment of 8.4% and a payback period of 8 years. In addition, since typical local grid
installation for a battery swap station only cater electricity load under 197 kVA, it is still
classified as a low voltage connection which does not require an additional infrastructure to be
built30.
29
ITDP Indonesia. (2021). Road Map and Timetable of Two-Wheeler Electrification in Greater Jakarta. Study conducted
under UK PACT GRCF.
30
Ibid.
Previously, the net metering scheme for solar PV was put at a ratio of 1:0.65, but it has been
updated to 1:1 in the MEMR Regulation No. 26/2021. This update can shorten the payback period
of solar PV installation by around one year. However, it is still considered unattractive to the
majority of small-scale (batery swap provider or residential) consumers who expect to have
less than 7 years of payback period. Moreover, another barrier still persists, which is the lack of
attractive financing options to lower the high upfront cost. The government can offer
low-interest rates and long-term soft loans and/or tax incentives for homes that utilize rooftop
solar PV.

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Supporting E-mobility focusing on Electric

Two- and Three-wheelers and Policies on

The transport sector significantly contributes to greenhouse gas emissions in Indonesia,

1. Baseline Assessment of Two- and Three-Wheelers in Indonesia

Indonesia's transportation landscape is predominantly shaped by motorized two-wheelers

Current 2W Market in Indonesia 4

Fuel Economy Baseline of 2W in Indonesia 10

Motorized 2W Fleet Emission Factor 13

Current Policies and Standards for 2&3W 24

Current Policies for Renewable Energy 32

Figure 1. Private vehicle ownership in Indonesia, 2015-2019

Figure 2. New motorized 2W Sales in Indonesia

1.2. Engine Displacement

Figure 3 (left). New motorized 2W Sales Based on Brand

Figure 6. New motorized 2W Sales Based on Body Type

2.1. GFEI Methodology

Figure 7. GFEI Fuel Economy Calculation

2.2. Data Collection

2.3. Fuel Economy Baseline Calculation

Table 1. Motorized 2W type for calculation sample grouped by brand

Number of Motorized 2W Sales

Total Sales (unit) 5,930,698 6,452,156 6,627,203 3,734,047 5,182,787

Top 95% Sales (unit) 5,642,789 6,135,571 6,304,979 3,552,209 4,931,947

Top 95% Sample Breakdown

Gesits 22,600 26,522 45,561

Honda 4,285,689 4,667,429 4,805,428 2,836,058 3,783,514

Kawasaki 60,552 33,464 33,016 44,293 76,796

Suzuki 32,420 35,390 28,575 12,149 53,632

Viar 19,680 25,200

Sample Percentage 95.15% 95.09% 95.14% 95.13% 95.16%

3.1. National 2W Fuel Economy Between 2017-2021

Figure 8. Motorized 2W Weighted Average Fuel Consumption

Figure 9. Motorized 2W Fuel Consumption Based on Engine Capacity

Figure 10. Motorized 2W Sales Share Based on Engine Capacity

Figure 11 (left). Motorized 2W Fuel Consumption Based on Brand

4.1. 2021 Emission Factor Baseline

Table 2. Energy and Carbon Assumption for Life Cycle Analysis

Life Cycle Stage Emission or Energy Factor

Vehicle Production 41.8 MJ/kg vehicle6

Fuel Production 225 g CO2/litre7

Fuel Combustion 2416.8 g CO2/litre8

Battery Production 500 MJ/kWh9

Electricity Production Vary between each year10

Vehicle Disposal 852 g CO2/kg vehicle11

Table 3. Assumptions for motorized 2W Lifecycle Analysis

Motorized 2W Lifetime 10 years

Annual VKT 10,620 km12

ICE motorized 2W Fuel Consumption Improvement 0.5% annually13

Electric motorized 2Ws

Battery Capacity 1.44 kWh/battery14

Battery Replacement during Lifetime 3 times15

Electric motorized 2W Fuel Consumption 0.2% annually16

Table 4. motorized 2W Classification Based on 2021 Data

Average Weighted Average Fuel

E-Scooter 0.92% 94.5 0.029 kWh/km

Scooter Small Scooter 65.6% 96.7 0.018 l/km

Large Scooter 29.88% 129.8 0.023 l/km

Motorcyle Large Motorcyle 8.79% 130.8 0.026 l/km

Small Underbone 2.44% 105.9 0.017 l/km