ICCT: A review of motor vehicle fuel demand and supply in Indonesia

ICCT: A review of motor vehicle fuel demand and supply in Indonesia

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Demand for motor fuels is increasing in Indonesia. Data from the Indonesian Ministry of Energy and Mineral Resources shows that from 2013 to 2018, transportation-related diesel consumption grew by 10% and gasoline consumption grew by 15%. This demand is expected to continue to grow as the economy prospers. Meanwhile, as shown in the table below, in recent years there has been a gap between demand and domestic supply for both diesel and gasoline.

To address this gap, Indonesia has boosted domestic supply by increasing utilization of existing refineries, providing subsidies to biofuel producers (particularly producers of palm oil biodiesel), and implementing mandates on biofuel blending in diesel fuel. While fuel imports are another way the Indonesian government has met increased demand, as a percentage of total domestic fuel consumption, fuel imports have actually decreased overall in recent years. Still, the need for imports and weak domestic fuel standards put the quality of fuels in doubt, and fuel quality has direct consequences for the environmental performance of the vehicle fleet. Given this, future working papers will explore how fuel and vehicle policies are interacting in Indonesia by analyzing fuel price setting policies, fuel quality standards, and more.

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SOURCE: ICCT



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