Rapid development of electric vehicles looks set to overtake the biofuel infrastructure that Indonesia is investing heavily in, and could render the country’s alternative-fuel model redundant. ndonesian policy think tank the Institute for Essential Services Reform (IESR) says that under a business-as-usual scenario, demand for biofuel in Indonesia will increase to 190 million metric tons by 2050. But if the EV market share increases, biofuel demand could end up being 93 million metric tons by 2050. The government is pushing for the development of EVs in the country, with the Indonesian Chambers Of Commerce and Industry (KADIN) predicting the country could become the world’s largest producer of lithium batteries and EVs thanks to its abundant reserves of nickel, a key component in EV development.
The aim is to both ease Indonesia’s dependence on crude oil imports and make the shift to what the government touts as a cleaner alternative fuel. The program is currently at the B30 stage, which means the diesel sold at the pump contains a 30% blend of palm oil-derived biodiesel. It’s expected to reach the B50 stage, a 50:50 blend, by 2025, according to the county’s mid-term development plan. The future potential demand for biofuel being uncertain, increasing the biofuel mandate too aggressively could risk the infrastructure becoming stranded assets. In the future, there will be a competition between biogasoline and electric vehicles because we’re talking about biogasoline refineries that will be built in the next five years, which will keep operating for 20 to 30 years. The adoption of EVs is expected to keep increasing, accounting for 69% of all vehicles on the road by 2050 if Indonesia follows China’s trajectory, according to a decarbonisation scenario from the New Climate Institute.