The largest archipelago in the world, Indonesia, is no stranger to the impacts of climate change. From increasing annual rainfall while experiencing drought on one side of the country, floods, rising sea levels, and biodiversity loss, the country’s risk to climate change is without a doubt. Hence, the government is pushing more green initiatives to fight climate change while fostering economic growth. One of the country’s projects is promoting sustainable transportation in Indonesia to lessen its reliance on fossil fuels, especially in the automotive industry.
In December, the Asian Development Bank (ADB), with PT TBS Energi Utama Tbk (TBS), signed a $10 million funding agreement to boost electric mobility and lower greenhouse gas emissions in Indonesia. This project encourages sustainable transportation in Indonesia by improving the availability of electric motorcycles (e-motorcycles) and battery-swapping stations (BSS).
A $5 million loan from ADB and an additional $5 million from the Australian Climate Finance Partnership (ACFP), which ADB manages, make up the funding. Through the installation of a BSS network and the purchase of e-motorcycles, TBS will be able to invest in PT Energi Kreasi Bersama (Electrum) and cut greenhouse gas emissions by at least 123,000 tons annually. DBS Indonesia becomes a counterpart lender to ADB.
With over 17,000 islands and long coastlines, Indonesia is one of the most climate-vulnerable countries. Due to its geography, rapid population growth, and diminishing natural resources, the archipelago is experiencing the different blows of climate change. According to Indonesia’s Climate Risk Profile, land use is the country’s top emitter of greenhouse gases (GHG). Between 2000 and 2017, land use and land use changes were responsible for 52.3% of the country’s GHG emissions.
Meanwhile, fossil fuels provide most of Indonesia’s energy, and the country is one of the biggest producers and consumers of highly polluting coal worldwide. According to an article from the Associated Press, the country has more than 250 coal-fired power plants, with more being built. Add to that, Indonesia’s energy sector released more than 650 million tons of carbon dioxide in 2022, the seventh-highest in the world.
One of the industries that has been rapidly increasing its energy demand is the transportation sector. While it is a global phenomenon, in 2022, Indonesia’s transportation industry consumed 2.4 million TJ, proving that it is the largest automotive market in Southeast Asia. According to a study from Kyoto University, 85% of this energy was from road transportation. In the same year, with the 148 million two-wheeler vehicles in Indonesia, of which only 26,000 were electric.
Suzanne Gaboury, ADB Director General for Private Sector Operations, acknowledges that with Indonesia’s rapid urbanization comes an increase in private vehicle ownership, especially motorbikes. With ADB’s collaboration with TBS, the initiative hopes to improve e-motorcycle dependability and provide more options for sustainable transportation in Indonesia. “As ADB’s first private sector financing for the country’s e-vehicle industry, the project can demonstrate the commercial viability of e-motorcycles and encourage further investments to promote their use,” she added.
TBS Co-Chief Executive Officer Pandu Sjahrir said, “This collaboration with ADB accelerates our efforts to redefine transportation in Indonesia. We aim to deliver eco-friendly, affordable, and sustainable mobility for the public while supporting national targets to combat climate change. Electrum is more than just a business—it is our commitment to building a cleaner and more resilient future for Indonesia.”