A Sustainable Asset Valuation of a Net-Zero Transport Strategy in Indonesia

Indonesia, home to the fourth largest population in the world, is exposed to significant climate change risks, experiencing high air pollution levels and having much of its population in low-lying areas prone to flooding. At the same time, the country's population and urbanization rates are expected to significantly increase in the coming decades.

Indonesia's transport sector is the most energy intensive sector in the country, and among the most polluting. For this reason, transforming the transport sector is crucial for reducing greenhouse gas emissions and improving energy efficiency in the long term. The electrification of transport—coupled with a high renewable energy share in electricity generation and a shift from individual, motorized transport modes to public transport and non-motorized modes—could help to decarbonize the transport sector in Indonesia.

The public and private sectors in Indonesia both play significant roles in addressing the ever-increasing environmental challenges. National and regional governments can promote policies that support decarbonization and invest in public transport infrastructure, encouraging individuals to adopt more sustainable transport practices. Similarly, the private sector can support this through investing in and improving innovative electric vehicle technologies.

For this assessment, we considered and combined interventions from both the public and private sectors in Indonesia—investments in public transport, private vehicle electrification, teleworking, and decarbonization of the electricity supply—into net-zero transport strategies. We used our Sustainable Asset Valuation (SAVi) methodology to assess and compare these strategies, demonstrating their economic, social, and environmental added benefits and avoided costs.

Key findings include:

• Combining energy and transport reforms is critical to attaining net-zero transport in Indonesia by mid-century; therefore, decarbonizing the energy supply should be an important component of any transport strategy.
• Promoting strategies that combine the electrification of private vehicles with renewable energy sources and investments in public transport infrastructure yield the most substantial societal benefits, such as avoided traffic accidents costs, avoided carbon dioxide emissions, and avoided internal combustion emission vehicle costs.
• The transformation of Indonesia's transport sector requires a collaborative approach that encourages behavioural shifts and promotes investments from both the public and private sectors.
• Integrating health considerations into the broader framework of transport reforms enhances the overall impact on both societal well-being and economic efficiency.