Indonesia’s Ambition in Electric Cars: Hope for Energy Transition and Emission Reduction?
By: Ditria Nabila
As one of the largest coal producers in the world many may think that Indonesia will be left behind in terms of green energy. However, In an effort to reduce carbon emissions and capitalize on Indonesia’s metal resources, President Joko Widodo issued a decree establishing government assistance for the Electric Vehicles industry. By 2030, the government hopes to have 13 million electric motorcycles (such as converted conventional motorcycles) as well as 2.2 million electric automobiles on the road. Indonesia has also set its eyes on being an EV powerhouse for Asia, announcing that it intends to sell exclusively electric vehicles and motorbikes by 2050 (Taylor, 2021). It was discovered that Indonesia, Southeast Asia’s largest economy, is seeking to cash in on the global transition to electric vehicles (EV) by trying to lure foreign investment from the likes of Elon Musk, founder and CEO of Tesla. Indonesia has an interest in cooperating with Tesla, this allows for hope for Indonesia to invest more into renewable energy sources and abandon, or at least, reduce coal consumption or production, while Musk himself said he was very interested in the future of Indonesia. Musk further stated that he would look, from Tesla and Space X’s point of view, to try to do more partnerships in Indonesia.
That being said, it is natural to wonder why Elon is so interested in Indonesia’s future prospects? Nickel is the answer. According to ABC Australia together with Australia, Indonesia has the largest nickel reserves in the world, according to the US government agency the United States Geological Survey (USGS). The USGS reports that mine production in Indonesia increased by 30 percent over 2021, and is linked to the “sustainable operation” of projects across the archipelago (ABC Australia, 2022). Not only nickel, Elon Musk also mentioned that Indonesia’s high population as well as consistent economic growth were factors that attracted him to the most populous country in Southeast Asia. However, due to several reasons that threaten the difficulty of obtaining nickel, Tesla also has plans to use alternatives to nickel. Some economic observers from Indonesia say that the government must be observant, but there are also those who are confident that Tesla’s plan to replace battery raw materials from nickel to iron does not pose a threat to Indonesia. The reason is that Batteries with a cathode aka lithium, iron, and phosphate positive pole (LFP) are usually used for public transportation buses because they are more affordable. It also helps free up manufacture of battery cells with other, more energy-dense chemistries, allowing for the creation of additional long-range cars (Lambert, 2022). The weakness of this product is the low conductivity value. The energy capacity is smaller than that of a nickel cathode battery.
Coordinating Minister for Maritime Affairs and Investment, Luhut Binsar Pandjaitan explained the development of Tesla’s investment in Indonesia. He elaborated that, currently they are still negotiating. Reflecting on the past, it would be unwise to jump to the conclusion that Tesla will choose Indonesia considering that Tesla was initially interested in India because India has a similar ecosystem to its headquarters in Silicon Valley, California, USA (Umah, 2022). That being said, although Indonesia appears to have become a strong candidate for Tesla’s investment partner, there has been no concrete agreement between the two parties. Tesla has not explained why there is no definite agreement, despite the fact that Indonesia has emerged as a viable possibility. However, if the investment is realized, Indonesia can help to produce equipment for as many as 3 million Tesla cars a year.
In addition to Tesla, Ford will also invest in Indonesia’s electric car industry (Muhammad, 2022). According to Luhut Binsar Pandjaitan, the arrival of Ford is in line with the company’s interest in investing in Indonesia, after the Tesla electric car company team visited the country some time ago. Minister Luhut then explained that Indonesia was chosen by Ford because it was considered the most prepared country. In addition to the aforementioned statement, when compared to other countries, Luhut stated that Indonesia was the strongest and most profitable area to invest in electric automobiles. North Kalimantan, for instance, can generate 265 gigawatt of energy and create 3 million electric vehicles (Kurniawan, 2022). Hence, that is a key factor in Ford’s decision to invest in Indonesia. The Ford company’s investment in Indonesia is a pretty good indication of how passionately the Indonesian government perceives electric vehicles.
However, if Tesla’s Indonesian branch plant is to be operational, which means massive nickel mining will occur, it is logical to raise the question of whether it is good news for local people and will they gain the right to breathe clean air due to at least reduced coal production? Nickel may mean reduced coal production but the right to breathe clean air remains under threat. A 2019 study by AEER found that a coal-fired power plant used for nickel production in the city of Morowali, Central Sulawesi, had caused respiratory infections (ARI) in local residents (ABC Australia, 2022). AEER notes that when small-scale nickel mining operations began in Morowali in the late 2000s, traditional farmers in the area were affected by flooding exacerbated by extractive industries (Setiawan, 2021). Morowali is now the location of the largest nickel-based industrial estate in Indonesia, funded by domestic and Chinese investors. The coordinator of the Mining Advocacy Network (JATAM) in Central Sulawesi said the Indonesian government should also consider the consequences for residents if Tesla builds facilities in Sulawesi (ABC Australia, 2022). In order to keep up with the progress of other nations, it is a good thing that the Indonesian government has ambitious plans for electric vehicles. This goal does not, however, imply any environmental control. All things considered, it is safe to conclude that Indonesia’s government ambition for electric vehicles does not necessarily mean that nature will be strengthened, or the freedom and right of those who live close to mining zones to breathe clean air will be achieved. In other words, due to natural exploitation, massive nickel production might still endanger the wellbeing of local residents.
Ditria Nabila is a member of the Research and Development Division of FPCI UGM. This article presents her own views and not necessarily those of FPCI UGM
References
ABC Australia. (2022). Warga Mungkin Kehilangan ‘Hak Menghirup Udara Bersih’ Bila Tesla Investasi Nikel di Indonesia. detiknews. Retrieved 11 June 2022, from https://news.detik.com/abc-australia/d-6093570/warga-mungkin-kehilangan-hak-menghirup-udara-bersih-bila-tesla-investasi-nikel-di-indonesia.
Kurniawan, R., 2022. Prinsipal Ford Datang ke Indonesia Pekan Depan, Mau Investasi Lagi?. [online] KOMPAS.com. Available at: <https://otomotif.kompas.com/read/2022/06/15/080200915/prinsipal-ford-datang-ke-indonesia-pekan-depan-mau-investasi-lagi-> [Accessed 18 June 2022].
Lambert, F., 2022. Tesla is already using cobalt-free LFP batteries in half of its new cars produced. [online] Electrek. Available at: <https://electrek.co/2022/04/22/tesla-using-cobalt-free-lfp-batteries-in-half-new-cars-produced/> [Accessed 18 June 2022].
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