Danantara: Transport Electrification Offers Easy Path to Emission Reduction
For developing nations such as Indonesia, we need to focus our attention on ‘easy to abate’ sectors that are more readily capable of electrification.
Speaking at the Indonesia International Sustainability Forum held in Jakarta on Tuesday, Rachmat Kaimuddin, Director of PT Danantara Development Management Fund, stated that the electrification of transport is one of the simplest methods to reduce carbon emissions.
According to Rachmat, transport electrification in Indonesia already possesses mature technology and is economically advantageous. Furthermore, Indonesia is currently building the entire electric vehicle supply chain, characterised by the downstreaming of nickel into batteries for electric vehicles.
“Let us maximise our efforts there, as it will certainly create the entire supply chain and ecosystem,” said Rachmat.
Furthermore, he highlighted households as another sector ripe for electrification. Rachmat suggested that electrification in the domestic sector could begin by replacing traditional gas stoves with electric ones.
“A large portion of household emissions comes from cooking. If we can reduce emissions from cooking activities, electrification will be very easy to implement,” Rachmat noted.
During the event, he encouraged the public to engage in electrification through daily activities before focusing on reducing carbon emissions from the industrial sector.
“The industrial sector is indeed difficult to decarbonise, but for a developing country like Indonesia with a middle-income GDP, it is easier to focus on electrifying sectors where emission reduction is more achievable,” said Rachmat.
According to the Financial Services Authority (OJK), the disbursement of financing for electric vehicles (EV) or hybrid vehicles by multifinance companies grew by 34.67 per cent year-on-year to Rp26.20 trillion as of August 2024.
Agusman, the Executive Head of Supervision of Financing Institutions, Venture Capital, Microfinance Institutions, and Other Financial Service Institutions (PVML) at OJK, stated that EV financing continues to grow and has become a key area of expansion for multifinance companies.