Towards more efficient fuel use

By Otto Soemarwoto

JAKARTA (JP): Fuel has been heavily subsidized by the government. Before the recent price hikes the subsidies amounted to Rp 27.54 trillion consisting of Rp 16.17 trillion for oil and Rp 11.37 trillion for electricity. In accordance with the IMF agreements the subsidies must be gradually abolished. Consequently, the prices of fuel and electricity were increased. This, however, caused protests and riots, and after consultation with the legislature the government reduced the price increases.

In theory the fuel subsidies are to help the poor. For this reason about 68 percent of the total subsidies were for kerosene, supposedly the main fuel used for cooking by the low and the low- middle income people. However, according to Potensi Desa (village potential) statistics of 1990, in the rural areas only in a very small percentage of kelurahan (subdistricts), i.e 3.2 percent, was kerosene used for cooking. In most kelurahan the people used wood. Therefore, most villagers did not benefit from the kerosene subsidies. Even in urban areas 35.8 percent of kelurahan used wood. In the middle and high income families gas is the primary fuel for cooking. Wood is not used at all.

Another important use of kerosene is for lighting. In the villages kerosene lamps are used for reading mostly by the well- to-do families, and even then only until about 8 p.m. to 9 p.m. After that very simple small wick lamps are used. The poor families mainly use this latter type of lamp. In cities of course, electricity is used for lighting. But lower income families use only a small amount of electricity, usually just a few low wattage lamps. The richer people become, the more they use electricity for all kinds of electric goods, such as TVs, electric and microwave ovens, kitchen utensils, refrigerators and washing machines. It is not unusual to find the entire house of the rich air-conditioned.

A major use of oil as fuel is for transportation. Many high income families have more than one car, often three or even more, one for the husband, one for the wife, one for the children and one for the maid to shop for daily needs. In upper income families the adult children may each have a car for their own use. Before the current economic crisis middle income families were also eager to have more than one car and the upper-lower income families were starting to acquire cars, albeit old second- hand ones. As a result the rate of growth for the number of cars has been high, and consequently, also the rate of growth for the volume of traffic. Hence, although many new roads have been built and existing ones broadened, the roads have not been able to keep pace with the increasing volume of traffic, even in large cities, like Jakarta, where highways and toll roads have been constructed. Increasingly, troublesome traffic jams occur in many cities.

People have electrical household goods and cars not merely to enjoy their services, but because they have become important symbols of status, success and modernity. Being symbols they have to be shown conspicuously. This in turn has a strong demonstration effect, driving the desire of other people to own them too. On the one hand this has the positive effect of stimulating the economy, but on the other it leads to a highly resource depleting and polluting lifestyle. Cars, the number one status symbol, are used for short distances. This can be inferred from the statistical data of 1996 that most households live at distances of less than 4 km from shops and markets, schools and recreation areas. This can also be clearly seen from maps of cities like Bandung, Yogyakarta, Denpasar, Medan and Ujungpandang, just to name a few. Even in the city of Jakarta thousands of households are located within a distance of 5 meters of Jl Sudirman-Jl Thamrin and Jl Rasuna Said, the main business centers of Jakarta. People living in Kebayoran Baru also live not very far from shopping centers and public buildings, such as schools, mosques and churches. In fact, the spatial structure of cities in Indonesia is such that offices, shops, markets, schools and public buildings are interspersed with residential houses. Of course, there are many people who do live at considerable distances from their workplaces, particularly with the proliferation of satellite towns around major cities. But the important point is that undoubtedly many car trips are of short distances of less than 5 kilometers, which is a very inefficient use of cars and gasoline. The inefficiency is made worse by the fact that in the upper and middle income families cars often carry only one passenger. The traffic jams and one-way traffic systems also increase the inefficiency of fuel use.

Traffic is also an important cause of heat islands in cities. These are areas of higher temperatures surrounded by cooler areas. There is no quantitative data on heat islands in Indonesian cities. Qualitatively, however, such heat islands are being experienced by people in the larger cities. People who have resided for a long time in Bandung, say since the 1950s, complain that Bandung is not cool anymore. While in former years sweaters had to be worn in the evenings and early mornings, they are not needed now. Because of the heat islands, more middle and upper income families install air-conditioning in their homes. Their cars are also air-conditioned. But air-conditioning also contributes to higher heat islands. The lower income people, however, travel on public transportation which is often crowded and does not have air-conditioning. Therefore, as we go up the economic ladder more fuel is being consumed per family, both directly to fuel cars and indirectly by consuming more electricity. Consequently, the higher the income, the more the fuel subsidy is enjoyed. As mentioned above, even the kerosene subsidy does not get to the poor people. Clearly, this is an unfair system. The increase in fuel prices exacerbates the unfairness, because the lower income families are harder hit by the higher fuel prices.

A fairer system would be to force those who use more fuel to pay an increasing tax for private car ownership, preferably by a steep progressive system, i.e. the second, third, etc. car would have steep increases in tax. Conversions of green areas for parking lots could be limited and heavily taxed, because they also contribute to the problem of overland flow and floods, and the creation of heat islands. As a consequence, parking lots would be reduced and parking fees would be increased. These measures would force the people to use their cars more efficiently which would result in less fuel consumption, and hence, also less government subsidy.

Another benefit would be decreased air pollution which, according to the World Bank, has caused a loss of about US$200 million per year, just for Jakarta alone. For the whole country the loss would presumably exceed $1 billion, since cities like Bogor, Bandung, Semarang, Yogyakarta, Surabaya, Medan, Palembang and Ujungpandang have large populations and many cars. The prevention of health-related losses would be of the order of the IMF installment. Much of this benefit would go to the poorer people who are daily exposed to high levels of air pollution, e.g. the street vendors or kaki-lima. These are also the population group who can ill afford to pay additional health expenses.

Short distance trips can be conveniently done by walking and bicycling. To encourage this the government should formulate a new transportation policy in which these two modes of transport are included as integral components. As a consequence, safe and pleasant pedestrian walks and bicycle lanes would have to be constructed in cities and between towns and villages. The construction of pedestrian walks and bicycle lanes would be cheaper than roads for motorized vehicles. They could be planned as part of the padat karya (labor intensive) projects. Mass use of bicycles would create many small- and medium-scale enterprises (SME) and many jobs for the production of bicycles and their spare parts, assembling and marketing, particularly since these SMEs would not depend on many dollars. Therefore, the padat karya projects for the pedestrian walks and bicycle lanes and the SMEs would help to overcome the economic crisis and its impacts. The growth of SMEs would also lessen the socioeconomic gap between the poor and the rich. Since about 30 million families live within a distance of 4 km from shops/markets, schools, recreational areas and other public buildings, the potential domestic market for bicycles is very large. But high quality bicycles also have a good potential for export. Taiwan, for example, exports 3 million bicycles to Europe.

It should be stressed here that this is not a proposal to substitute cars with walking and bicycling. These two modes are for short distance travel with light burdens, while motorized vehicles are for long distances and heavy loads. In other words the motorized and non-motorized modes of travel are complementary to each other. To stimulate walking and bicycling high level government officials and the rich should give the example that there is nothing wrong with walking and bicycling for short distances. The IMF and the World Bank could play a positive role by suggesting to the government that this would be an economically appropriate and environmentally sound way of reducing fuel subsidies which would contribute to overcoming the economic crisis.

Prof. Dr. Otto Soemarwoto is an expert on environmental matters, based in Bandung.