What is Indonesia's pathway to limit global warming to 1.5°C?

Our Highest Possible Ambition (HPA) scenario suggests that direct CO₂ emissions from the transport sector would peak around 2025 before declining rapidly towards full decarbonisation by the late 2050s.

During this transition, energy demand would temporarily increase, before shifting to a downward trend, achieving a 27% reduction from 2023 levels by 2050. This dynamic reflects the combined impact of rising energy demand due to increased car ownership and a restructured energy mix. Such restructuring reflects a short-term rise in oil use until 2030, followed by a steep decline as oil approaches near phase-out by 2060. By 2050, electricity’s share in the energy mix would grow significantly reaching 78%, providing efficiency gains, with biofuels usage phasing down, reaching 4%.

During this period of transition, although car ownership may continue to rise, overall energy demand in the sector would decrease until 2050, reaching 27% below the 2023 levels. This is largely due to the higher efficiency of electricity as a fuel, which is 2–4 times more efficient than fossil fuels, yielding substantial energy savings. These efficiency gains will help meet Indonesia’s growing demand for transport energy, with far lower overall energy consumption compared to a fossil fuel-dominated energy mix. After 2050, in a highly electrified energy system, energy demand would start to grow, primarily driven by the expansion of car ownership. Synthetic fuels emerge by 2060, primarily in transport modes less suited to electrification like aviation and shipping, reaching 9% of the energy mix.

Recent policies will have conflicting impacts on the decarbonisation of the transport sector. Recent oil market pressures have accelerated implementation of the B50 policy, scheduled to begin on 1 July 2026, which increases the mandatory blending rate for palm-based biodiesel from 40% to 50%, with a view to full adoption by 2028.³3 However, expanded biomass use raises significant concerns regarding the role of palm oil in deforestation.⁴4

The BRT network, established under the Buy-The-Service programme in 2020, has successfully shifted 62% of users from motorcycles to public transport.⁵5 However, reduced public funding and a lack of commitment from local governments has led to reduced operational routes, stalling progress in shifting transport modes.⁶6

Meanwhile, Indonesia has ended financial incentives for imported EVs and raised the local content requirement from 40% in 2026 to 60% in 2027, which could suppress EV sales without clear policy direction to support deeper local value chain development.⁷7 In 2025, the termination of electric motorcycle incentives caused sales to plummet by 80% in the first quarter, compared to the same period in the previous year.⁸8 While the government is planning to accelerate electric motorcycles adoption, it remains unclear what the implementation plan would be, casting doubts on the credibility of its decarbonisation workplan.⁹9

To accelerate decarbonisation, Indonesia would need to introduce targeted policy support and financial incentives to expand low-carbon public transport, scale up electrification across various transport modes, develop ultrafast public charging infrastructure, and promote stricter fuel economy standards and compliance.¹⁰10