UGMToyota/TMMIN/TMAP-EM

PT PertaminaMizuho Information & Research Institute

16 December 2013

UGMToyota/TMMIN/TMAP-EM

PT PertaminaMizuho Information & Research Institute

16 December 2013

Energy Best Mix for Road Transportation in Indonesia

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� It is only a transportation sector which oil demand increases greatly.� The number of the car ownership is a huge expansion in ASEAN.� It is necessary to make a `Energy Best Mix in Transp ort Sector` to

reduce the fuel consumption, CO2 etc.

Oil Demand and Vehicle Population

Transportation

Domestic/ business use

Industry

Power Generation

Petrochemistry

（出典）（出典）（出典）（出典）IEA

Oil demand according to usage Vehicle population

0

100

200

300

1980 1990 2000 2010 2020 2030 2050

(Million)

ASEAN

0

2

4

6

8

10

1980 1985 1990 1995 2000 2005 2010

Indonesia(thousand)

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Energy Supply/Demand in Indonesia

�Indonesia depended on Import Oil since 2004. �Well balanced Energy Mix is promoted.�Quite high New and Renewable Energy share is targeted in 2025.

Oil

Coal

Gas

GeothermalHydro Power

2006

Oil

CoalGas

NRE 17%

NRE: New and Renewable Energy

2025 Target

Bio Fuel : 5%Biomass,Nuclear,hydro/Solar/Wind:5%Geothermal: 5%Liquefaction Coal: 2%

What should be done to achieve the policy target?

Supply

Demand

Gap

Oil Supply/Demand in Indonesia

4

Expansion of Our Activity (Transport Sector)

Finally, it is necessary to make theASEAN energy grid .

1st Step

�Making the Model�Study in Indonesia

2nd Step

�Study in each countryin ASEAN

3rd Step

�Study of ASEAN Energy Best Mix�ASEAN Energy Grid

It is necessary to study about the optimum energy mix in each country .

Energy situation is quite different in each country .

Make the model and execute the studyin Indonesia .

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Energy Best Mix in Indonesia

TargetMinimization of Energy consumption , CO2 emission and Fiscal expenditure (include investment in infrastructure).

Best Energy Balance Scenario

Vehicle population, Travel distance, FE etc.

Gasoline/Diesel fuel/CNG/Bio rate

Infrastructure cost, Subsidy etc.

Making the Model �Develop the model which examine the influence of fuel. *Base is IEA/SMP model

�A peculiar condition on each country is used

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INDONESIAN OIL PRODUCTION

Business as usualOn-going projectsOld fieldsCepu Block

OptimizationMarginal fieldsNew fieldsNew potential

Annu

al Oi

l Pro

ducti

on

(thou

snad

sof b

arre

ls)

Indon

esian

Minis

try of

Energ

y & M

ineral

Resou

rces

7

Fossil Fuel 2009 2010 Annual Production

Yearsd

Oila,b 7.99 BBO 7.76 MBO 0.345 BBO 14Gasa,c 159TSCF 157 TSCF 3.23 TSCF 22Coalb 125 BT 126.2 BT 327 MT 49

NATIONAL ENERGY POTENTIAL

a BP Statistical Review of World Energy 2011b Indonesian Ministry of Energy & Mineral Resourcesc BP Migasd 7% annual increase of energy consumption

Limited reserves requires measures to extend resource

availibility

Energy mix

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Model

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�Model development�Mode：：：： Passenger car, Freight car

→ Passenger Car, Bus, Truck, Motorcycle�Fuel：：：： Gasoline, Diesel, CNG, Biofuel�Period：：：： Present - 2030�Output：：：： Energy consumption, WtoW CO2 emission,

Cost evaluation (expense by government by subsidy, infra cost, …)�Base model：：：： IEA/SMP model ※※※※SMP: Sustainable Mobility Project

MODEL DESCRIPTION

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�IEA SMP model�Calculation Method ：：：： ASIF

Activity(km/year)

Structure(mode and

vehicle type)

Intensity(fuel efficiency)

Fuel type(gasoline, diesel…)

×××× ×××× ××××

＝＝＝＝

Fuel use CO2 emission

Length a vehicle runs

Length a vehicle runs

By car, by rail, by bus, ...

By car, by rail, by bus, ...

Fuel efficiency(ℓ/km））））

Fuel efficiency(ℓ/km））））

Gasoline, Diesel, CNG ...（（（（gCO2/ℓ））））Gasoline, Diesel, CNG ...（（（（gCO2/ℓ））））

Energy consumption （（（（ℓ））））CO2 emission （（（（gCO2））））

Energy consumption （（（（ℓ））））CO2 emission （（（（gCO2））））

MODEL DESCRIPTION

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�Cost evaluationFor cost evaluation, expense such as subsidy, infr astructure building and

maintenance cost are taken into account. In this stu dy we focused on expense

by government.

� Subsidy ：：：： Gasoline, Diesel, Ethanol, Biodiesel

� Infrastructure building: Gasoline station, CNG stat ion,

Renovation cost for biofuel supply

�Maintenance: Gasoline station, CNG station

� Benefit loss: benefit loss due to domestic CNG usage instead of LNG Export

�CNG kit distribution ：：：： Subsidy for remodeling for CNG usage

MODEL DESCRIPTION

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AREA BASED ENERGY MIX SCENARIO

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GROSS DOMESTIC PRODUCT PROJECTION

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POPULATION PROJECTION

Regional population data projection beyond 2010 based on IEEJ (2011)

1999-2010

2010-2020

2020-2030

Sumatra 1.4% 1.1% 1.0%

Java 0.9% 0.7% 0.4%

Kalimantan 1.6% 1.3% 1.1%

Sulawesi 1.2% 0.9% 0.7%

Nusa Tenggara

1.2% 0.9% 0.7%

Papua 2.5% 2.4% 2.2%

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INCOME AND VEHICLE OWNERSHIP

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Scenarios

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SCENARIO 0 : BAU SCENARIO

� Biofuel mixture follows Ministry of Energy Regulations

� No CNG vehicles� No vehicles utilizing new fuel efficient technologies

� Fuel subsidy maintained at 2013 level

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Validation of Model CalculationsBAU SCENARIO

Cost of Fuel SubsidiesLiters Consumed

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BAU SCENARIO

Jenis Sektor 2013 2014 2015 2016 2020 2025

Transportasi PSO 0% 0.5% 1% 2% 5% 20%

Transportasi Non-PSO 1% 1% 2% 5% 10% 20%

Jenis Sektor 2013 2014 2015 2016 2020 2025

Transportasi PSO 10% 10% 10% 20% 20% 25%

Transportasi Non-PSO 3% 10% 10% 20% 20% 25%

Ministry of Energy and Mineral Resources Regulation No, 25 Year 2013on the Revision of Regulation No. 32 Year 2008 conc erning

The Provision, Utilization and Commerce of Biofuels as Alternative Fuels

Mandatory Biodiesel Usage

Mandatory Bioethanol Usage

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BAU SCENARIOEnergy Consumption based on Vehicle Type

100 billion liters by 2030!!

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Energy Consumption based on Fuel TypeBAU SCENARIO

100 billion liters by 2030!!

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BAU SCENARIOCO2 emissions based on Vehicle Type

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Projected Annual Transportation Energy Costs(exc. Infrastructure costs)

BAU SCENARIO

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Subsidy for Biodiesel

Subsidy for Diesel

Subsidy for Gasoline

TOTAL : 4,772,186 billion IDR

Station cost and maintenance

Total costs 2005 � 2030BAU SCENARIO

Subsidy for ethanol

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SCENARIO 1 : SUBSIDY WITHDRAWAL

� No CNG vehicles

� Biofuel mixture follows Ministry of Energy Regulations� Gradual fuel subsidy withdrawal with zero fossil fuel subsidy at 2020

� Biofuel subsidy maintained at 2013 levels

� No vehicles utilizing new fuel efficient technologies

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SUBSIDY WITHDRAWAL SCENARIOProjected Annual Transportation Energy Costs (exc. Infrastructure costs)

Reduction of subsidies reduces annual cost significantly

However …• Dependency on imported oil

remains a problem• High oil based fuel price will

be a burden on consumers

Subs

idy W

ithdr

awal

BAU

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Subsidy for Biodiesel

Subsidy for Diesel

Subsidy for Gasoline

TOTAL : 1,789,770 billion IDR

Subsidy for Ethanol

Station cost and maintenance

Total costs 2005 � 2030

Removal of subsidies may allow accelerated development of infrastructure for alternative fuel types (i.e. CNG)

SUBSIDY WITHDRAWAL SCENARIO

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� Sale of new fuel efficient technology cars up to 55% of cars sold in 2025

� Sale of new CNG four wheeled vehicles begins at 0.5% of annual vehicle sales in 2016 up to 45% of vehicles sold in 2030

SCENARIO 2: ENERGY MIX SCENARIO� Biofuel timeline according to Ministry of Energy regulations

� Subsidies assumed to be maintained at 2013 level

� The initial 0.5% CNG vehicles sold (around 4500 vehicles) assumes initial adoption only by taxi companies and public transport

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ENERGY MIX SCENARIOEnergy consumption

Mix

BAU

Introduction of CNG and fuel efficient vehicles results in a 3 % decrease of energy consumption by 2030

Measures must be taken to hold back increase of energy consumptione.g. vehicle retirement initiatives

• Energy consumption remains high

• Low number of CNG vehicles means consumption of gasoline/diesel still high

Gasoline consumed by fuel efficient vehicles

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Mix

BAU

Projected Annual Transportation Energy Costs(exc. Infrastructure costs)

ENERGY MIX SCENARIO

By 2030, an annual cost reduction of 3% has been achieved

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Subsidy for Biodiesel

Subsidy for DieselSubsidy for Gasoline

TOTAL : 4,812,123 billion IDR

Subsidy for Ethanol

CNG station cost

ENERGY MIX SCENARIOBAU Subsidy

Withdrawal Energy Mix

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EFFECT OF RETIREMENT

Energy consumptionCar/truck/bus retirement can potentially hold back the increase of energy consumption by 20% in 2030

However, due to no motorcycle retirement, energy consumption by motorcycles remains high

A retirement scheme for ALL VEHICLE TYPES should be

adopted

Lower energy consumption will extend lifetime of resources

Cars retired after 19 years

A possible scenario with cars retired after 19 years of service

Retir

emen

t BA

U

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Conclusion

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CONCLUSIONTargetMinimization of Energy consumption, CO2 emission and Fiscal expenditure (include investment in infrastructure).

Achieved by energy mix scenario in 2030� Annual energy consumption decreased by 3 %� Annual CO2 emissions unchanged

� Annual cost reduced by 3% , Total cost relatively unchanged

Due to CNG and fuel efficient technology being introduced only via new car sales, Old low efficiency vehicles remain and thus still consume large amounts of energy.

The dominant numbers of old vehicles still consume a large amount of gasoline and diesel fuel which in turn retains the large subsidy cost

Measures to reduce energy consumption and cost must consider presence of old vehicles

Achieved by subsidy withdrawal scenario by 2030� Annual cost decreased by 87 %� Total cost decreased by 63 %

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RECOMMENDATIONS

� Biofuel usage must be continually pursued with adequate subsidy to reduce oil dependency

� Older vehicles can only use lower content biofuels (below E10/B7)�Availability of both low and high content biofuels should be considered

� If fuel subsidy is removed, freed budget may be allocated for alternative fuel infrastructure (CNG infrastructure) or to subsidize CNG conversion kits to increase feasibility of the CNG alternative and to build road infrastructure to reduce traffic congestion especially in big cities.

Measures to reduce energy consumption and cost must consider presence of old vehicles

� To improve overall vehicle population, old vehicles must then :� Retired via regulatory requirements (can reduce energy consumption by 23%) to be

replaced by fuel efficient vehicles

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FUTURE WORK

� Construct vehicle retirement model for varying degrees of retirement� Consumer behavior study to observe policies that

may improve alternative fuel adoption� Include effects of congestion on fuel consumption

(will result in different fuel economy for congested cities)

Thank you