Transportation transformation key to Indonesia's energy self-sufficiency, competitiveness: Minister AHY

Transforming Indonesia's transportation sector is vital for achieving energy self-sufficiency and bolstering economic competitiveness, stated Coordinating Minister for Infrastructure and Regional Development (Menko IPK) Agus Harimurti Yudhoyono (AHY). He emphasized the need to balance economic growth with environmental sustainability, noting that increased economic activity drives up energy demand and environmental pressure.

"On one hand, Indonesia needs high economic growth to improve public welfare. On the other hand, this growth will increase energy needs and environmental pressure. Therefore, the transformation of the transportation sector is key so that energy security, economic competitiveness, and sustainability can go hand in hand," AHY said.

The Indonesian government is actively pursuing national energy self-sufficiency through strategies like increasing the biodiesel mix, boosting oil exploration, building refineries, and expanding renewable energy use. However, national diesel consumption has risen 24.5 percent in the last five years, while domestic production only meets about 51.6 percent of demand. This imbalance has cost the government Rp415.84 trillion in solar subsidies and compensation between 2019 and 2024.

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On one hand, Indonesia needs high economic growth to improve public welfare. On the other hand, this growth will increase energy needs and environmental pressure. Therefore, the transformation of the transportation sector is key so that energy security, economic competitiveness, and sustainability can go hand in hand.

Without demand control, Indonesia could face renewed diesel import needs by 2027, according to WRI Indonesia's initial modeling. Country Director Nirarta Samadhi highlighted that while electric vehicles are often discussed for emissions reduction, their strategic benefit for Indonesia extends further. "Our modeling shows that without significant changes in transportation technology, Indonesia's diesel demand could reach around 87.5 million kiloliters by 2040," Nirarta stated, with domestic production projected at only 26.5 million kiloliters. "This means increasing energy supply alone will not be enough. We must also start managing energy demand, and transforming freight transport is one of the most important strategies to achieve Indonesia's energy self-sufficiency."

To drive this logistics sector transformation, WRI Indonesia launched the Indonesia Freight Decarbonization Accelerator (IFDA) in 2025. IFDA serves as a cross-sector platform for heavy-duty transport decarbonization, involving 42 companies from the logistics ecosystem in various studies and discussions.

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Our modeling shows that without significant changes in transportation technology, Indonesia's diesel demand could reach around 87.5 million kiloliters by 2040. This means increasing energy supply alone will not be enough. We must also start managing energy demand, and transforming freight transport is one of the most important strategies to achieve Indonesia's energy self-sufficiency.