Impact of Low Cost Green Car Policy on CO2 Emission and Energy Subsidy in Indonesia

Abstract

The Indonesian government introduced the low cost green cars policy since 13 May 2013 by imposing a regulation on tax reduction for luxury items particularly for low emission cars with price cap (PP/41/13, 2013). This policy aims at increasing the share of low and zero emission vehicles in the national vehicle fleet. Apart from achieving targets of lower greenhouse gas (GHG) emissions, this program also attempts to reduce fossil fuel consumption of the transportation sector and to lessen the national budget share of energy subsidy. In this thesis, the vehicle fleet model was used to evaluate three market mix scenarios were conducted to assess and gave illustration on to what extend will the low cost and green car policy reduce the fossil oil consumption and CO2 emission on light-duty vehicles usage and thereby reduce the amount of energy subsidy during next 20 years implementation.