TRANSPORT CO2 EMISSIONS IN INDONESIA BEFORE AND AFTER THE EMISSIONS-BASED LUXURY GOODS SALES TAX (PPnBM) ON MOTOR VEHICLES
Published:
2026-09-28Downloads
Abstract
The emissions-based luxury goods sales tax (PPnBM) on motor vehicles, effective 16 October 2021 under Government Regulation No. 74 of 2021, was designed as an instrument for decarbonising Indonesian transport, yet whether it has played a role in transport emission patterns since its introduction is unknown. This study uses a quantitative descriptive analysis of official annual data for 2013–2025. A series of CO2 emissions from transport-sector gasoline and diesel is built from fuel volumes in the Handbook of Energy & Economic Statistics of Indonesia and IPCC default emission factors, decomposed using the Logarithmic Mean Divisia Index (LMDI), and complemented by an upper-bound calculation of the PPnBM contribution through battery electric vehicle (BEV) sales. Emissions did not fall: they averaged 140.9 Mt CO2 in 2022–2025, 2.0% above 2019, although GDP grew by 24.0% over 2019–2025. The decomposition shows that in 2019–2025 economic growth added 29.9 Mt, while the offsetting factors were biodiesel blending (−14.5 Mt) and the decline in fuel use per unit of GDP (−12.4 Mt). This decline in fuel intensity is not new and has in fact slowed, from 1.7% a year in 2013–2019 to 1.3% a year in 2021–2025. Even if all 175,309 BEVs sold in 2020–2025 were attributed to PPnBM, the emission savings would be at most 0.4–0.8 Mt, less than 0.6% of 2025 emissions. Post-policy restraint in emissions is therefore explained mainly by biodiesel blending and a pre-existing efficiency trend, not by PPnBM. The paper also specifies the data needed for future policy monitoring: monthly fuel sales, registrations by emission class, and CO2 per kilometre of new vehicles.
Keywords:
transport CO2 emissions luxury goods sales tax (PPnBM) fuel consumption biodiesel LMDI decomposition IndonesiaReferences
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