Tatsuya Terazawa Chairman and CEO The Institute of Energy Economics, Japan
Message for January 2026
<Main Points>
1. BEVs are not the only pathway for the Global South
Battery electric vehicles (BEVs) are often regarded as the only pathway for decarbonizing road transport. But are BEVs the only pathway? My Institute, IEEJ, has conducted a multifaceted study analyzing pathways for road transport in Indonesia, Brazil, and India who are the three leaders of the Global South. The results of the study demonstrate that BEVs are not necessarily the optimal or practical pathway for these three countries. In fact, other pathways may better fit each country’s unique conditions.
2. Life-cycle CO2 emissions of BEVs in Indonesia are the highest among powertrains currently and potentially in the future as well
Currently, two-thirds of electricity in Indonesia is produced by coal-fired power plants. As a result, the emissions factor of power generation in Indonesia is 829 gCO2/kWh—40% higher than the global average of 575 gCO2/kWh. While the Indonesian government is pledging to expand renewable energy drastically, exceptions allow construction of new coal-fired power plants for captive industrial use, including nickel processing for BEV manufacturing. IEEJ’s analysis of life-cycle CO2 emissions shows that BEVs emit more CO2 than other powertrains, including internal combustion vehicles (ICVs), today (Figure 1). Hybrid electric vehicles (HEVs) are the best option for the lowest life-cycle CO2 emissions today. Even assuming maximum technology advancement as in the Advanced Technologies Scenario (ATS), BEVs continue to emit more CO2 than plug-in hybrid vehicles (PHEVs) in 2050.
This analysis is based on average daily emissions factors. However, coal-fired power plants may be used more than the average suggests, especially for nighttime BEV charging. If charging occurs primarily at night, coal-fired plants could be the main power source, increasing BEV’s well-to-tank CO₂ emissions by 30% today. By 2050, well-to-tank emissions could be 3.8 times higher, making BEVs the highest-emitting powertrain even then (Figure 2). Through these analyses, BEVs appear not to be the best pathway to minimize life cycle-based CO2 emissions in Indonesia now or in 2050. HEVs and PHEVs could be better options.
3. The total cost of deploying BEVs must be considered
Many people focus only on the purchase and operating costs of BEVs. However, there are other costs that are incurred through the deployment of BEVs. If the ownership of BEV continues to expand in line with the goal of the Indonesian government, and if half of the charging occurs at night, an additional 15 GW of power generation capacity will be necessary in 2040, which is about 15% of Indonesia’s current capacity. A large expansion of the grid will be necessary as well. The cost for investing in power generating capacity and the expansion of the grid to support the deployment of BEVs will be substantial. The Indonesian government also plans to deploy over 60,000 charging units in the next five years, requiring 23 trillion rupiah (200 billion yen) of investment. The total amount of support provided for BEVs in Indonesia is estimated to reach 5–6 trillion rupiah (43–52 billion yen) annually. Lost gasoline tax revenue must also be considered. As we can see, the total cost must be accounted for when assessing the cost of BEV deploying.
4. A combination of biofuel and PHEVs/HEVs is the best option for Brazil
Brazil is well known for its long history of promoting biofuels and is now the global leader in the use of biofuels for vehicles. Is utilizing these biofuel resources an ideal pathway for road transport for Brazil?
Assuming biofuel is used for 100% of the fuel for vehicles, IEEJ's analysis of the life-cycle CO2 emissions shows that BEVs emit more CO2 than other powertrains today and in 2050 (Figure 3). PHEVs and HEVs generate the lowest CO2 emissions today and in 2050. For Brazil, combining biofuel with PHEVs/HEVs delivers the best life-cycle CO2 emissions.
5. Biogas can be a practical option for India
Compressed natural gas (CNG) is widely used in India especially in metropolitan areas to reduce air pollution and for its relatively low cost. Starting in 2025, biogas is required to be blended in CNG at 1%, rising to 5% after 2028. Switching from CNG to biogas can reduce CO2 emissions. Existing CNG vehicles can be used without modification, and CNG stations can remain in use. India has abundant feedstocks, including cow waste, which can be used to produce methane for biogas. This switch can help reduce emissions and provide new revenue sources for farmers. On the other hand, given India’s heavy reliance on coal-fired power plants, BEVs would result in high life cycle CO2 emissions, as we saw in Indonesia. These are the reasons why biogas can be a practical pathway for India. But the use of biogas is still modest. Only 5% of its potential is currently utilized. In addition to regulation, effective support is necessary to deploy biogas more broadly. Development and transfer of carbon credits may help.
6. Climate conditions of some regions are not conducive to BEVs
Temperatures in Global South countries are generally very high, which is not conducive to BEVs. At 100°F (37.8°C), driving distance drops by 17–18%. High temperatures reduce battery storage capacity by 5–6% after four years compared with moderate climates. BEV manufacturers do not recommend charging at high temperatures. During summer, temperatures in many regions in the Global South often rise above 40°C (104°F). BEVs do not appear to be practical for countries with hot climates.
7. Various pathways for road transport in the Global South
BEVs may be the best pathway for countries with a decarbonized power mix, moderate climate, short driving distances, concentrated populations (enabling charging station networks), large purchasing power, and strong policy support. But many countries in the Global South do not enjoy these conditions. I believe we should recognize that various pathways for road transport are appropriate in the Global South, tailored to fit the unique circumstances of such countries. Applying BEVs as the only pathway is not practical, may lead to more CO2 emissions, and could be more costly in the long run. The topics introduced in this message will be explained in detail in the following webinar. The webinar covers two topics, and presentation “2” corresponds to the content introduced here. Please feel free to click the hyperlink below to register. For those who miss it, a video recording will be available afterwards.
The 21st IEEJ Webinar for the World 1. Date/Time: 2AM ET/8AM CET/ 10AM AST/ 3PM SGT/4PM JST on Wednesday, January 7, 2026 2. Webinar App.：Zoom 3. Title: The IEEJ Outlook 2026: Challenges and opportunities for decarbonizing the energy sector in emerging economies 4. Agenda： ①Evaluating the System Integration Costs and Deployment Potential of Variable Renewable Energy Yu NAGATOMI, PhD, Executive Analyst, Manager, Econometric and Statistical Analysis Group (ESA), Energy Data and Modelling Center (EDMC), IEEJ ②Various pathways for decarbonizing the road transport sector in the Global South Toshiyuki SAKAMOTO, Board Member, Director, Climate Change and Energy Efficiency Unit, IEEJ 5.Registration: https://us02web.zoom.us/webinar/register/WN_KAvFa-O-RSOo3ryJPB6ZCQ#/registration 6.Video You can watch the video here (it will be uploaded shortly after the webinar). https://eneken.ieej.or.jp/en/seminar/other/ieej_seminar.html
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