Public Perception Pricing into Vehicle Biofuel Policy in Indonesia

The Indonesian government established that Indonesia would implement EURO IV standard emissions by the end of 2021. Furthermore, to enhance the corresponding policy, theIndonesian government also eliminated policy incentives for fossil fuels, such as the fuel pricesubsidy. As an alternative, the government now supports biofuel as a new fuel technology toimprove environmental conditions and increase palm production in Indonesia. The aim of thispaper is to determine public perception toward the pricing policy at the time biofuel is introduced.We apply a discrete choice model through a stated preference survey. We found that the majority ofpeople would shift to biofuel and particularly to green diesel, despite its higher price than currentfuels, due to its similar molecular structure to petroleum diesel and its even better diesel properties.However, this condition only applies if no other alternative exists and if implementing EURO IVstandard emissions becomes mandatory. Moreover, the implementation of biofuel and the EURO IVpolicy will also affect vehicle demand and purchases. Therefore, vehicle manufacturers need to beprepared for the increasing demand for particular types of vehicles