The Indonesian government continues to accelerate the transition toward sustainable transportation through the adoption of electric vehicles. This transformation requires a comprehensive approach, particularly in managing the battery lifecycle through circular economy principles.

The implementation of a circular economy aims to minimize waste and maximize resource utilization. The electric automotive sector has become a top priority in the national circular economy roadmap developed by Bappenas [5].

The inspection process of modern lithium-ion battery modules at an industrial laboratory facility to ensure quality and sustainability standards. — Image created by AI

Regulatory foundations and strategic policies

The government has established a strong legal framework through Presidential Regulation Number 55 of 2019. This regulation serves as the foundation for accelerating the battery-based electric motor vehicle program [1].

These rules require industry players to manage battery waste responsibly. Furthermore, optimizing the electric vehicle lifecycle from design to waste management has become a primary focus in maintaining environmental preservation.

Waste classification and battery management

Used electric vehicle batteries are classified as hazardous and toxic waste (B3) under Government Regulation Number 22 of 2021. Therefore, every recycling process requires a special license from the Ministry of Environment and Forestry.

The automotive industry is now being encouraged to adopt high-level waste processing technology. This is in line with the government’s efforts to promote the implementation of a circular economy in the national automotive industry [2].

Fiscal incentives for industry players

The government provides various incentives to attract investment in the battery recycling sector. Tax holiday facilities of up to 100 percent are available for companies that build B3 waste processing facilities.

In addition, there is an exemption from import duties on machinery and modern recycling technology. This policy facilitates the extraction of valuable materials such as nickel, cobalt, and lithium from the “black mass” of used batteries [4].

Battery reuse strategies

The “second-life battery” concept is one of the pillars of the circular economy being promoted. Batteries whose capacity has declined can be repurposed as Energy Storage Systems (ESS).

This utilization is highly effective for energy reserves in solar power grids. You can learn more about the potential of used electric vehicle batteries for energy storage systems in Indonesia as an energy efficiency solution.

The role of an integrated ecosystem

The Indonesia Battery Corporation (IBC) plays a vital role in integrating the supply chain from upstream to downstream. This state-owned enterprise consortium ensures that the recycling process is carried out centrally and efficiently [3].

The government is also encouraging the standardization of swappable batteries for two-wheeled vehicles. This standardization facilitates the collection of batteries at the end of their service life for processing at recycling facilities.

Development of green industrial zones

The construction of battery waste processing centers is focused on green industrial zones. The Batang and Morowali Integrated Industrial Estates have become strategic locations for this ecosystem.

Investment in these areas is expected to increase the added value of domestic components. Consequently, dependence on mining new raw materials can be gradually reduced through the recycling of critical materials.

Future prospects and targets

The government’s target to have millions of electric vehicles in operation by 2030 brings new challenges. The volume of battery waste is predicted to increase sharply in line with the growth of electric vehicle adoption among the public.

The government continues to strengthen inter-agency coordination to ensure the entire supply chain operates according to sustainability principles. The circular economy is not just an option, but a necessity to maintain the competitiveness of the national automotive industry in the global market.

More Information

  1. Circular economy: An economic system that aims to minimize waste and maximize resource use through the reuse, repair, and recycling of materials within a sustainable production cycle.
  2. Black mass: A mixture of black powder resulting from the shredding of used batteries that contains valuable metals such as nickel, cobalt, and lithium, which can be re-extracted through advanced metallurgical processes.
  3. Second-life battery: The utilization of electric vehicle batteries whose capacity has dropped below vehicle operational standards but are still suitable for stationary energy storage applications that do not require high power.
  4. TKDN (Domestic Component Level): The percentage of domestic production components used in a product, which is a key requirement for manufacturers to receive fiscal incentives and government support in Indonesia.
  5. B3 waste: Hazardous and toxic materials that require special handling due to their potential to pollute the environment or endanger human health if not managed with strict operational standards.