It appears that Indonesia’s efforts to turn itself into an EV battery production hub may be supported by the fact that it could offer the lowest manufacturing costs in the whole of Asia. According to a BloombergNEF report, Indonesia’s industrial electricity prices are about 11% lower than China.

In fact, the country is teeming with nickel, cobalt and manganese depositories, which are key raw minerals in EV batteries. This, coupled with low labour and electricity costs, as well as government subsidies, can reduce the total battery manufacturing cost by 8% compared to those made in China, the report adds.

However, one downside to Indonesia’s low electricity price is its grid carbon intensity, which is among the highest in the region at 711 grammes of CO2 per kWh. This may cause manufacturers who are looking for low carbon energy sources to look elsewhere, but Indonesia said it plans to develop new hydro and geothermal powerplants that it says will supply the industry with cheap, low-carbon electricity.

Meanwhile, Indonesia has also announced plans to relocate its capital city from Jakarta to East Kalimantan, and that the city will only use autonomous and electric vehicles for mass transportation. East Kalimantan is a province on the island of Borneo, one which it shares with Malaysia and Brunei.

To further promote EV uptake, there will also be lithium battery-production facilities in the new capital city, with plans to build a hydroelectric powerplant as a low-carbon energy source. Once again, the move isn’t without controversy – the planned city requires massive deforestation, and doing so will further raise Indonesia’s greenhouse gas emissions.

Borneo’s forests consist largely of peatland, a type of wetland that holds about 12 times more carbon than other tropical rainforests. Just one hectare of peatland can release around 6,000 metric tonnes of CO2 when cleared. Many parts of Borneo’s peatland forest have been cleared via burning for palm oil plantations, which has released over 140 million metric tonnes of C02, an amount that’s equal to the annual emissions of 28 million cars.

Indonesia has promised to not clear any protected forests in Borneo, but the peatlands will have to be drained to support the construction buildings and highways, which could make the turf drier and more vulnerable to fires.