Question: What are the challenges in implementing sustainable technology in this region?

We need clarity from the government along with the budget and green-financing scheme associated with that. Europe has worked at a faster pace because things are clear and it allows companies to invest and accelerate those tech and initiatives.

Indonesia digital roadmap 2021-2024 [for example] has been very successful in creating unicorns. We need a similar one but on sustainability.

How’s the market potential for sustainable technology in this region? Many firms in Indonesia have been reluctant to invest in it.

To address net zero, one needs a national and company strategy. We see a significant advancement in Europe and the United Kingdom, as both government and companies are addressing the same problem. Investments and budgets are just being called in to drive some of this agenda.

We need the same happening in our region of Southeast Asia as well. My fear is that if we don't do enough in our region, we will get excluded from the future markets because companies will start looking at their supply chain to be able to demonstrate they are reaching for net zero as well.

So, we must start as soon as possible. Investments in sustainability are profitable investments. We're not going to lose money by doing this. We actually think that it will give us a better competitive edge.

Your company has developed electric aircraft. What are the challenges? Can electric aircraft be used in the Indonesian airline industry?

Rolls Royce is developing power and propulsion system for electric aircraft. This electric vertical take-off and landing (E-VTOL) can carry 45 passengers for a short range with full electric propulsion. We are developing another for 82 to 100 passengers.

When we looked at E-VTOL markets, our analysis shows the market penetration will be in 2024 and 2025. First it will happen in America and Europe. In this part of the world it will likely happen in Japan, South Korea and Singapore. The rest of the region will catch up.

It may not be airlines, but a different kind of transportation company.  

Have you heard from Indonesia?

We are exploring, but no -- but once there is an appetite, it will be huge because it suits the terrains of your nation.

The tech is novel, so it will be very pricey, right? How will it fit with largely poor Indonesians living in mountainous or island regions?

I am sure there will be market forces, but you are right. They will be premium. So, they must scale up.

I understand, but we must not forget our core business. Electrification is an important part of our sustainable journey, especially with aerospace.

People want a net zero in the airline industry. How close are we in this region? Most airlines still use regular fossil fuel. Have they expressed interest?

The tech is there but we need the investment, the regulations and the push from policies to drive this whole. All needs to line up. We can do it very quickly if those line up, but we are seeing more conversation is still needed to accelerate that.

For example, we need more than 500 million tonnes of sustainable fuel (i.e., from recycled cooking oil) by 2050 and only 0.1 percent is available today. I think the key here is to be able to manufacture or to source it.

To make sustainable aviation fuel, our position is to break away from liquid by using nuclear power in the form of a small modular reactor (SMR) to generate the sustainable aviation fuel.

If I use SMR, you can get much greater emission reductions with sustainable aviation fuel.

Can SMR be used to help solve electrification problems in frontier, outermost and least developed areas, which have a hard time sourcing energy inputs and building power plants?

Exactly -- that’s the application. That you can have it for certain and specific use -- for university campus, hospital.

You can power a small city. It resides within the city. The safety feature has passed the regulatory approval, but we are not saying use this and not the others -- but we are saying use all.

The traditional nuclear reactor costs between 20 billion euro (US$19.67 billion) to 30 billion euro, while an SMR with 450 megawatts is between 2 billion and 3 billion euro.

The airline industry has just recently recovered from the pandemic. How is the future projection for this region and have sales on spare parts, engines returned?

We are seeing a significant amount of recovery beyond 2019 levels for Europe. Southeast Asia -- we are not there yet, we are still below 100 percent.

We need more opening up -- that needs to take place. Many regions have it, but China needs to come on board as well. Without China, there's a certain margin for revenue that's just lost because there’s no flight in and out.

What we are seeing is that maintenance, repair and overhaul (MRO) facility is much faster at recovering and it is at pre-pandemic levels already.

So, MRO is our primary focus. Other sectors like cargo are doing well. Now we need passenger airline and future orders to ramp up and pick up.