Identification of Factors Affecting Net Zero Emission Level in Indonesia

Adhitya Nugraha, Hermanto Siregar, Idqan Fahmi, Zenal Asikin, Dikky Indrawan, Harianto Harianto and Salis Aprilian
Additional contact information
Adhitya Nugraha: Pertamina Energy Institute, PT Pertamina (Persero), School of Business, IPB University, Indonesia
Hermanto Siregar: Department of Economics, IPB University, Indonesia
Idqan Fahmi: School of Business, IPB University, Indonesia
Zenal Asikin: School of Business, IPB University, Indonesia
Dikky Indrawan: School of Business, IPB University, Indonesia
Harianto Harianto: School of Business, IPB University, Indonesia
Salis Aprilian: Digital Energy Asia, Bogor, Indonesia

International Journal of Energy Economics and Policy, 2024, vol. 14, issue 5, 203-210

Abstract: Amid the rising risks of fossil fuel prices and uncertainties about the global energy supply, countries worldwide have the opportunity to strengthen the development of clean energy investments. This study analyzes the impact of economic growth and other variables, such as fossil fuel consumption, renewable electricity generation, and low-carbon energy use, on carbon dioxide emissions in Indonesia over the past 58 years, from 1965 to 2022. The analysis compares the findings with the Environmental Kuznets Curve (EKC) hypothesis using quadratic equations and cubic equations through the stepwise application of ordinary least square (OLS) methods. Projections suggest that this relationship could follow the Environmental Kuznets Curve (EKC) hypothesis with an inverted U-shape as GDP per capita increases, CO2 emissions per capita rise until reaching a turning point at $12,440 GDP per capita, after which CO2 emissions per capita potentially decrease with further GDP growth. The EKC is a theoretical framework that suggests that environmental degradation initially increases with economic growth, but it starts to decrease beyond a certain point. The analysis also shows that projections could follow an N-curve when variables such as fossil fuel consumption and low-carbon energy influence the NZE level. This indicates that Indonesia still needs to consider energy security in the short and medium term while advancing sustainable energy initiatives. There is also a need for support in research and development of environmentally friendly technologies to reduce emissions alongside national economic growth.

Keywords: Climate Changes; Energy; Environmental Kuznets Curve; Net Zero Emissions (search for similar items in EconPapers)
JEL-codes: A12 C12 C13 C21 C51 C52 Q42 Q47 (search for similar items in EconPapers)
Date: 2024
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