Empowering Energy Efficiency: The Role of Local Government Financing in Indonesia

Andi Dian Resyani (), Maat Pono and Sri Sundari
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Andi Dian Resyani: Hasanuddin University
Maat Pono: Hasanuddin University
Sri Sundari: Hasanuddin University

A chapter in Proceedings of the 9th International Conference on Accounting, Management, and Economics 2024 (ICAME 2024), 2025, pp 1942-1952 from Springer

Abstract: Abstract This study aims to analyze the impact of local government financing on energy efficiency in Indonesia, while considering the role of economic development levels and private investment as control variables. The study employs a quantitative approach using secondary data collected from 34 provinces in Indonesia over the period 2015 to 2022. The data were analyzed using panel data models, with the Fixed Effects Model (FEM) and Random Effects Model (REM) approaches, and the best model was selected through the Hausman test. The independent variable in this study is local government financing, while the dependent variable is energy efficiency, measured by energy consumption per unit of Gross Domestic Product (GDP). Economic development levels and private investment are utilized as control variables. The results show that local government financing has a positive and significant effect on energy efficiency at the provincial level. In addition, economic development and private investment also significantly influence the improvement of energy efficiency. Provinces with higher levels of economic development and greater private investment tend to have better energy efficiency. The conclusion of this study underscores the importance of local fiscal policies that support the green energy sector, as well as the need for collaboration between the public and private sectors to achieve more optimal energy efficiency.

Keywords: Government funding; Energy efficiency; Economic development (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-758-8_155

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DOI: 10.2991/978-94-6463-758-8_155

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