A Deep Dive into Indonesia's CO2 Emissions: The Role of Energy Consumption, Economic Growth and Natural Disasters

Abstract

This study examines the influence of non-renewable energy consumption, renewable energy consumption, economic growth, and natural disasters on Indonesia's carbon dioxide (CO2) emissions spanning from 1980 to 2021. The Autoregressive Distributed Lag (ARDL) model is employed, with supplementary robustness checks utilizing Fully Modified Ordinary Least Squares (FMOLS), Dynamic Ordinary Least Squares (DOLS), and Canonical Cointegration Regression (CCR). The findings reveal that economic growth, along with non-renewable and renewable energy consumption, significantly affects CO2 emissions in both the short and long term. Robustness checks confirm the positive impact of non-renewable energy consumption and economic growth, while renewable energy consumption has a negative effect on CO2 emissions. Moreover, natural disasters exhibit a positive short-term impact on CO2 emissions. Pairwise Granger causality results further underscore the intricate relationships between the variables. To mitigate climate change and curb CO2 emissions in Indonesia, the study recommends implementing policies that foster sustainable economic development, encourage the adoption of renewable energy, and enhance disaster resilience.