Economy, Energy, and CO2 Emissions

Abstract

The introductory chapter provides a historical overview on the nexus of economic development, energy use, and energy-related CO2 emissions over the past 40 years in Indonesia. A logarithmic mean Divisia index (LMDI) decomposition analysis was employed to examine determinants for the changes in energy-related CO2 emissions. The 40-year period was divided into three major periods of political regimes with available data: 1971–1997 for the Suharto regime, 1999–2004 for the transition to a democratic regime, and 2005–2011 for the Yudhoyono regime. The analysis found that (1) coal started to play an important role in exports and power generation, which have positive effects on CO2 emissions; (2) the price of oil commodities increased due to the fuel subsidy removal, and the rise of international oil prices accelerated improvements in energy efficiency; and (3) the transportation sector became increasingly important to increasing CO2 emissions. The chapter concludes with future perspectives related to other chapters in the book.