Abstract
Indonesia is involved in the global effort to alleviate the deterioration of the environment due to climate change. Given that the manufacturing industry accounts for the second-highest share of national energy consumption, efficiency energy in the industrial sector is crucial. This research examines which industrial subsector has to be prioritized to improve energy efficiency and what are the determinant factors that influence energy efficiency in Indonesia manufacturing. This study analyzes energy intensity as an approach to measure energy efficiency. Focusing on the 2010 - 2015 period, this research employs two methods, namely input-output and panel data regression analysis. The empirical finding shows that textiles and textile products; pulp, paper, paper products, printing, and publishing; and rubber and plastics sectors are the first priority subsectors that must implement green industry standards. The next priority is the subsectors at the second level but have no green industrial standards, namely electrical and optical equipment. Furthermore, there were four variables that statistically increase energy intensity, namely lagged energy intensity, technology intensity, lagged value added, and location of plant. However, other two variables, the price of electricity and company size, can reduce energy intensity.
Highlights
The climate change issue has surfaced since the late 1980s
In 1995, the United Nations Framework Convention on Climate Change (UNFCCC) initiated the United Nations Climate Change Conferences which came to be known as the First Conference of the Parties (COP)
Since the Input-Output table provided by the Asian Development Bank (ADB) grouped manufacturing only into 14 subsectors, the authors adjust data from BPS in accordance with ADB category
Summary
The climate change issue has surfaced since the late 1980s. In 1995, the United Nations Framework Convention on Climate Change (UNFCCC) initiated the United Nations Climate Change Conferences which came to be known as the First Conference of the Parties (COP). The meeting was held in Berlin, Germany and the attending nations agreed to take joint action to protect the global climate. Several more countries joined the third COP which was held in Kyoto and agreed to a timetable of Green House Gases (GHG) emission reductions for the first emissions budget period 2008 to 2012. The target was to decrease emissions by 6 to 8% below the 1990 levels. Defined as The Kyoto Protocol, it applied the UNFCCC idea to fight global warming by decreasing GHG intensities in the atmosphere. In the holding of COP 18 in Doha, Qatar, a second period was agreed between 2012 and 2020 despite the fact that many developing countries such as China, India and Brazil were not targeted for reducing emissions under the Kyoto Protocol
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