EXAMINING THE DRIVING FORCES AFFECTING ENERGY INTENSITY DURING FINANCIAL CRISIS: EVIDENCE FROM ASEAN-6 COUNTRIES

Dhani Setyawan,Rakhmin Dyarto,Rita Helbra Tenrini,Sofia Arie Damayanty,Hadi Setiawan

doi:10.32479/ijeep.9565

Abstract

This study observes the factors affecting the changes of energy intensity in Indonesia and five selected ASEAN countries during the period (1971 to 2016) particularly measuring its impact during 1997 financial crisis. By employing the Logaritmic Mean Divisia Index, this study summaries that the changes in energy intensity in the ASEAN-6 economies was a result of the changes within industry energy intensity (intensity effect). The intensity effects also provide a proxy measure of energy efficiency activity at the sectoral level. Overall, the general direction of the intensity effect in all ASEAN countries is downward. These decreasing intensity effects show that the trend towards technological changes in ASEAN countries has assisted significantly in increasing energy efficiency. Further, all the ASEAN-6 countries showed a change in the structure index indicates that the structure of economy periodically shifted away from less energy intensive sector to more energy intensive sector.Keywords: Energy Efficiency, ASEAN countries, Energy Intensity, Indonesia.JEL Classifications: Q43, O13, O11DOI: https://doi.org/10.32479/ijeep.9565

Highlights

Indonesia is a large energy user, with energy supply heavily based on fossil fuels and with a long history of subsidies to energy use
This study explores the determinants of energy consumption from 1980 to 2012 in three Association of South East Asian Nations (ASEAN) countries: Malaysia, Thailand and
In terms of structure and industry effects on aggregate energy intensity, all of the ASEAN-6 countries showed a shift in industry value added to more energy-intensive industries which offset by falling within-industry energy intensity

Summary

Introduction

Indonesia is a large energy user, with energy supply heavily based on fossil fuels and with a long history of subsidies to energy use. At the moment the Indonesian Government had periodically adjusted the energy prices by reforming the energy subsidies. There are some reasons behind this subsidy reform (IEA, 2015; WorldBank, 2014). Energy subsidies encourage inefficient energy consumption and contradict the government’s objectives to reduce the oil share in the national energy mix. Energy subsidies discourage the development of new renewable energy and energy efficiency investment. It severely increased air pollution and jeopardizes the environment (Davis, 2014)

Objectives

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Discussion

Conclusion