Renewable Electricity Analysis of Indonesia's Green Economy: an Error Correction Model Approach

Abstract

Fossil energy sources In Indonesia are depleting. Electricity production from fossil fuels in 2020 is 239 terawatts (TWh) or 88,73%. The high demand for non-renewable power plants is also influenced by the number of people where the higher the population in a country, the need for electricity increases. The use non-renewable power plants has increased carbon emissions. This study examines the effect of renewable electricity on the green economy in Indonesia. The objectives of this study are as follows: i) analyze how the use of renewable energy in Indonesia, ii) analyze how carbon dioxide affects, population, foreign investment, non-renewable energy, to the green economy in Indonesia. The method used in this study is an error correction model to determine the long- and short-term influence between variables. The data used in this study is from 1990-2020. The results of the study found that the variables that affect the long-term green economy in Indonesia are as fol¬lows renewable electricity, foreign investment, carbon emissions, and openness of trade. Mean¬while, the variables that affect the short-term green economy in Indonesia are as follows non-renewable electricity and foreign investment.