Abstract
Sustainable development and reducing environmental pressure are major issues that concern developed as well as developing countries. Although researchers widely use carbon dioxide emissions and ecological footprint within the scope of environmental degradation, a more comprehensive ecological indicator is needed to assess environmental sustainability. In this context, the load capacity factor enables a comprehensive environmental sustainability assessment through the simultaneous analysis of biocapacity and ecological footprint. However, there are few studies analyzing the determinants of load capacity factor and this study aims to fill this gap for Indonesia. Using the recently developed Fourier quantile causality test, this study investigates the impact of income, export diversification, non-renewable and renewable energy consumption on the load capacity factor for Indonesia during 1965Q1–2014Q4. The results show unidirectional causality from non-renewable energy consumption to the load capacity factor at all quantiles, while income, export diversification, and renewable energy are the causes of environmental quality at middle and higher quantiles (within 0.5, 0.7, and 0.9). Most importantly, renewable energy and export diversification increase the load capacity factor and thus support environmental quality. In contrast, an increase in income and consumption of non-renewable energy reduces the load capacity factor. These results highlight the importance of renewable energy and export diversification for the sustainable development of Indonesia.
Highlights
One of the most serious issues confronting the entire planet is the continuing and increasing degradation of the environment and climate
This study aims to examine the impact of renewable energy, non-renewable energy, income and export product diversification on the load capacity factor in Indonesia
ZA unit root test indicates that gross domestic product (GDP) is stationary at level [I(0)], while load capacity factor (LCF), export product diversification (EXDIV), renewable energy consumption (REC) and fuel consumption (FEC) contain a unit root
Summary
One of the most serious issues confronting the entire planet is the continuing and increasing degradation of the environment and climate. The COP21 agreement in Paris was a critical step in improving global awareness and Export Diversification in Indonesia diplomacy on climate-related concerns. The COP21 was crucial for the global community to realize that the continuous expansion of economic activities has exacerbated climate change by increasing carbon dioxide (CO2) levels in the atmosphere, leading to an increase in global temperature (Su et al, 2021). The rapid expansion of global production has expanded the ecological footprint (EF) by exploiting natural resources and increasing energy utilization (Adebayo and Kirikkaleli, 2021), causing global warming. As the world’s populace grows, the need for energy adds to ecological concerns (He et al, 2021)
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