The Effects Energy Consumption, Export, GDP, and Import on Indonesia’s Emission of CO2

Abstract

The purpose of this study is to examine the connection between exports, imports, GDP, and energy consumption on Indonesia's CO2 emissions used the World Bank data. This research is a type of quantitative research using VAR (Vector Autoregression) estimation. The data used comes from secondary data in a time series from 1971-2014. The data analysis technique in this study used the Vector-Autoregression (VAR) method. The tests performed include the optimum lag, Granger causality test, cointegration test, stationary test, VAR stability test, Impulse Response Function, and Variance Decontamination test. This study found that an increase in economic activity, in general, will affect an increase in CO2 gas emissions, which is caused by the large energy consumption of the economy. The increase in CO2 emissions will cause climate change, thus causing environmental damage. The Granger causality test analysis demonstrates the exports no one has any effect on CO2 emissions.So with imports, there is also no causality to CO2. The VAR analysis test also explains that export and import activities have no significant effect on increasing CO2 because both variables' values are higher than with the t-statistics' values. So, international trade has no effect on increasing CO2 and environmental degradation. According to the study's findings, CO2 emissions can rise as a result of energy usage.