The Role of Natural Gas in Indonesia CO2 Mitigation Action: The Environmental Kuznets Curve Framework

Dede Udayana Laksmana, Uka Wikarya

Abstract


Indonesia is one of the developing countries in the world, which is predicted to become one of the strongest economies in the world. Many challenges facing Indonesia, along with its economic growth, include energy security and environmental problems. These problems can be overcome simultaneously with the selection and allocation of appropriate energy sources. With the constraints of dependence on fossil energy, natural gas can be a "clean fossil energy” choice that can reduce CO2 emissions amid Indonesia's economic growth. Under the Environmental Kuznets Curve (EKC) framework and the ARDL to cointegration approach, this study estimates the long-term and short-term relationship between CO2 emissions and per capita GDP in three different models. The estimation results show that EKC in Indonesia is generally formed in the long term, but not in the electricity sector. The existence of EKC in Indonesia indicates the effects of energy conservation. The estimation results also show that natural gas consumption has a negative correlation with CO2 emissions in general. In the electricity sector, electricity from natural gas contributes to the smallest CO2 emissions. Empirical evidence from this study can then be used as a reference in the formulation of policies related to the energy mix and efforts to encourage increased domestic natural gas consumption. 


Keywords


CO2 emissions; environmental Kuznets curve; Indonesia; natural gas; policy.

Full Text:

PDF

References


A. Wijaya et al., “How Can Indonesia Achieve Its Climate Change Mitigation Goal? An Analysis of Potential Emissions Reductions from Energy and Land-use Policies”, 2017.

K. Dong, R. Sun, G. Hochman, X. Zeng, H. Li, and H. Jiang, “Impact of natural gas consumption on CO2 emissions: Panel data evidence from China’s provinces,” J. Clean. Prod., 2017.

D. Hirst, “Carbon Price Floor (CPF) and the price support mechanism,” 2018.

S. Dinda, “Environmental Kuznets Curve hypothesis: A survey,” Ecol. Econ., 2004.

M. A. Cole, A. J. Rayner, and J. M. Bates, “The environmental Kuznets curve: An empirical analysis,” Environ. Dev. Econ., 1997.

C. Lieb, “The Environmental Kuznets Curve – A Survey of the Empirical Evidence and of Possible Causes,” Discuss. Pap. Ser., 2002.

N. Shafik and S. Bandyopadhyay, “Economic growth and environmental quality: time series and cross-country evidence,” Policy Res. Work. Pap. Ser., 1992.

A. Jalil and S. F. Mahmud, “Environment Kuznets curve for CO2 emissions: A cointegration analysis for China,” Energy Policy, 2009.

H. Heidari, S. Turan Katircioǧlu, and L. Saeidpour, “Economic growth, CO2 emissions, and energy consumption in the five ASEAN countries,” Int. J. Electr. Power Energy Syst., 2015.

M. G. B. and A. P. I, “International Journal of Management Research and Review,” vol. 4, no. 1, pp. 316–334, 2014.

B. Saboori and J. Sulaiman, “CO2 emissions, energy consumption and economic growth in the association of Southeast Asian Nations (ASEAN) countries: Acointegration approach,” Energy, 2013.

K. Dong, R. Sun, and X. Dong, “CO2 emissions, natural gas, and renewables, economic growth: Assessing the evidence from China,” Sci. Total Environ., 2018.

R. Li and M. Su, “The role of natural gas and renewable energy in curbing carbon emission: a Case study of the United States,” Sustain., 2017.

M. A. Zambrano-Monserrate, C. A. Silva-Zambrano, J. L. Davalos-Penafiel, A. Zambrano-Monserrate, and M. A. Ruano, “Testing environmental Kuznets curve hypothesis in Peru: The role of renewable electricity, petroleum, and dry natural gas,” Renewable and Sustainable Energy Reviews. 2018.

K. Dong, R. Sun, and G. Hochman, “Do natural gas, and renewable energy consumption leads to less CO2 emission? Empirical evidence from a panel of BRICS countries,” Energy, 2017.

K. Dong, R. Sun, H. Li, and H. Liao, “Does natural gas consumption mitigate CO2 emissions: Testing the environmental Kuznets curve hypothesis for 14 Asia-Pacific countries,” Renewable and Sustainable Energy Reviews. 2018.

Y. Sugiawan and S. Managi, “The environmental Kuznets curve in Indonesia: Exploring the potential of renewable energy,” Energy Policy, 2016.

P. K. Narayan and S. Narayan, “Carbon dioxide emissions and economic growth: Panel data evidence from developing countries,” Energy Policy, 2010.

M. H. Pesaran, Y. Shin, and R. J. Smith, “Bounds testing approaches to the analysis of level relationships,” J. Appl. Econom., 2001.

P. K. Narayan, “The saving and investment nexus for China: Evidence from cointegration tests,” Appl. Econ., 2005.




DOI: http://dx.doi.org/10.18517/ijaseit.10.1.10660

Refbacks

  • There are currently no refbacks.



Published by INSIGHT - Indonesian Society for Knowledge and Human Development