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Energy Consumption, Carbon Emissions and Economic Growth in Indonesia and Malaysia

Author

Listed:
  • Ahmad Farabi

    (Department of Management and Humanities, Universiti Teknologi PETRONAS, 32610 Seri Iskandar, Perak Darul Ridzuan, Malaysia)

  • Azrai Abdullah

    (Department of Management and Humanities, Universiti Teknologi PETRONAS, 32610 Seri Iskandar, Perak Darul Ridzuan, Malaysia)

  • Rahmat Heru Setianto

    (Faculty of Economics and Business, Universitas Airlangga, Jl. Airlangga 4, Surabaya, 60285, Indonesia.)

Abstract

The main objective of this study is to examine the relationship between energy consumption, carbon emission and economic growth in the case of Indonesia and Malaysia. As every type of energy may has different impact on carbon emission and economic growth, the aggregate and disaggregate energy consumption are applied in the analysis. For the model of aggregate energy consumption, this study employs total energy consumption per capita and CO2 emission per capita based on the total of energy consumption. Meanwhile, the disaggregate models use derivatives of variable energy consumption, namely, oil, coal, and gas. Some methodologies of econometrics such as unit root, cointegration, Granger causality, and error correction model are employed in the analysis. The short and long-run relationship are exist in both countries, the increase in aggregate consumption of energy source will increase produce CO2 emission, while the increase in income also leads to the increase of CO2 emission. Moreover, gas consumption is less polluting compared with other source of energy. In addition, there is a negative relationship between income and carbon emission which indicate that the carbon emission can be reduced by using gas as source of energy without preventing economic growth.

Suggested Citation

  • Ahmad Farabi & Azrai Abdullah & Rahmat Heru Setianto, 2019. "Energy Consumption, Carbon Emissions and Economic Growth in Indonesia and Malaysia," International Journal of Energy Economics and Policy, Econjournals, vol. 9(3), pages 338-345.
    • Handle: RePEc:eco:journ2:2019-03-37
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    3. Muhammad Firdaus Mohd Zublie & Md. Hasanuzzaman & Nasrudin Abd Rahim, 2023. "Modeling, Energy Performance and Economic Analysis of Rooftop Solar Photovoltaic System for Net Energy Metering Scheme in Malaysia," Energies, MDPI, vol. 16(2), pages 1-18, January.
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    5. Karen Fernandes & Y. V. Reddy, 2020. "Energy Consumption and Economic Growth in Newly Industrialised Countries of Asia," International Journal of Energy Economics and Policy, Econjournals, vol. 10(4), pages 384-391.
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    7. Ghazouani, Tarek & Boukhatem, Jamel & Yan Sam, Chung, 2020. "Causal interactions between trade openness, renewable electricity consumption, and economic growth in Asia-Pacific countries: Fresh evidence from a bootstrap ARDL approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 133(C).
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    More about this item

    Keywords

    carbon emission; oil; coal; gas; energy consumption; GDP;
    All these keywords.

    JEL classification:

    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • P18 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Energy; Environment
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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