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The Unsustainable Path: Assessing Indonesia’s Reliance on Fossil Energy in Economic Growth

Author

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  • Sukanto Sukanto

    (Department of Development Economics, Faculty of Economics, Sriwijaya University, Indonesia.)

  • Azwardi Azwardi

    (Department of Development Economics, Faculty of Economics, Sriwijaya University, Indonesia.)

  • Hamira Hamira

    (Department of Development Economics, Faculty of Economics, Sriwijaya University, Indonesia.)

  • Dirta Pratama Atiyatna

    (Department of Development Economics, Faculty of Economics, Sriwijaya University, Indonesia.)

Abstract

Indonesia is the most energy-intensive country in Southeast Asia. Indonesia’s energy consumption reaches 40% of the total energy consumption in the Southeast Asian region. This study aims to analyze the relationship between economic growth and energy consumption in Indonesia in 2000-2021. The variables used are oil and gas GDP, energy consumption, global price, net exports and imports, foreign investment, and domestic investment. The data used is obtained from macroeconomic data and requires stationarity testing. This study uses a quantitative research type to assess energy consumption and its relationship with oil and gas GDP in Indonesia with the Auto-Regressive Distributed Lag (ARDL) Model Approach. The results of this study indicate that increasing development and dynamic economic growth will be accompanied by increasing energy demand. The conclusion of this study is that the ARDL model estimation results show significant differences in the influence of variables on oil and gas GDP in Indonesia in the short and long term.

Suggested Citation

  • Sukanto Sukanto & Azwardi Azwardi & Hamira Hamira & Dirta Pratama Atiyatna, 2024. "The Unsustainable Path: Assessing Indonesia’s Reliance on Fossil Energy in Economic Growth," International Journal of Energy Economics and Policy, Econjournals, vol. 14(2), pages 484-489, March.
    • Handle: RePEc:eco:journ2:2024-02-49
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    References listed on IDEAS

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    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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