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Economic Strategies and Efficiency of Power Plants in Indonesia to Achieve Net Zero Emissions

Author

Listed:
  • Rizal Rachmad

    (Management Technology, Institut Teknologi Sepuluh Nopember, Surabaya, Indonesia)

  • Mohammad Isa Irawan

    (Mathematics Department, Institut Teknologi Sepuluh Nopember, Surabaya, Indonesia)

  • Syarifa Hanoum

    (Business Management Department, Institut Teknologi Sepuluh Nopember, Surabaya, Indonesia)

Abstract

Indonesia is the fourth most populous country in the world. As a developing country, Indonesia needs electricity to boost its economy. Indonesia’s efforts to achieve Net Zero Emission (NZE) will have difficulty achieving this goal because fossil fuels contribute 85% of its electricity production. This study aims to measure the operational variables of CFPPs, and CO2 is used to measure efficiency to help reduce carbon gas emissions. In addition, this study attempts to analyze the factors that make CFPPs less economically profitable. Data Envelopment Analysis (DEA) and Malmquist Productivity Index (MPI) techniques are used to measure efficiency. The results are 23% of CFPPs are in an efficient condition. While the rest are in an inefficient condition, in the future the CFPPs can be optimized by benchmarking against their peers and increasing the target of increasingly efficient CFPPs in Indonesia. CFPPs that are close to coal mines have relatively higher operational costs but have lower CO2 emissions than CFPPs located near economic centers. Government policies are needed in efforts to encourage cheap operational costs but with low CO2 emissions as well.

Suggested Citation

  • Rizal Rachmad & Mohammad Isa Irawan & Syarifa Hanoum, 2024. "Economic Strategies and Efficiency of Power Plants in Indonesia to Achieve Net Zero Emissions," International Journal of Energy Economics and Policy, Econjournals, vol. 14(6), pages 213-221, November.
    • Handle: RePEc:eco:journ2:2024-06-21
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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