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An Analysis of Energy Intensity in Indonesian Manufacturing

Author

Listed:
  • Tony Irawan

    (Department of Economics,Faculty of Economics and Management, Bogor Agricultural University;InterCAFE-LPPM, IPB)

  • Djoni Hartono

    (Graduate Program in Economics, Faculty of Economics and Business, University of Indonesia)

  • Noer Azam Achsani

    (Department of Economics,Faculty of Economics and Management, Bogor Agricultural University;InterCAFE-LPPM, IPB)

Abstract

Many countries utilize their resources at optimal capacity in fostering countries’ economic growth without any concern on environmental impact. Even though the importance of environmental issue as one of the important aspects in sustainable development is fully understood, the economic growth still remained as the priority target. In Indonesia, industry is one of the important sectors both in term of its contribution to national output and national energy consumption. Based on Indonesian Statistic Bureau, industry is always at the top list of contributor of national energy consumption since 2000. This paper employs the decomposition analysis to calculate what factors contribute to the change in energy intensity. We also conduct a panel data analysis to investigate the determinants of energy intensity using firm level data. The result suggests that, even though the industrial sector’s energy intensity is higher than national level, it varied across sub sectors within the industry. Meanwhile, the econometric analysis suggests that wage, age, capital intensity and share of capital owned by private sector have positive impact on energy intensity, whereas size of firms, labor productivity and technology intensity has negative impact on energy intensity.

Suggested Citation

  • Tony Irawan & Djoni Hartono & Noer Azam Achsani, 2010. "An Analysis of Energy Intensity in Indonesian Manufacturing," Working Papers in Economics and Development Studies (WoPEDS) 201007, Department of Economics, Padjadjaran University, revised Aug 2010.
    • Handle: RePEc:unp:wpaper:201007
    as

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    File URL: http://ceds.feb.unpad.ac.id/wopeds/201007.pdf
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    References listed on IDEAS

    as
    1. Sahu, Santosh & Narayanan, K, 2009. "Determinants of Energy Intensity: A Preliminary Investigation of Indian Manufacturing," MPRA Paper 16606, University Library of Munich, Germany.
    2. Zhang, ZhongXiang, 2003. "Why did the energy intensity fall in China's industrial sector in the 1990s? The relative importance of structural change and intensity change," Energy Economics, Elsevier, vol. 25(6), pages 625-638, November.
    3. Gale A. Boyd and Joseph M. Roop, 2004. "A Note on the Fisher Ideal Index Decomposition for Structural Change in Energy Intensity," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 87-102.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Lin, Boqiang & Chen, Yu & Zhang, Guoliang, 2018. "Impact of technological progress on China's textile industry and future energy saving potential forecast," Energy, Elsevier, vol. 161(C), pages 859-869.
    2. Ouyang, Xiaoling & Lin, Boqiang, 2015. "An analysis of the driving forces of energy-related carbon dioxide emissions in China’s industrial sector," Renewable and Sustainable Energy Reviews, Elsevier, vol. 45(C), pages 838-849.
    3. Muhammad Shahbaz & Amatul Razzaq Chaudhary & Syed Jawad Hussain Shahzad, 2020. "Is energy consumption sensitive to foreign capital inflows and currency devaluation in Pakistan?," Applied Economics, Taylor & Francis Journals, vol. 50(52), pages 5641-5658, June.
    4. Lin, Boqiang & Zhang, Li & Wu, Ya, 2012. "Evaluation of electricity saving potential in China's chemical industry based on cointegration," Energy Policy, Elsevier, vol. 44(C), pages 320-330.

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    More about this item

    Keywords

    energy intensity; industry; firm; decomposition; panel data;
    All these keywords.

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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