Does the Environmental Kuznets Curve (EKC) Hypothesis Exist on CO2 Emissions in Indonesia?
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Date
2022-01-11
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Abstract
Indonesia is among the Asian countries that are experiencing rapid economic expansion. However, this rapid economic progress is accompanied by environmental degradation, namely increasing carbon dioxide (CO2) emissions. The existing research in Indonesia on the Environmental Kuznets Curve (EKC) hypothesis relies too much on overall energy consumption without differentiating its sources, and no study has examined the implications of the Indonesian government’s CO2 emissions policy. As a result, this study used the Autoregressive Distributed Lags (ARDL) model to determine the presence of the EKC hypothesis on CO2 emissions in Indonesia, taking into account income, fossil energy consumption, renewable energy consumption, and forest moratorium and restoration policies. In the long run, we discovered that CO2 emissions will continue to climb simultaneously with income growth, implying that the EKC hypothesis does not apply to CO2 emissions in Indonesia. In addition, we found that fossil energy consumption has a positive effect on the growth of CO2 emissions, whereas renewable energy consumption, forest moratoriums, and forest restoration policies have a negative impact on CO2 emissions. This research emphasises the necessity of lowering reliance on fossil energy, increasing the use of renewable energy, and conserving Indonesia’s forests.
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EKC hypothesis, CO2 emissions, income