Revisiting the EKC Hypothesis in Indonesia: The Role of Economic Growth, Coal Production, and Renewable Energy in Carbon Emissions
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Abstract
The Environmental Kuznets Curve (EKC) hypothesis suggests an inverted U-shaped relationship between economic growth and carbon emission. This study revisits the EKC hypothesis in Indonesia by examining the dynamic interplay among economic growth, coal production, and renewable energy consumption. Using time-series data from the World Development Bank and Our World in Data from 1991-2021, the study applies a quadratic linear regression model based on the Ordinary Least Squares (OLS) method to assess whether Indonesia exhibits the characteristic EKC pattern. Furthermore, the role of renewable energy in mitigating environmental degradation is explored. The findings confirm the existence of an EKC pattern in Indonesia, with carbon emissions initially rising alongside GDP growth but declining as income reaches higher levels. The estimated turning point occurs at an average GDP per capita of approximately USD 7,256. However, renewable energy consumption does not yet show a statistically significant effect on emissions reduction, which may be attributed to its relatively small share in the national energy mix. This study highlights the unique context of Indonesia, a major emerging economy with high fossil fuel dependency and underdeveloped renewable energy infrastructure. It offers novel insights by integrating coal production and renewable energy as core factors affecting emissions trajectories.
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