Energy Transitions and Economic Sustainability: Empirical Insights from Indonesia

¹ Faculty of Economics and Business, Universitas Negeri Semarang, Semarang, Indonesia
² Faculty of Economics and Business, Universitas Diponegoro, Semarang, Indonesia

^* Corresponding author: oktavilia@mail.unnes.ac.id

Abstract

This research investigates the impact of renewable energy usage, fossil fuel consumption, carbon emissions, and population on Indonesia's economic growth from 1993 to 2023. Utilizing the Autoregressive Distributed Lag (ARDL) method, the study examines both short-term and long-term relationships among these factors. The findings reveal that over the long term, all independent variables—renewable energy, fossil fuels, carbon emissions, and population—contribute positively to economic growth. In contrast, in the short term, only fossil fuel consumption, carbon emissions, and previous GDP levels have significant effects, while renewable energy and population do not show statistically significant impacts. These results indicate that Indonesia's economy is still heavily reliant on fossil fuels as the main growth driver, with the shift to renewable energy in its nascent phase. Based on these outcomes, the study suggests enhancing investment in clean energy, reforming fossil fuel subsidies, and bolstering international and regional collaboration to promote more sustainable and low-carbon economic growth. This study provides empirical insights to inform energy and long-term economic policy development in emerging economies such as Indonesia.