The ecological footprint of industrial value added and energy consumption in Indonesia
International Journal of Energy Sector Management
ISSN: 1750-6220
Article publication date: 2 November 2023
Abstract
Purpose
The purpose of this paper is to determine the effect of the industrial sector, renewable energy consumption and nonrenewable energy consumption in Indonesia on the ecological footprint from 1990 to 2020 in the short and long term.
Design/methodology/approach
This paper uses vector error correction model (VECM) analysis to examine the relationship in the short and long term. In addition, the impulse response function is used to enable future forecasts up to 2060 of the ecological footprint as a measure of environmental degradation caused by changes or shocks in industrial value-added, renewable energy consumption and nonrenewable energy consumption. Furthermore, forecast error decomposition of variance (FEVD) analysis is carried out to predict the percentage contribution of each variable’s variance to changes in a specific variable. Granger causality testing is used to enhance the analysis outcomes within the framework of VECM.
Findings
Using VECM analysis, the speed of adjustment for environmental damage is quite high in the short term, at 246%. This finding suggests that when there is a short-term imbalance in industrial value-added, renewable energy consumption and nonrenewable energy consumption, the ecological footprint experiences a very rapid adjustment, at 246%, to move towards long-term balance. Then, in the long term, the ecological footprint in Indonesia is most influenced by nonrenewable energy consumption. This is also confirmed by the Granger causality test and the results of FEVD, which show that the contribution of nonrenewable energy consumption will be 10.207% in 2060 and will be the main contributor to the ecological footprint in the coming years to achieve net-zero emissions in 2060. In the long run, renewable energy consumption has a negative effect on the ecological footprint, whereas industrial value-added and nonrenewable energy consumption have a positive effect.
Originality/value
For the first time, value added from the industrial sector is being used alongside renewable and nonrenewable energy consumption to measure Indonesia’s ecological footprint. The primary cause of Indonesia’s alarming environmental degradation is the industrial sector, which acts as the driving force behind this issue. Consequently, this contribution is expected to inform the policy implications required to achieve zero carbon emissions by 2060, aligned with the G20 countries’ Bali agreement of 2022.
Keywords
Acknowledgements
Ethical considerations: The authors have taken care of all ethical issues, such as plagiarism, informed consent, misconduct, data fabrication and/or falsification, double publishing and/or submission, redundancy, etc.
The authors would like to thank all supportive parties. The authors received no financial support for the research.
Conflicts of interest: The authors declare no conflict of interest.
Author contributions: Conceptualization: Robert Kurniawan, Novan Adi Nugroho; Formal analysis: Robert Kurniawan, Novan Adi Nugroho; Investigation: Robert Kurniawan, Novan Adi Nugroho; Resources: Robert Kurniawan, Novan Adi Nugroho, Bagus Sumargo, Sri Kuswantono Wongsonadi; Data curation: Prana Ugiana Gio, Sri Kuswantono Wongsonadi; Writing—original draft preparation: Robert Kurniawan, Novan Adi Nugroho; Writing—review and editing: Ahmad Fudholi, Agung Purwanto; Visualization: Prana Ugiana Gio; Supervision: Ahmad Fudholi.
All authors have read and agreed to the published version of the manuscript.
Since acceptance of this article, the following author has updated their affiliation: Ahmad Fudholi is at the Solar Energy Research Institute, Universiti Kebangsaan Malaysia, Bangi, Malaysia and the Research Center for Energy Conversion and Conservation, National Research and Innovation Agency, Indonesia.
Citation
Kurniawan, R., Nugroho, N.A.A., Fudholi, A., Purwanto, A., Sumargo, B., Gio, P.U. and Wongsonadi, S.K. (2023), "The ecological footprint of industrial value added and energy consumption in Indonesia", International Journal of Energy Sector Management, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJESM-05-2023-0006
Publisher
:Emerald Publishing Limited
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