Does RSPO certification affects the amount of CO2 emission in Indonesia?

Abstract

As the most giant Crude Palm Oil (CPO) producer, Indonesia faces environmental issues. In 2004, the adoption of Roundtable Sustainable Palm Oil (RSPO) aimed at reducing the negative effect created by the palm oil industries. This study examined the impact of RSPO certification in the Indonesian palm oil industries on the amount of CO2 as one component of GHG emissions. This study used time series data from 1981 to 2016, collected from the World Bank, the Tree Crop Estate Statistics of Indonesia, and UnComtrade. Vector Error Correction Model (VECM), with the amount of CO2 emissions in Indonesia as the dependent variables, was run against the area used to produce CPO, the amount of CPO produced by Indonesia, the CPO price of Indonesia, and the dummy variable that is RSPO certification. The results show that the model has both short and long-term equilibrium relationships. While the RSPO certification as a dummy variable is not associated with the amount of CO2 emissions in Indonesia.