Decarbonization of Indonesia’s Economy: An Analysis using Machine Learning Method

Abstract

A strong correlation between economic growth, energy consumption and carbon dioxide (CO2) emissions has made the increasing level of CO2 emissions becomes a perpetual problem worldwide. Therefore, the efficacy of current energy and environment related policies needs to be evaluated. In this regard, finding a reliable model to accurately forecast CO2 emissions is of importance, particularly for a developing country like Indonesia. By involving an unbalanced panel data of 77 countries covering the period of 1966 to 2019, this paper proposes a model which relies on the machine learning method to forecast CO2 emissions in Indonesia and to predict the feasibility for decoupling CO2 emissions from economic growth. This study finds the beneficial impacts of new and renewable energy on reducing CO2 emissions. However, the peak of CO2 emissions in Indonesia was not predicted. Hence, decarbonization of Indonesia’s economy is not likely to be achieved in the near future.