Addressing CO2 emissions in Indonesia: Potential role of environmental policy, renewable energy, and economic growth

Abstract

This study seeks to unravel the potential role of policy stringency and renewable energy in reducing carbon dioxide (CO2) emissions in Indonesia for the period 1990-2020 by integrating the Environmental Kuznets Curve (EKC) model. The Autoregressive Distributed Lag (ARDL)-Bounds testing is used to uncover the dynamic association. Data were gathered from Our World in Data and the World Bank. The Bounds test signifies that the presence of long-run equilibrium amid the variables is evident. The EKC hypothesis, i.e., an inverse U-shaped nexus between income and pollution is verified. The income turning point is US$ 2,771 per capita, which was reached in 2009. Environmental policy stringency and clean energy are confirmed to support CO2 reduction. A 1% increase in the proportion of clean energy consumption leads to a 0.65% decline in CO2. Following the findings, this study remarks that advancing environmental policy stringency and enhancing the adoption of clean energy are effective instruments for CO2 emissions reduction.