The drivers of energy-related CO2 emission changes in Indonesia: structural decomposition analysis

This study aims to decompose the changes in CO2 emission, in 1990-1995 and 2010-2015, to identify the main drivers of those changes at the sectoral level. Using energy input and input-output table, the emission changes were decomposed into six factors: energy intensity, carbonization factor, technology, structural demand, consumption pattern effect, and scale effect. This model would allow a given country to identify the impacts of energy consumption, energy mix, and production efficiency (as direct sources of emission) while paying close attention to their linkages with both the economic structure and the accretion of final demand. This research was the first attempt to decompose CO2 emission changes using the input-output framework in Indonesia. The results revealed that the scale effect was the main driving factor of emission in 1990-1995. In 2010-2015, embodied emission in the chemical industry, mining, rubber, and plastic industry significantly rose due to an increase in energy intensity. Meanwhile, the embodied emission in electricity, road and air transportations, and non-metallic mineral production rose due to inefficiency in production. The energy policy to improve efficiency and diversified primary energy seemed to be negative between 2010 and 2015. Consequently, the embodied emission from energy intensity factor in several energy-intensive sectors increased along with a lack of contribution to changes in primary energy composition. This study also demonstrated that there was a decline in structural demand for electricity and mining between 2010 and 2015, which contributed negatively to the emission and yet outdrew with the rise from scale effect.