Analysis of the Environmental Kuznets Curve in Indonesia: The Impact of Economic Growth, Renewable and Non-Renewable Energy Consumption, and International Trade on CO₂ Emissions

Putra, Yozhan Dwi (2026) Analysis of the Environmental Kuznets Curve in Indonesia: The Impact of Economic Growth, Renewable and Non-Renewable Energy Consumption, and International Trade on CO₂ Emissions. S1 thesis, Universitas Andals.

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Abstract

This undergraduate thesis examines the validity of the Environmental Kuznets Curve (EKC) hypothesis in Indonesia by analyzing the relationship between economic growth, renewable energy, non-renewable energy, and trade openness on CO₂ emissions over the period 1965–2024. The research employs a quantitative explanatory approach using annual time series secondary data obtained from the World Bank and Our World in Data. The econometric methodology applied includes the Autoregressive Distributed Lag (ARDL) model and Error Correction Model (ECM) to estimate both long-run and short-run dynamics. The findings indicate that the EKC hypothesis is not supported in Indonesia, as the coefficients of GDP and GDP² do not exhibit the expected inverted U-shaped relationship. Non-renewable energy consumption significantly increases CO₂ emissions, while renewable energy shows a limited and less consistent role in reducing emissions. Trade openness is found to positively influence emissions, suggesting potential scale or pollution haven effects. The ECM results confirm a stable long-run equilibrium with a significant speed of adjustment. In conclusion, Indonesia’s economic growth remains carbon-intensive, driven largely by fossil fuel dependence. Policy implications highlight the urgency of accelerating energy transition, strengthening renewable energy adoption, and integrating environmental considerations into trade and growth strategies to achieve sustainable development. Keywords: Environmental Kuznets Curve, CO₂ emissions, economic growth, renewable energy, non-renewable energy, trade openness, ARDL

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