Grimsa Journal of Business and Economics Studies
Vol. 2 No. 1 (2025): January 2025

Long-Term Impact of Dirty and Clean Energy on Indonesia’s Economic Growth: Before and During the COVID-19 Pandemic

Ringga, Edi Saputra (Unknown)
Hafizah, Iffah (Unknown)
Idroes, Ghifari Maulana (Unknown)
Amalina, Faizah (Unknown)
Kadri, Mirzatul (Unknown)
Idroes, Ghalieb Mutig (Unknown)
Noviandy, Teuku Rizky (Unknown)
Hardi, Irsan (Unknown)



Article Info

Publish Date
25 Nov 2024

Abstract

Dirty (non-renewable) energy, considered environmentally harmful due to greenhouse gas emissions, is contrasted with clean (renewable) energy, which is believed to have positive ecological impacts that can boost economic growth in the long term. This study analyzes the long-term effects of electricity generation from both dirty and clean energy sources on economic growth in Indonesia, using data from two periods: before the COVID-19 pandemic (2000–2019) and the full period including the COVID-19 pandemic (2000–2022). Empirical findings from Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) methods reveal that dirty energy significantly impacts long-term economic growth in both periods, while clean energy does not have a substantial effect. A robustness check conducted using the Canonical Cointegrating Regression (CCR) method confirms that dirty energy continues to play a crucial role in Indonesia's long-term economic growth. A key finding is that the positive impact of dirty energy generation on economic growth was stronger in the full period including the COVID-19 pandemic compared to before. This suggests that dirty energy contributed more to economic growth during the pandemic. The study recommends a balanced approach to economic growth by prioritizing the transition to clean energy while recognizing the importance of dirty energy in Indonesia's economy. This transition should be gradual, using the current role of dirty energy to support economic development while investing in clean energy alternatives for sustainable growth.

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Journal Info

Abbrev

gjbes

Publisher

Subject

Decision Sciences, Operations Research & Management Economics, Econometrics & Finance Energy Environmental Science Social Sciences

Description

Grimsa Journal of Business and Economics Studies aims to provide a platform for researchers, scholars, and professionals to share their innovative ideas, findings, and insights in the following areas: Economic Theory and Analysis, Business Management and Strategy, Finance and Investment, Marketing ...