IDEAS home Printed from https://ideas.repec.org/a/spr/masfgc/v26y2021i8d10.1007_s11027-021-09973-2.html
   My bibliography  Save this article

Potential impact of introducing emission mitigation policies in Indonesia: how much will Indonesia have to spend?

Author

Listed:
  • Marissa Malahayati

    (National Institute for Environmental Studies)

  • Toshihiko Masui

    (National Institute for Environmental Studies)

Abstract

Under the Nationally Determined Commitment (NDC), Indonesia voluntarily reduces GHG emission by 29% compared to the BAU level in 2030. While the national economics itself is still growing and advancing, the mitigation policies are expected to slow down the economy at some level. This study is trying to examine the potential impact of the emission mitigation policies on the Indonesian economy by utilizing a dynamic computable general equilibrium (CGE). The simulation result showed that the implementation of comprehensive mitigation technology would cause a GDP loss of around 1.7% by 2030 compared to the BAU level. If we look at the sectoral GDP, the agriculture sector is projected to experiencing the most significant shock by the emission mitigation policies (− 13.4% compared to BAU level by 2030). But the energy sector might become a sector experiencing higher GDP under the mitigation action (3.5% compared to BAU level by 2030). It also showed that the utilization of renewable energies for power generation would increase significantly, especially after 2025, but still cannot fully replace the dominance of fossil fuel sources. There are several policy recommendations based on our simulation results, including that the government also needs to increase efficiency in using fossil fuels, especially coal and gas, during the process of building infrastructure for renewable energy utilization. In terms of employment, the government needs to prepare other sectors to absorb labor, especially from the agricultural sector. Another crucial thing is that considering the possible economic impact, especially in the mid-term period, the government needs to implement necessary mitigation policies immediately. Otherwise, the government may need to prepare more expenditure to introduce more technologies and policies in the future.

Suggested Citation

  • Marissa Malahayati & Toshihiko Masui, 2021. "Potential impact of introducing emission mitigation policies in Indonesia: how much will Indonesia have to spend?," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 26(8), pages 1-37, December.
    • Handle: RePEc:spr:masfgc:v:26:y:2021:i:8:d:10.1007_s11027-021-09973-2
    DOI: 10.1007/s11027-021-09973-2
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11027-021-09973-2
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s11027-021-09973-2?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Malahayati, Marissa & Masui, Toshihiko, 2019. "The impact of green house gas mitigation policy for land use and the forestry sector in Indonesia: Applying the computable general equilibrium model," Forest Policy and Economics, Elsevier, vol. 109(C).
    2. Dissanayake, Sumali & Mahadevan, Renuka & Asafu-Adjaye, John, 2020. "Evaluating the efficiency of carbon emissions policies in a large emitting developing country," Energy Policy, Elsevier, vol. 136(C).
    3. Richard Millar & Myles Allen & Joeri Rogelj & Pierre Friedlingstein, 2016. "The cumulative carbon budget and its implications," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 32(2), pages 323-342.
    4. Kyoung-Min Lim & Seul-Ye Lim & Seung-Hoon Yoo, 2014. "Oil Consumption, CO 2 Emission, and Economic Growth: Evidence from the Philippines," Sustainability, MDPI, vol. 6(2), pages 1-13, February.
    5. Babatunde, Kazeem Alasinrin & Begum, Rawshan Ara & Said, Fathin Faizah, 2017. "Application of computable general equilibrium (CGE) to climate change mitigation policy: A systematic review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 78(C), pages 61-71.
    6. Jo-Hee Hwang & Seung-Hoon Yoo, 2014. "Energy consumption, CO 2 emissions, and economic growth: evidence from Indonesia," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(1), pages 63-73, January.
    7. Tomoko Hasegawa & Shinichiro Fujimori & Rizaldi Boer & Gito Sugih Immanuel & Toshihiko Masui, 2016. "Land-Based Mitigation Strategies under the Mid-Term Carbon Reduction Targets in Indonesia," Sustainability, MDPI, vol. 8(12), pages 1-12, December.
    8. Ucok W.R. Siagian & Bintang B. Yuwono & Shinichiro Fujimori & Toshihiko Masui, 2017. "Low-Carbon Energy Development in Indonesia in Alignment with Intended Nationally Determined Contribution (INDC) by 2030," Energies, MDPI, vol. 10(1), pages 1-15, January.
    9. Tacconi, Luca & Muttaqin, Muhammad Zahrul, 2019. "Reducing emissions from land use change in Indonesia: An overview," Forest Policy and Economics, Elsevier, vol. 108(C), pages 1-1.
    10. Nobuhiro Hosoe & Kenji Gasawa & Hideo Hashimoto, 2010. "Textbook of Computable General Equilibrium Modelling," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-28165-3, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dzyuba, Yu. & Bakalova, I., 2023. "CGE models for resource-based economy: A comprehensive bibliometric analysis," Journal of the New Economic Association, New Economic Association, vol. 61(4), pages 12-50.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dzyuba, Yu. & Bakalova, I., 2023. "CGE models for resource-based economy: A comprehensive bibliometric analysis," Journal of the New Economic Association, New Economic Association, vol. 61(4), pages 12-50.
    2. Duyen Dang Thi Thuy & Huyen Giang Thi Thu, 2023. "Tourism with Energy Production and Consumption in the Red River Delta, Vietnam," International Journal of Energy Economics and Policy, Econjournals, vol. 13(1), pages 501-509, January.
    3. Lin, Boqiang & Jia, Zhijie, 2019. "How does tax system on energy industries affect energy demand, CO2 emissions, and economy in China?," Energy Economics, Elsevier, vol. 84(C).
    4. Azam, Muhammad, 2016. "Does environmental degradation shackle economic growth? A panel data investigation on 11 Asian countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 65(C), pages 175-182.
    5. Leila Niamir & Gregor Kiesewetter & Fabian Wagner & Wolfgang Schöpp & Tatiana Filatova & Alexey Voinov & Hans Bressers, 2020. "Assessing the macroeconomic impacts of individual behavioral changes on carbon emissions," Climatic Change, Springer, vol. 158(2), pages 141-160, January.
    6. Malahayati, Marissa & Masui, Toshihiko, 2019. "The impact of green house gas mitigation policy for land use and the forestry sector in Indonesia: Applying the computable general equilibrium model," Forest Policy and Economics, Elsevier, vol. 109(C).
    7. Bilgili, Faik & Mugaloglu, Erhan & Koçak, Emrah, 2018. "The impact of oil prices on CO2 emissions in China: A Wavelet coherence approach," MPRA Paper 90170, University Library of Munich, Germany.
    8. Liu, Li-Jing & Yao, Yun-Fei & Liang, Qiao-Mei & Qian, Xiang-Yan & Xu, Chun-Lei & Wei, Si-Yi & Creutzig, Felix & Wei, Yi-Ming, 2021. "Combining economic recovery with climate change mitigation: A global evaluation of financial instruments," Economic Analysis and Policy, Elsevier, vol. 72(C), pages 438-453.
    9. Lin, Boqiang & Jia, Zhijie, 2020. "Does the different sectoral coverage matter? An analysis of China's carbon trading market," Energy Policy, Elsevier, vol. 137(C).
    10. Tuna, Gülfen & Tuna, Vedat Ender, 2019. "The asymmetric causal relationship between renewable and NON-RENEWABLE energy consumption and economic growth in the ASEAN-5 countries," Resources Policy, Elsevier, vol. 62(C), pages 114-124.
    11. Attila Jambor & Nuno Carlos Leitao, 2017. "Economic Growth and Sustainable Development: Evidence from Central and Eastern Europe," International Journal of Energy Economics and Policy, Econjournals, vol. 7(5), pages 171-177.
    12. M. Alejandro Cardenete & M. Carmen Lima & Ferran Sancho, 2013. "Are There Key Sectors? An Appraisal Using Applied General Equilibrium," The Review of Regional Studies, Southern Regional Science Association, vol. 43(2,3), pages 111-129, Winter.
    13. Obsatar Sinaga & Mohd Haizam Mohd Saudi & Djoko Roespinoedji & Mohd Shahril Ahmad Razimi, 2019. "The Dynamic Relationship between Natural Gas and Economic Growth: Evidence from Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 9(3), pages 388-394.
    14. Fangyi Li & Zhaoyang Ye & Xilin Xiao & Dawei Ma, 2019. "Environmental Benefits of Stock Evolution of Coal-Fired Power Generators in China," Sustainability, MDPI, vol. 11(19), pages 1-17, October.
    15. Katsuyuki Nakano & Ken Yamagishi, 2021. "Impact of Carbon Tax Increase on Product Prices in Japan," Energies, MDPI, vol. 14(7), pages 1-19, April.
    16. Korrakot Phomsoda & Nattapong Puttanapong & Mongkut Piantanakulchai, 2021. "Economic Impacts of Thailand’s Biofuel Subsidy Reallocation Using a Dynamic Computable General Equilibrium (CGE) Model," Energies, MDPI, vol. 14(8), pages 1-21, April.
    17. Dong, Kangyin & Sun, Renjin & Li, Hui & Liao, Hua, 2018. "Does natural gas consumption mitigate CO2 emissions: Testing the environmental Kuznets curve hypothesis for 14 Asia-Pacific countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 94(C), pages 419-429.
    18. Niu, Tong & Yao, Xilong & Shao, Shuai & Li, Ding & Wang, Wenxi, 2018. "Environmental tax shocks and carbon emissions: An estimated DSGE model," Structural Change and Economic Dynamics, Elsevier, vol. 47(C), pages 9-17.
    19. Kingsley Appiah & Jianguo Du & Michael Yeboah & Rhoda Appiah, 2019. "Causal relationship between Industrialization, Energy Intensity, Economic Growth and Carbon dioxide emissions: recent evidence from Uganda," International Journal of Energy Economics and Policy, Econjournals, vol. 9(2), pages 237-245.
    20. Bu, Yan & Wang, Erda & Möst, Dominik & Lieberwirth, Martin, 2022. "How population migration affects carbon emissions in China: Factual and counterfactual scenario analysis," Technological Forecasting and Social Change, Elsevier, vol. 184(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:masfgc:v:26:y:2021:i:8:d:10.1007_s11027-021-09973-2. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.