International Journal of Energy Economics and

Policy
ISSN: 2146-4553

available at http: www.econjournals.com

International Journal of Energy Economics and Policy, 2023, 13(1), 510-517.

Analysis of the Effect of Economic, Population, and Energy

Growth, as well as the Influence on Sustainable Energy
Development in Indonesia

Faisal Irsan Pasaribu*, Catra Indra Cahyadi, Restu Mujiono, Suwarno

Universitas Muhammadiyah Sumatera Utara, Medan, Indonesia. *E-mail: [email protected]

Received: 17 October 2022 Accepted: 09 January 2023 DOI: https://doi.org/10.32479/ijeep.13859

ABSTRACT
All economic activities require energy and are natural energy sources that can be utilized as much as possible by the community for prosperity
and sustainable development. The potential for renewable/sustainable energy in Indonesia is very large and its utilization has not been maximized.
Consumption of sustainable energy according to current data is still very low, this is because it is still dominated by fossil energy. This study aims to
analyze the effects of economic growth, population, and subsidized energy, as well as their impact on sustainable energy development. Based on the
secondary data used in this study was obtained from World Energy, the Indonesian Ministry of Finance, which was obtained in the previous three years
(2018-2021). This analysis uses a multiple linear regression model and the results of this research model show that economic growth on population
growth does not show a major influence on sustainable energy consumption in Indonesia for three years, fossil fuel energy consumption shows a
positive and significant effect on sustainable energy consumption in Indonesia.
Keywords: Renewable Energy, Energy Forecast, Energy Consumption, Energy Economy
JEL Classifications: C13, C22, C36, C39, L94, Q42

1. INTRODUCTION and economic competitiveness are some of the reasons for the
high energy demand.
Utilization of energy to conduct economic business, for example,
consumption needs, production, and so on. One of the sources of The negative impact of fossil fuel and carbon pollution will affect
natural energy, utilization as much as possible for the welfare of the human development in the future, so a transformation of fossil
community refers to the development of sustainable (renewable) energy into renewable energy is needed to save people from
energy, then sustainable energy sources and fossil energy to pollution and damage to the universe (Perera, 2017). Global
support each other in the supply of energy in the future, (Owusu warming is dangerous and serious which can cause environmental
and Asumadu-Sarkodie, 2016). damage and the universe and can cause flooding, rising sea levels,
and other problems (Shahzad, 2015).
International energy use continues to increase, where to the World
Energy Agency (IEA) projection, world energy, needs until 2030 One of the largest sustainable energy consumption in Southeast
will increase by 45% or 1.6% per year and 80% of world energy Asia and Asia Pacific, which is Indonesia compared to other
use still depends on fossil fuels. Energy consumption is an integral countries because of its large population. Almost all over the world,
and inseparable part of the economic development of a country, including Indonesia, still depend on the use of fossil energy, based
population growth, improved lifestyles, improved production, on the Director General of Renewable Energy and Conversion,

This Journal is licensed under a Creative Commons Attribution 4.0 International License

510 International Journal of Energy Economics and Policy | Vol 13 • Issue 1 • 2023
 Pasaribu, et al.: Analysis of the Effect of Economic, Population, and Energy Growth, as well as the Influence on Sustainable Energy Development in Indonesia

Ministry of Energy and Mineral Resources (2018), fossil energy Figure 1: Indonesia’s renewable energy 2015-2022
reserves are running low. Data shows that coal reserves are
currently around 7.3-8.3 billion tons which are predicted to be
exhausted in 2026.

Meanwhile, oil stocks are currently at 3.7 billion barrels and are
predicted to run out in 2028. For gas fuel, the reserves are 151.33
trillion cubic feet (TCF) and are predicted to run out in 2067. The
continuous use of fossil energy will result in the energy reserves
being depleted. Maintaining energy supplies in the future is one
of the threats to economic development in Indonesia that must be
a concern for all parties.

The development and consumption of renewable energy in

Indonesia is a hot topic for discussion so that energy shortages
do not occur by developing renewable energy and sustainability.
To realize national energy independence and security, as stated
in the master regulation, namely Government Regulation no. 79
equivalent. This is because Indonesia’s energy consumption is
of 2014 concerning National Energy Policy, the Presidential
still dominated by the consumption of fossil energy such as oil,
Regulation on General National Energy Plan (GNEP) prioritizes
natural gas, and coal.
Indonesia’s energy development that utilizes renewable energy to
the maximum and at an economic level, minimizes the use of fuel
oil, and uses optimal natural gas and new energy wisely. This is because public awareness of the environment is increasing,
resulting in people slowly starting to switch to renewable energy
Utilization of natural energy sources is a policy that must be taken consumption even though the increase is not so significant.
for sustainability in consuming energy in the future while taking Renewable energy still plays a big role in hydropower, biomass,
into account the public interest in economic development (Dogaru, geothermal, and biodiesel. Consumption of renewable energy
2020). For this reason, it is necessary to develop renewable in Indonesia will affect economic growth, population, and
energy and conserve green energy or non-fossil energy, which consumption of fossil energy.
if managed properly, these energy sources will not run out. The
issue of renewable energy has become one of the world’s central According to Sadorsky (2009), The use of RES (renewable energy
issues, considering that fossil energy is limited in the long term sources) and economic growth, when analyzed by Ward’s method
and is not environmentally friendly. based on hierarchical clusters, reveal the existence of clusters in
two countries; a group of countries with a high gross domestic
Renewable energy (green energy) is an energy source whose product (GDP) and high RES user countries and another group of
formation does not come from organic bodies. Some opinions countries with low GDP and low RES consumption. The growing
suggest that green energy is clean energy that does not pollute or population encourages the economy to provide more goods and
add to atmospheric pollutants. This energy can come from water, services which require more production of natural resources that
hydrothermal, hydropower, geothermal, wind, solar, garbage, must be extracted or taken stock of.
biomass, biofuel, to ocean waves. In the future, all green energy
should be the main policy of energy development and utilization. Research related to the relationship between energy use, economic
growth, and CO2 emissions in Pakistan (1965-2015) that, all-time
So, renewable energy or renewable energy must be put forward, series are stationary at the first level and difference and there is no
not used as an alternative. Because this energy source is a
time series at the second difference. The coefficient of economic
natural energy source that can be directly used freely and can be
growth has a positive effect on emissions from CO2 in Pakistan
renewed continuously. The potential for renewable energy that
for both observed periods (Khan, 2020). Energy consumption in
can be utilized in Indonesia is very large, but not yet optimally
Indonesia is still based on fossil fuel energy. It is hoped that shortly
developed. Geographical disparities between locations of energy
supply and demand, relatively low technological efficiency, high a significant source of sustainable energy can be found in 2046, if
technology investment, and social factors as energy users pose it is not found, it is feared that Indonesia will experience an energy
challenges for the government to develop renewable energy- shortage. The development and utilization of sustainable energy
based technologies. The development of sustainable energy is have been analyzed by PESTLE, and funds have been identified
shown in Figure 1. linking overlapping and cross-sectoral stakeholder interests in
the renewable energy sector in Indonesia. Appropriate policies
Figure 1 shows that sustainable energy consumption in Indonesia have made renewable energy stakeholders and actors face various
continues to grow and sustainable energy consumption in Indonesia risks such as economic and technological. In addition, Indonesia’s
is still very low, where the average sustainable energy consumption renewable energy target can reach 23% of the primary energy mix
in Indonesia during 2010-2018 was only 6.05 million tons of oil by 2025 and the ASEAN target as a whole.

International Journal of Energy Economics and Policy | Vol 13 • Issue 1 • 2023 511
 Pasaribu, et al.: Analysis of the Effect of Economic, Population, and Energy Growth, as well as the Influence on Sustainable Energy Development in Indonesia

Author Contribution: Provide input to the government to think or as energy. This energy source cannot be renewed if it has run
about and obtain sustainable energy in the future to provide energy out. Non-renewable energy sources consist of coal, oil, and natural
reserves for economic needs and support further development. gas. While renewable energy sources are natural energy sources
that can be directly used freely and can be renewed continuously
2. RELATED WORK and indefinitely. Renewable energy sources include hydro energy,
biomass, geothermal, solar, wind, tidal, ocean waves, and ocean
Scientific future planning can influence strategic actions (Gabriel, heat. The desire to consume by individuals will lead to a demand
2014). The future is a virtual phenomenon of time and has no for an item. Demand is the desire of consumers to buy goods with
factuality (Neuhaus, 2006). The future scientifically needs to be various alternative prices. Energy consumption is the use of energy
considered because its aspects are blurred and the nature of this to facilitate human life.
future is a function of anticipation (Habegger, 2010). Anticipate
the future based on knowledge in everyday life and science by The desire to consume by individuals will lead to a demand
elaborating ideas in theoretical templates and generating scenarios for an item. Demand is the desire of consumers to buy goods
(Gabriel, 2014). with various alternative prices. Energy consumption is the use
of energy to facilitate human life. The high use of energy can
The environment and economy are protected by not interfering be caused by rapid economic growth. The use of energy can
with growth as a requirement (Lahidji et al., 1999). Energy not be separated from human thinking to facilitate a job and
technology utilizes and stores renewable energy in the energy want high profits or economic value. The richer a country is,
supply (Whittingham, 2012). The biggest challenge in the use the greater its energy needs, but the ratio of energy needs is not
of electric vehicles and the use of electrification from residential the same. The characteristics of modern society are indicated
buildings can cause uncertainty on the energy demand side (Chakir by the high consumption of energy, especially fossil fuels.
et al., 2022). The scale of changes in the energy system will have The more people, the greater the need for energy. Energy can
an indicative impact and uncertainty for the future is a challenge be used to produce clothing and food, shelter, transportation,
for the reliability of the energy system to respond to the possibility communications, and other services that affect the quality of
of a global community that has provided future solutions with the environment.
energy transitions (Hadian and Madani, 2013).
The enormous use of energy in urban areas and industrialized
Fossil fuels produced from the fossilization process are a type of countries can cause environmental damage. According to the
hydrocarbon compound produced by living plants through the National Energy Council (2016), The main driving factors for
process of photosynthesis which converts solar energy directly increasing energy demand are population growth, economic
into energy chemicals. Most fossil fuels were produced during the growth, energy prices, and technological developments. First,
Carboniferous century in Earth’s Paleozoic era about 325 million population changes greatly affect the size and composition
years ago. Fossil fuels are fuels that hurt the environment, while of energy needs, both directly and as a result of the impact of
green energy is an energy source whose formation does not come economic development. The pattern of energy use in urban
from organic objects. Some opinions suggest that green energy is and rural areas is very different. Second, economic activity
clean energy that does not pollute or add to atmospheric pollutants. assuming GDP growth is very sensitive to energy forecasts. Third,
This energy can come from water, hydrothermal, hydropower, technology plays an important role in determining future energy
geothermal, wind, solar, garbage, biomass, biofuel, to ocean needs, such as for power generation.
waves. In the future, all green energy must become the main
policy of energy development and utilization. So, it is better if Technology will influence investment decisions, different supply
renewable energy or renewable energy should be put forward not costs for each type of energy, and the level and composition of
as an alternative. future energy demand. Economic growth is economic development
that occurs from time to time and causes real national income to
The roles and impacts of integration on the environment and the grow. Gross domestic product is one of the important indicators
adverse impacts of each source of RE, including technical and and the amount of added value to monitor the economic condition
operational challenges and social challenges towards a sustainable of a country during a certain period and is well based on constant
electricity future and grid decarbonization are comprehensively prices, while GRDP (Gross Regional Domestic Product) is
analyzed. some literature shows that RE integration has improved the basis of constant prices with the added value of goods and
dramatically and has many benefits; however, more is being services using prices during the year. certain as the basis (Bank
given to mitigating harmful impacts and challenges have recently Indonesia, 2016). Economic growth and energy use have a positive
emerged, resulting in increasing RE generation and connecting it relationship, meaning that a country’s economic growth will
to the grid to enable future studies to find appropriate solutions increase energy consumption. Because an increase in a country’s
towards green and sustainable energy towards sustainable power GDP will increase the country’s tendency to increase its energy
systems as shown in Figure 2. consumption.

An energy source is something that produces energy, directly or Population Growth Population growth is a dynamic balance
through a conversion or transformation process. Renewable energy between forces that increase and forces that reduce population.
sources are natural resources that can be used as energy sources When countries are encouraged to supply more energy due to high

512 International Journal of Energy Economics and Policy | Vol 13 • Issue 1 • 2023
 Pasaribu, et al.: Analysis of the Effect of Economic, Population, and Energy Growth, as well as the Influence on Sustainable Energy Development in Indonesia

Figure 2: CO2 emission reduction from changing the fuel mix in a power plant

population growth then they will use a faster or cheaper way of Population growth is the percentage of Indonesia’s population
using and using fossil fuels. growth rate in 2022 of 1.17%, which the previous year reached
1.22%, a decline caused by several factors including the declining
Energy Subsidy United Nations Environment Program (2008), birth rate. This variable data is obtained from the World Bank and
explains subsidies energy as a direct payment made by the is measured in percent with energy subsidies provided by Indonesia
government to producers of energy or buyers to stimulate in 2030, the world’s energy needs increase by 45%. This data
production or use for energy certain or convert it to a form of variable is obtained from the Indonesian Ministry of Finance and
energy other. Meanwhile, The IEA states that energy subsidies is measured in billions of rupiah. Fossil fuel energy consumption is
are government policies related to energy policies that can the amount of fossil energy consumed by the people of Indonesia.
reduce the cost of energy production, and can increase the value This data variable is taken from the BP SRWE and is measured in
received by energy producers or reduce the value paid by energy million tons of oil equivalent (equivalent to million tonnes of oil).
consumers. New Energy Development Renewables (NEDR) are Data Collection Techniques This research is descriptive analysis
driven by the Indonesian government as the future national energy, research with quantitative methods. In this study, the data used
because of the level high economy. Energy subsidies as forms of is secondary data in the form of time series data for three years
government action that aim to reduce production costs of energy, in Indonesia.
increase the income of energy producers or reduce the costs paid
by energy consumers. Fossil energy consumption fossils are fuels The data used are renewable energy consumption data and fossil
derived from organic bodies (living things) that have undergone energy consumption data from BP SRWE, data on economic
a sedimentation process for millions of years. growth and population growth sourced from the World Bank, as
well as data on energy subsidies sourced from the Ministry of
Most fossil fuels were produced during the Carboniferous century Finance. This research is processed by using the E-Views analysis
in Earth’s Paleozoic era, about 325 million years ago. Indonesia tool 10 Data Analysis Classical Assumption Test Technique.
still dominates the use of fossil-based energy, especially oil, and
coal and it is hoped that shortly (2046) significant renewable 3.1. Normality Test
energy sources will be found, otherwise, Indonesia will experience The normality test was conducted to determine whether the data
an energy deficit. Because they both show substitutions. Currently, were normally distributed or not. This regression model will have
fossil energy consumption continues to increase due to population a residual value that is normally distributed or close to normal.
growth, and small, medium, and large industries. In addition to the tests above, there are three tests of normality-
Kolmogorov-Smirnov (Kolmogorov, 1933), (Smirnov, 1948), Two
approximation models for finding normality using graphical and
3. RESEARCH METHODOLOGY numerical models.

Variable Operational Definition Sustainable energy consumption The mathematical basis of the statistics for this normality test is
is the use of new energy by Indonesian people over the last few quite large and can be obtained from the literature (Motulsky and
years. This variable data is obtained from the BP (British Petroleum) Ransnas, 1987). Subtraction can be used to assess the curve of the
Statistical Review of World Energy (SRWE) and is measured in proposed model. The use of a mathematical model, for subtraction
units of million tonnes of oil equivalent (equivalent to million for the ith observation in the given data set, can be stated as follows
tonnes of oil). Economic growth is the percentage of Indonesia’s (Equation 1).
economic growth rate based on constant prices so far. The reason
ei = yi − f ( xi , β ) (1)
for using economic growth data at constant prices is that a country’s
economic growth is driven by the output produced in an economy where, yi shows the response of the ith data from the given data
whose input comes from energy consumption. This variable data set and xi is the variable vector of each set in the ith study that
is obtained from the World Bank and is measured in percent. corresponds to the data set of this study.

International Journal of Energy Economics and Policy | Vol 13 • Issue 1 • 2023 513
 Pasaribu, et al.: Analysis of the Effect of Economic, Population, and Energy Growth, as well as the Influence on Sustainable Energy Development in Indonesia

3.2. Multicollinearity Test This result shows that the VIF value of the four variables does not
Multicollinearity shows the condition of a strong correlation exceed 10, so there is no multicollinearity in the four independent
or relationship between two or more independent variables. variables.
The regression model consists of independent variables, where
this model logically shows the effect of speed on the quality of The results of the classical assumption test of linear regression
customer satisfaction so that there should not be a high correlation models using OLS, obtained a good regression model that is free
between the two variables. The multicollinearity test is not carried from multicollinearity, so the model in this study is free from
out on a simple linear regression analysis but is carried out on multicollinearity. In the results of the Glejser Heteroscedasticity
an autocorrelation test that does not need to be applied to the Test, it can be seen that the Chi-square probability value of 0.111
intersecting data. is greater than the level greater than the significance value used
(α = 5%), concluded that the model is free from heteroscedasticity
3.3. Heteroscedasticity Test and the results of the autocorrelation test, the probability of Chi-
Assumptions made for errors in OLS regression are errors that have Squared value is 0.721 which is greater than the significance value
the same variance but are not expressed as homoscedasticity. If this used (α = 5%), so it can be concluded that this equation model
assumption is violated, then it has heteroscedasticity properties. does not experience autocorrelation symptoms.
• The result of Heteroscedasticity test results are;
• OLS estimators and regression predictions follow an unbiased 4.1. Multiple Linear Regression Analysis
and consistent determination. The estimation results using the following equation can be written:
• The OLS estimator is no longer BLUE, because it is no longer
efficient and its regression prediction is also inefficient. yi = β 0 + β1 xi1 + β 2 xi 2 + ... + β n xn xin + ε (3)
• Hypothesis testing (ttest, Ftest) is no longer valid, caused by
the inconsistency of the covariance matrix of the estimated yi = dependent variable
regression coefficients. xi = independent variable
β 0 = y-intersect
3.4. Autocorrelation Test β n = slope coefficient for each independent variable
The autocorrelation test is based on the relationship of the same
ε = residual
variable to two consecutive time intervals and measures the value
of the related variable with the original value in the time series.
4.2. Test Statistics
Durbin-Watson statistics are commonly used to test autocorrelation
The coefficient of determination has a degree of accuracy about
and have been applied to data sets with statistical software. The
the independent variable and the dependent variable. The results
test results of the Durbin-Watson model are 0 to 4. A result that
of the regression test obtained an R2 value of 0.9147 which means
is close to 2 means that the level of autocorrelation is very low.
that sustainable energy consumption is obtained from variations
A result that is close to a value of 0 means a stronger positive
in the model of economic growth, population growth, energy
autocorrelation, and a result that is close to a value of 4 indicates a
subsidies, and fossil fuel-based energy consumption of 91.47%,
strong negative autocorrelation. The formula used for the Durbin-
and the remaining 8.53% is explained by other variables in outside
Watson Test can be seen below (Equation 2).
the model.
n
∑ t =2
( et − et −1 )2 Based on the results of regression analysis shows that the fcount
d= n
(2) value is greater than the ftable value, namely 64.304 > 2.99 which
∑ e
t =1 t
2
means Ha is accepted and Ho is rejected, so it can be concluded
that together the variables of economic growth, population growth,
The symbol et is the error (residual) on the tth observation, where energy subsidies, and consumption of fossil fuel energy together
n is the amount of data analyzed, and the simulation of the have a significant effect on sustainable energy consumption.
calculation of the d formula is shown below.
Discussion on the Effect of Economic Growth on Sustainable
4. RESULTS AND DISCUSSION Energy Consumption in Indonesia for three years. The results of
the analysis show that the regression coefficient of the economic
The results of the research data analysis for the Classical growth variable is -0.0281. This shows that when there is an
Assumption Test obtained the results of the normality test that increase in the economic growth of 1%, there will be a decrease in
had been carried out with the Jarque-Bera value of 0.9596 with sustainable energy consumption of 0.0281 mtoe (million tonnes of
a probability of 0.6189 which was greater than the significance oil equivalent) assuming that the variables of population growth,
value of 0.05 (α = 5%) and it could be concluded that the data energy subsidies, and consumption of fossil energy are fixed. The
used were distributed normally. results of hypothesis testing are known that economic growth does
not affect sustainable energy consumption.
The multicollinearity test can be seen in the VIF column, where
the VIF value for the economic growth variable is 1.1862, the This can be seen from the t-count -0.9691 < 1.7081 with a
population growth variable is 1.4957, the energy subsidy variable significance level of 0.739 (greater than = 5%). Economic growth
is 1.5441, and the fossil energy consumption variable is 1.1529. does not affect sustainable energy consumption in Indonesia.

514 International Journal of Energy Economics and Policy | Vol 13 • Issue 1 • 2023
 Pasaribu, et al.: Analysis of the Effect of Economic, Population, and Energy Growth, as well as the Influence on Sustainable Energy Development in Indonesia

The results of this study are following the research conducted natural resources will increase in energy consumption can result
by Attiaoui et al. 2017, which states that economic growth has in environmental damage. In addition, the pattern of energy
no significant effect on sustainable energy consumption. These consumption in Indonesia has not led to renewable energy because
results confirm that most African countries are still far from being public awareness of the environment is still very minimal.
able to exploit renewable energy. The results of this study are
interesting to study because they are different from the research Economic growth and regional development require efficiency and
conducted by Sadorsky, 2009, that economic growth has a effectiveness in the industrial, trade, and service sectors. Increased
significant effect on sustainable energy consumption after all, income and increased mobility will provide energy consumption
energy demand and economic growth in developing countries and have an impact on environmental quality and will correlate
can create opportunities for these countries to increase the use with energy demand (Surya et al., 2021).
of sustainable energy.
The results of this study are interesting to discuss because they
Likewise, research conducted by Dasilva, 2018, says that economic are different from the research conducted by Dasilva, 2018, when
growth has an effect positive and strong impact on renewable countries are encouraged to supply more energy due to high
energy consumption. With increasing economic growth, the population growth they will use the faster or cheaper way i.e., by
ability of a country to invest in renewable energy sources will also utilizing and using fossil fuels. The Effect of Energy Subsidies
increase. Thus, it can encourage countries to increase sustainable on Sustainable Energy Consumption in Indonesia for three
energy consumption. years results in an analysis that, the regression coefficient of the
energy subsidy variable is –0.0044. This shows that when there
The Effect of population growth on sustainable energy is an increase in energy subsidies of one billion, it will reduce
consumption in Indonesia for three years shows the results of the the consumption of renewable energy by 0.0044 mtoe with the
analysis that the regression coefficient of the population growth assumption that the variables of economic growth, population
variable shows the number 2.0064. The results of this analysis growth, and consumption of fossil energy are fixed.
indicate that there is an increase in population growth of 1.0%,
which will increase sustainable energy consumption by 2,006,355 From the results of hypothesis testing, it is found that energy
mtoe with the assumption that the variables of economic growth, subsidies have a negative and significant effect on renewable
energy subsidies, and consumption of fossil energy are fixed. The energy consumption. This can be seen from the t-count -2.174974
results of hypothesis testing found that population growth does >-0.70814 with a significance level of 0.0397 (smaller than = 5%),
not affect sustainable energy consumption. that energy subsidies have a positive and significant impact on
sustainable energy consumption in Indonesia.
This can be seen from the tcount 1.1508 < 1.7081 with a significance
level of 0.5573 (greater than = 5%). Based on this research, Energy subsidies have a negative and significant effect on
shows that population growth does not affect sustainable energy renewable energy consumption because energy subsidies in
consumption in Indonesia, because the energy consumption, of Indonesia are mostly aimed at fuel consumption which is not
the population in Indonesia is still dominated by fossil fuel energy renewable energy. In addition, energy subsidies are also allocated
consumption, so when there is an increase in population growth, for electricity. Meanwhile, energy subsidies used for renewable
people will consume fossil fuel energy. So, when population energy development are still very low. The results result in a
growth occurs, it will increase fossil energy consumption and do significant impact of energy subsidies on sustainable energy
not affect on increasing sustainable energy consumption. consumption in Indonesia. Where when fossil energy subsidies
increase it can reduce the consumption of renewable energy.
The increase in energy consumption can result in environmental
damage. In addition, the pattern of energy consumption in Analysis, rapid innovation by facilitating the transition can lower
Indonesia has not led to renewable energy because public the cost of sustainable technologies as well as technologies
awareness of the environment is still very minimal. The growing such as batteries so that advances in solar and wind technology
population encourages the economy to provide more goods and are examples of future energy that can be directed in a certain
services to maintain or enhance the standard of living of a nation. direction through technology policy (Gielen et al., 2019). Thus, the
Increased production of goods and services will demand more government needs to shift the use of fuel to biofuels by preparing
production of natural resources that must be extracted or taken the downstream sector of the biofuel industry, the price of biofuel
stock. As a result, natural resources will The increase in energy produced by producers is purchased according to its economic
consumption can result in environmental damage. price, and the price of biofuel subsidies is optimized so that it
can compete with fuel.
In addition, the pattern of energy consumption in Indonesia has
not led to renewable energy because public awareness of the According to Bridle and Kitson, 2014, with fossil fuel subsidies,
environment is still very minimal. Population growth encourages renewable energy does not benefit because it receives less funding
the economy to provide more goods and services to maintain from the government than fossil fuel sources. Fossil fuel subsidies
or improve a nation’s standard of living. Increased production can hinder the development of renewable energy. In addition, fossil
of goods and services will demand more production of natural fuel subsidies can impair the relative cost of renewable energy
resources that must be extracted or taken stock. As a result, competitiveness.

International Journal of Energy Economics and Policy | Vol 13 • Issue 1 • 2023 515
 Pasaribu, et al.: Analysis of the Effect of Economic, Population, and Energy Growth, as well as the Influence on Sustainable Energy Development in Indonesia

The Effect of Fossil Energy Consumption on Sustainable Energy The need for energy will be used for public consumption.
Consumption in Indonesia for three years with the results of the In addition, the existence of energy subsidies will be able to
analysis that the regression coefficient of the energy subsidy encourage technology investment, especially in the development
variable shows several 0.0543. These results indicate that if there of renewable energy so that it can encourage and facilitate public
is an increase in sustainable energy consumption by one mtoe, it access to be able to consume renewable energy and can create
will increase sustainable energy consumption by 0.0543 mtoe with opportunities for sustainable energy use to continue to increase.
the assumption that the variables of economic growth, population However, Energy subsidies in Indonesia are still mostly aimed at
growth, and energy subsidies are fixed. subsidizing fuel and electricity. Where fuel is an energy that is
classified as fossil energy so it can lead to waste in the use of this
The results of testing the hypothesis that energy subsidies affect energy because the price is cheaper. Fossil energy consumption
sustainable energy consumption are shown from the results can affect renewable energy consumption. Energy use in Indonesia
of t-count 5.7370 > 1.7081 with a significance level of 0.0000 (less is still dominated by the use of fossil fuels, and it is hoped that
than = 5%). Variables of subsidized energy, population growth, significant sustainable energy sources will be found in 2046.
and consumption of fossil energy have a positive effect on CO2
emissions and fossil energy consumption whose externalities The results of this study are in agreement with the research
are related to greenhouse gases and energy consumption, while conducted by (Costello et al., 2018), research results show that
sustainable energy consumption has a negative but significant economic growth, fossil fuel prices, population growth, imports,
impact on CO2 emissions in Indonesia in 1990-2014 (Sasana and emissions together affect sustainable energy consumption.
et al., 2017). The results of research conducted by Bridle (Bridle et al., 2017),
state that with fossil fuel subsidies, sustainable energy does not
Energy use in Indonesia is still dominated by the use of fossil benefit because it receives less funding from the government than
fuels (oil and coal), so it is necessary to obtain sustainable energy other fossil fuel sources.
in shortly future so that there is no energy deficit. The use of
sustainable energy is a special concern for the government to Fossil fuel subsidies can hinder energy development renewable. In
reduce dependence on fossil fuel energy and make environmentally addition, fossil fuel subsidies can interfere with the relative cost
friendly energy. Meanwhile, in the research of Apergis and of power renewable energy competitiveness.
Payne, 2012 (Apergis and Payne, 2012), the results show that
the consumption of fossil fuel energy affects sustainable energy 5. CONCLUSION
consumption. If new energy sources are not found shortly, it is
feared that they will cause an energy deficit. After analyzing and discussing the research, it can be concluded
as follows;
Meanwhile, research by Apergis and Payne (Apergis and Payne, 1. The economic growth variable (X1) has no significant effect
2012) states that there is a two-way relationship between sustainable on sustainable energy consumption in Indonesia.
energy consumption and non-renewable energy consumption. Both 2. The population growth variable (X2) has no significant effect
have a negative relationship because it shows substitute goods or on sustainable energy consumption in Indonesia.
substitutions between the two. If the consumption of fossil energy 3. The energy subsidy variable (X3) will have a negative and
increases it will reduce the consumption of renewable energy and significant effect on sustainable energy consumption in
vice versa if the consumption of fossil energy decreases it will Indonesia.
increase the consumption of renewable energy. 4. The fossil energy consumption variable (X4) will have
a positive and significant effect on sustainable energy
Effect of Economic Growth, Population, Energy Subsidy, and consumption in Indonesia.
Fossil Energy Consumption on Sustainable Energy Consumption 5. Economic growth, population growth, energy subsidies,
in Indonesia for three years. Based on the analysis results show and consumption of fossil fuel energy have a positive and
that economic growth, population growth, energy subsidies, and significant impact on sustainable energy consumption in
consumption of fossil energy together have a significant influence Indonesia.
on renewable energy consumption. The results of the Fcount test of
64.3035, which is greater than the Ftable, which is 2.99. The results Based on the research that has been done, the researchers provide
of the study can be concluded that economic growth, population the following suggestions:
growth, energy subsidies, and consumption of fossil energy for 1. The government needs to maintain increased economic growth
three years together have a significant influence on renewable which can also increase public awareness and attention to the
energy consumption. environment and support environmentally sound development.
Thus, the consumption of renewable energy can be increased
Increased economic growth can increase investment in renewable to substitute fossil energy which is in very limited supply.
energy sources that will encourage an increase in the consumption 2. Energy consumption is still high in Indonesia due to high
of renewable energy in the country. In addition to economic population growth. So, control is needed from the government
growth, one important aspect of renewable energy consumption through the Program (Family Planning).
is population growth. With increasing population growth, the need 3. There is a need for a review of energy subsidies in Indonesia
for energy resources will also increase. and government policies are needed regarding the allocation

516 International Journal of Energy Economics and Policy | Vol 13 • Issue 1 • 2023
 Pasaribu, et al.: Analysis of the Effect of Economic, Population, and Energy Growth, as well as the Influence on Sustainable Energy Development in Indonesia

of energy subsidies for renewable energy such as those related experiences of the UK, Singapore, and the Netherlands. Futures,
to development and investment. 42, 49-58.
4. The government must be committed to reducing the use of Hadian, S., Madani, K. (2013), The water demand of energy: Implications
fossil energy by implementing a green economy to support for sustainable energy policy development. Sustainability, 5, 4674-
sustainable development. 4687.
Khan, M.K., Khan, M.I., Rehan, M. (2020), The relationship between
5. The government must be committed to achieving the target of
energy consumption, economic growth and carbon dioxide emissions
using renewable energy by utilizing the potential of existing in Pakistan. Financial Innovation, 6(1), 1-13.
renewable energy. Kolmogorov, A. (1933), Sulla determinazione empirica di una legge di
distribuzione. G Dell’ Ist Ital Degli Attuari, 4, 83-91.
6. ACKNOWLEDGMENT Lahidji, R., Michalski, W., Stevens, B. (1999), The long-term future for
energy: An assessment of key trends and challenges. In: Energy:
Thank you to the leadership of the Universitas Muhammadiyah The Next Fifty Years. Paris, France: Organisation for Economic
Cooperation and Development (OECD).
Sumatera Utara and all parties who have supported and provided
Motulsky, H.J., Ransnas, L.A. (1987), Fitting curves to data using
motivation in completing this journal.
nonlinear regression: A practical and nonmathematical review.
FASEB J, 1(5), 365-374.
REFERENCES Neuhaus, C. (2006), Zukunft im Management: Orientierungen für
das Management von Ungewissheit in strategischen Prozessen.
Apergis, N., Payne, J.E. (2012), Renewable and non-renewable energy Heidelberg, Germany: Carl-Auer-Verlag.
consumption-growth nexus: Evidence from a panel error correction Owusu, P.A., Asumadu-Sarkodie, S. (2016), A review of renewable energy
model. Energy Economics, 34, 733-738. sources, sustainability issues and climate change mitigation. Cogent
Bank Indonesia. (2016), Statistics disseminator. In: Basic Information. Engineering, 3(1), 1167990.
Central Jakarta, Indonesia: Bank Indonesia. Perera, F. (2017), Pollution from fossil-fuel combustion is the leading
Bridle, R., Kitson, L., Duan, H., Sanchez, L., Merrill, T. (2017), At environmental threat to global pediatric health and equity: Solutions
the Crossroads: Balancing the Financial and Social Costs of Coal exist. International Journal of Environmental Research and Public
Transition in China. Winnipeg, Canada: International Institute for Health, 15, 16.
Sustainable Development (IISD). Sadorsky, P. (2009), Renewable energy consumption and income in
Costello, M., Fleharty, M., Abreu, J., Farjoun, Y., Ferriera, S., Holmes, L., emerging economies. Energy Policy, 37, 4021-4028.
Granger, B., Green, L., Howd, T., Mason, T., Vicente, G., Sasana, H., Setiawan, A.H., Ariyanti, F., Ghozali, I. (2017), The effect
Dasilva, M., Brodeur, W., DeSmet, T., Dodge, S., Lennon, N.J., of energy subsidy on the environmental quality in Indonesia.
Gabriel, S. (2018), Characterization and remediation of sample International Journal of Energy Economics and Policy, 7(5), 245-249.
index swaps by non-redundant dual indexing on massively parallel Shahzad, U. (2015), Global warming: Causes, effects and solutions.
sequencing platforms. BMC Genomics, 19, 332. Durreesamin Journal, 1(4), 1-7.
Chakir, A., Abid, M., Tabaa, M., Hachimi, H. (2022), Demand-side Smirnov, N. (1948), Table for estimating the goodness of fit of empirical
management strategy in a smart home using electric vehicle and distributions. Annals of Mathematical Statistics, 19(2), 279-281.
hybrid renewable energy system. Energy Reports, 8, 383-393. Surya, B., Muhibuddin, A., Suriani, S., Rasyidi, E.S., Baharuddin, B.,
Dogaru, L. (2020), Green economy and green growth-opportunities for Fitriyah, A.T., Abubakar, H. (2021), Economic evaluation, use of
sustainable development. Proceedings, 63(1), 70. renewable energy, and sustainable urban development mamminasata
Gabriel, J. (2014), A scientific enquiry into the future. European Journal metropolitan, Indonesia. Sustainability, 13, 1-45.
of Futures Research, 2, 31. Whittingham, M.S. (2012), History, evolution, and future status of energy
Habegger, B. (2010), Strategic foresight in public policy: Reviewing the storage. Proceedings of the IEEE, 100, 1518-1534.

International Journal of Energy Economics and Policy | Vol 13 • Issue 1 • 2023 517