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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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Economic growth Dirty energy Clean energy COVID-19 FMOLS DOLS CCR

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Copyright (c) 2024 Edi Saputra Ringga, Iffah Hafizah, Ghifari Maulana Idroes, Faizah Amalina, Mirzatul Kadri, Ghalieb Mutig Idroes, Teuku Rizky Noviandy, Irsan Hardi

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Ringga, E. S., Hafizah, I., Idroes, G. M., Amalina, F., Kadri, M., Idroes, G. M., … Hardi, I. (2024). Long-Term Impact of Dirty and Clean Energy on Indonesia’s Economic Growth: Before and During the COVID-19 Pandemic. Grimsa Journal of Business and Economics Studies, 2(1), 66–76. https://doi.org/10.61975/gjbes.v2i1.49
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