Energy Efficiency Priority for Indonesia: A General Equilibrium Analysis

Climate change mitigation, through the means of energy efficiency improvement, requires all countries to play important roles. Developing countries are not the exception. However, in the context of developing countries, the benefit of energy efficiency improvement need to be measured against a broad range of development indicators. Using a general equlibrium model of the Indonesian economy, we simulate various different energy efficiency scenarios and compare its impact not only on the amount of emissions reduction, but also on other relevant development indicators such as employment creation, poverty incidence and income distribution. The result suggests that energy efficiency improvement which leave more resource available for output expansion is employment-generating, poverty-reducing and can have a favorable distributional implication. For Indonesia, improving fuel efficiency in public road transportation and improving energy efficiency of the energy-intensive manufacturing sector has come out as the key priority areas where energy efficiency strategy should focus on.



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Center for Economics and Development Studies is a research center under the Department of Economics, Padjadjaran University, Indonesia. A leading research institute in Indonesia in the area of economics and development studies.
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