Decomposition of Coal Consumption, Economic Scale, and Coal Intensity in Indonesia: A Laspeyres Index Approach

Muhammad Aritama Juniarto; Deni Kusumawardani

doi:10.59261/inkubis.v8i3.312

Authors

Muhammad Aritama Juniarto Universitas Airlangga
Deni Kusumawardani Universitas Airlangga

DOI:

https://doi.org/10.59261/inkubis.v8i3.312

Keywords:

Coal, Coal Intensity, Economic Growth, Indonesia, Laspeyres Decomposition

Abstract

Background: Indonesia’s dependence on coal creates energy and economic challenges that cannot be explained solely by changes in consumption volume.

Objective: This study analyzes changes in Indonesia’s coal energy consumption at the national aggregate level during 2000–2024 by decomposing the economic scale effect (ESE) and coal intensity effect (CIE).

Methods: The study applies a two-factor Laspeyres index decomposition analysis adapted from Tang 2024. Coal consumption is expressed as the product of real economic scale and coal intensity per unit of real GDP. Data are obtained from the Indonesian Energy Balance, BPS real GDP statistics, and official energy and economic publications.

Results: Indonesia’s coal consumption increased by 6,272,042 terajoules during 2000–2024. The CIE contributed 3,620,525 terajoules, exceeding the ESE contribution of 2,651,517 terajoules. The five-year decomposition reveals a nonlinear pattern: the CIE constrained consumption growth during 2000–2004, became the dominant driver during 2005–2009, weakened during 2010–2014, regained dominance during 2015–2019, and reached its largest contribution during 2020–2024. These findings indicate that rising coal consumption reflects not only economic expansion but also increasing coal use per unit of economic output.

Conclusion: Indonesia’s coal-use control strategy should prioritize reducing coal intensity through energy-mix transformation, improvements in power-system efficiency, and restraint on coal-based capacity expansion.

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