THE IMPACT OF GEOTHERMAL ENERGY SECTOR DEVELOPMENT ON ELECTRICITY SECTOR IN INDONESIA ECONOMY

• Main Authors: Nayasari Aissa, Djoni Hartono
• Format: Article
• Language: Indonesian
• Published: Bank Indonesia 2016-12-01
• Series: Bulletin Ekonomi Moneter dan Perbankan
• Subjects: CGE; Electricity; CO2 Emission; Fossil Energy; Geothermal; Growth
• Online Access: https://www.bmeb-bi.org/index.php/BEMP/article/view/628

Energy is one of the most important inputs that supports Indonesia’s economy. The government utilises coal and oil as the main sources for power plants energy mix. However, the utilization of fossil fuel energy has been proven to pose negative impacts on the environment such as, increasing carbon dioxide emission which leads to global warming. This study analyses investment policy on increasing electricity production of geothermal power plants as well as substitution of fossil energy to geothermal energy using Computable General Equilibrium (CGE) Model and Indonesia’s data of Social Accounting Matrix 2008. The result shows that when investment on the substitution of energy from fossil to renewable energy takes place, economic growth will increase and carbon dioxide emission will reduce significantly.