Economic Growth and CO2 Emissions in Indonesia : Investigating the Environmental Kuznets Curve Hypothesis Existence

The increasing threat of air pollution and global warming had been widely discussed in various international events. Environmental Kuznets Curve (EKC) become an interesting issue that motivated a lot of studies on the inverted U-shaped relationship between income and CO2 emission: in the early stage of development, environmental degradation occurs, but at a certain point, an increase in economic development will reduce CO2 emission. This study aims to investigate the existing of EKC hypothesis and the dynamic relationship between CO2 emission and economic growth in Indonesia for 1981-2016 using Autoregressive Distributed Lag (ARDL) co-integration framework. Data were retrieved from World Bank Development Indicators. The study shows that EKC Hypothesis does not exist. In addition, the long run model shows that economic growth appears to have a significant positive impact on CO2 emission, especially from electricity and heat production. These findings suggest the Indonesian government shift towards a service-intensive economy rather than resource-intensive and develop an alternative renewable energy source to mitigate environmental degradation as well as promote economic development