DECOUPLING ANALYSIS OF CARBON EMISSIONS AND DETERMINANTS IN INDONESIA

Abstract

This study aims to analyze the relationship between economic growth and environmental degradation in 10 provinces in Indonesia during the period 2014–2023. Using the Tapio Index analysis method and panel data regression with the Fixed Effect model (FEM), this study examines the influence of Gross Domestic Product (GDP), industrialization level (IND), and investment (INV) on CO₂ emissions. The results of the Tapio Index analysis indicate that the majority of the observed regions (90%) are still in a coupled status, indicating that economic growth continues to accompany increasing emissions. Only South Kalimantan Province shows a weak decoupling status. The panel data regression results confirm that GRDP has a positive and significant effect on CO₂ emissions. However, the industry variable shows a significant negative effect, indicating an increase in energy efficiency in the sector. Meanwhile, the investment variable is found to have no significant effect on emissions. These findings emphasize the need for more aggressive policy transformation to shift investment to the green sector to achieve sustainable economic growth.