Carbon Emission Control Mechanism: Analysing the Role of Growth of the Transportation and Warehousing Sector, GDP, and Renewable Energy Consumption

Abstract

This study explores the relationship between Growth of the Transportation and Warehousing Sector, Gross Domestic Product (GDP), and Renewable Energy Consumption on carbon emissions in Indonesia. This study is motivated by the global challenge of reducing carbon emissions to address climate change, especially in developing countries that face a dilemma between economic development and environmental sustainability. Using the Fully Modified Ordinary Least Squares (FMOLS) approach with time series data from 2011-2023, the results show that Growth of the Transportation and Warehousing Sector has a significant positive effect on carbon emissions, reflecting the increase in fossil energy consumption caused by increased logistics and distribution activities. Gross Domestic Product (GDP) was also found to be significantly positively related to carbon emissions, supporting the Environmental Kuznets Curve (EKC) hypothesis, which states that in the early stages of economic growth, emissions tend to increase along with higher fossil energy use. In contrast, Renewable Energy Consumption shows a negative and significant effect on carbon emissions, indicating that the transition towards clean energy sources can substantially reduce carbon emissions. This research confirms the need for low-carbon technology adoption, accelerated investment in renewable energy, and strengthened environmental policies to reduce the impact of carbon emissions. The findings provide relevant empirical insights for policymakers in designing climate change mitigation strategies and a sustainable energy transition, in line with Indonesia's carbon emission reduction target of 29% by 2030 and achievement of net zero emissions by 2060.