CAUSALITY ANALYSIS OF COAL CONSUMPTION AND BIOMASS CONSUMPTION TO INDONESIA ECONOMIC GROWTH

ANALISIS KAUSALITAS ANTARA KONSUMSI BATUBARA DAN KONSUMSI BIOMASSA TERHADAP PERTUMBUHAN EKONOMI DI INDONESIA

Abstract

Coal is one of the fossil fuels that can be utilized in various industries including the electric power industry, cement industry, paper industry, steel industry, and other industries. It is Approximately 70 percent of Indonesian coal production utilized for the supply of domestic electricity, while 10 percent used for cement production, and the rest utilized for industrial fuel and metallurgical processes. In addition to coal, wood is also another source that is often used among certain communities as a biomass energy source. Coal and biomass can be used as energy sources, which can be one of the drivers of economic growth (Gross Domestic Product). Therefore, the shortage of these energy sources can be an obstructive factor for economic acceleration. The purpose of this study is to figure out the reciprocal relationship between the three variables. The method used in this study is Granger causality. The results indicate that there is a positive relationship between GDP and coal consumption, meaning that the use of coal is influenced by GDP. On the other hand, economic growth may also increase coal consumption.