Indonesia sees efficiency gains despite 120% rise in carbon emissions

CO₂ rose to 620 million tonnes as the country's energy efficiency index falls to 64.7.

Indonesia’s energy efficiency improved in 2021, falling to 64.7 in 2021 from 96.8 in 2000, even as carbon emissions rose 120%, alongside weak productivity growth across the economy, according to an Asian Productivity Organization (APO) report.

Over the same period, carbon dioxide emissions increased to around 620 million tonnes from about 280 million tonnes, whilst the country’s total factor productivity recorded an average annual decline of 1.00% between 1990 and 2020 despite increased labour productivity.

Gross capital formation rose from 22.2% to 31.4% of gross domestic product (GDP) between 2000 and 2021, whilst urbanisation increased to 57.3% from 42.0% over the same period.

The energy mix shifted towards renewables, which increased to 11.08% in 2021 from 3.70% in 2000.

Agriculture accounted for 13.2% of GDP in 2021, down from 42.32% in 1970. It employed 26.9% of the workforce in 2021, down from 72.9% in 1970. Agricultural EE remained low, with an energy efficiency index of 25.9 in 2021.

The manufacturing sector’s GDP share has seen a gradual decrease from its peak in the mid-2000s, whilst the employment share has remained relatively stable.

Although overall EE has improved since 2000, the sector has faced recent challenges with energy-use spikes outpacing output growth.

Services recorded an energy efficiency index of 42.3 in 2021, reflecting a deterioration as energy use grew faster than sector output.

The report classifies Indonesia as a low-income APO member economy in its statistical appendix and as an upper-middle-income economy in macro analysis.