Chen Joyce J., Pitt Mark M.

This paper describes the energy transition in Indonesia and examines the determinants of energy demand, by fuel. The key innovation of this paper is the documentation of how these relationships have evolved over time. We present a new method to combine econometric analysis and index decomposition analysis to examine household energy transition. This approach also allows us to consider a broad range of demographic and structural factors, while providing a clear and concise representation of our findings. We find that the composite indices mask important underlying patterns. In particular, our results indicate that energy transition in Indonesia cannot be confidently attributed to any one index. Rather, it has been driven predominantly by the triple interaction of demographics, income growth, and change in demand/supply parameters. Our findings point to the importance of utilizing time-series data in studying both the characteristics and determinants of energy transition in developing countries.

DOI : 10.1016/j.eneco.2016.10.025

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