Economy wide CO2 implications of considering IPPs in the Indonesian power sector:: An input-output analysis

In this paper, an input-output decomposition model has been developed to examine the factors which affect the economy-wide CO2 emission changes due to considering independent power producers (IPPs) in the Indonesian power sector during 2003-2017. There are four major components that affect the total economy-wide change in CO2 emissions, i.e., fuel mix-, structural-, final demand-and joint-effects. The results show that considering IPPs in power sector planning in Indonesia would mitigate the CO2 emissions. The CO2 mitigations would increase if the length of contract between IPPs and the existing utility is increased. The CO2 mitigations would increase 2.1 times higher if the duration of contract is increased from 5 to 15 years. Of the total CO2 mitigations, the fuel mix- and structural-effects would increase the CO2 mitigations, however, the final demand- and joint-effect would act in the opposite direction under all duration of contract cases.