Forecasting CO2 Emission in Indonesia from the Economic and Environment Impact Using Vector Error Correction Model

CO2 emissions are a crucial problem in almost the entire world, including Indonesia. CO2 emissions are considered the primary source of greenhouse gas emissions causing climate change and global warming. Various literature studies show a relationship between CO2 emissions and the population, Gross Domestic Product (GDP), and energy consumption. However, limited research still raises the relationship between forest areas and CO2 emissions, including the various factors that cause CO2 emissions to continue to be developed as mitigation efforts to reduce CO2 emissions and Create workable action plans to ensure sustainable low-carbon development. This study aims to analyze the causality relationship of various factors that affect CO2 emissions in Indonesia, namely Population, GDP, energy consumption, and forest areas, and predict CO2 emissions for 2020 to 2030. The method used in this study is the Vector Error Correction Model (VECM). This Econometric methodology can present the relationship of variables in the short and long term and the causality relationship between variables and the Granger causality test. The Granger causality test findings that in a short time, only the area of forest area does not substantially increase CO2 emissions. But in the long term, Population, GDP, energy consumption, and forest areas have uni-directional caused CO2 emissions. Forecasting CO2 emissions from 1990 to 2019 using the VECM model resulted in a MAPE of 2.637836%. In the long run, it is predicted that from 2020 to 2030, there will be a 65% increase in CO2 emissions. Energy consumption, the variable that most contribute to the rise in CO2 emissions, should get immediate attention.