Determinants of CO2 emission intensity

Using a firm-level dataset from the Indonesian large and medium manufacturing sector, this paper investigates the energy usage performance and the main factors that are related to carbon dioxide emission intensity of manufacturing firms, from 2011 to 2014. Although food, beverages; fabricated metal and machinery; and non-metallic mineral are three primary energy-intensive sectors, only the latter had high energy intensity. Meanwhile food industry and fabricated metal and machinery show low energy intensity due to their high value-added. This paper also presents an estimation of carbon dioxide emission due to fuels consumption of firms. During the period of study, the trend of carbon emission has increased, but the carbon emission intensity has shown improvement. Performing panel data framework, this study uses OLS, 2SLS, and fixed effect model in analysing the determinants of CO2 intensity. The result of the FE regressions suggests that larger firms are emission efficient compared to small sized firms. Similarly, capital and labor intensive firms are less-carbon intensive. Furthermore, firms that spend more on maintenance have emitted more. This perhaps due to the adoption of high maintenance equipment by emission-intensive firms that requires for more expanses.