Examining the Nexus between Tourism Investment, Renewable Energy Consumption and CO2 Emissions in Indonesia

The tourism industry undoubtedly contributes positively to economic growth. However, numerous studies show that tourism can have diverse impacts on environmental quality. This study focuses on exploring the correlation between investment in the tourism sector, the renewable energy consumption, and the contribution of tourism-related sectors to CO2 emissions within the period 2000 – 2017 using a case study in Indonesia. By employing the distributed lag method with the Koyck approach, this study found that investment in the tourism sector in Indonesia has a statistically positive and significant correlation with CO2 emissions. Conversely, renewable energy consumption, as the control variable, exhibits a significant negative correlation with CO2 emissions. The findings suggest that the existing investment policies in Indonesia are not aligned with environmental sustainability, supporting the pollution haven hypothesis. To address this, the study underscores the need for stronger commitments to transitioning from fossil-based to renewable energy sources, ensuring that future tourism investments contribute to both economic growth and environmental preservation.