Exploring the role of geothermal energy consumption in achieving carbon neutrality and environmental sustainability

While there is extensive research on the environmental impacts of renewable energy sources, a notable gap remains in understanding the specific environmental effects of geothermal energy. This knowledge shortfall is particularly critical for Indonesia, which holds the world's second-largest geothermal potential but has yet to effectively harness these valuable resources. This study aims to address this gap by providing a preliminary evaluation of the dynamic impact of geothermal energy consumption and various macroeconomic variables on carbon dioxide (CO₂) emissions in Indonesia from 1995 to 2020. The study employs the Fully Modified Ordinary Least Squares (FMOLS) method and conducts robustness checks using the Dynamic Ordinary Least Squares (DOLS) method. Our findings reveal that geothermal energy consumption, military expenditure, and technology innovation contribute to a reduction in CO₂ emissions, while non-renewable energy consumption increases CO₂ emissions. Additionally, the pairwise Granger causality test results indicate a unidirectional causality running from geothermal energy consumption to CO₂ emissions, suggesting that trends in geothermal energy use can reliably predict changes in CO₂ levels. This study provides valuable insights for policymakers and stakeholders in formulating sustainable policies for carbon reduction in Indonesia.