The findings are important for Indonesia as the country seeks to maintain economic growth while reducing environmental damage. Although Indonesia has abundant renewable energy resources, fossil fuels remain a significant part of its energy system. The study shows that increasing renewable energy utilization is associated with lower greenhouse gas emissions, whereas greater fossil energy consumption is associated with higher emissions. It also highlights the need to direct domestic and foreign investment toward environmentally sustainable activities.
Indonesia Has Abundant Renewable Energy Resources
Indonesia has considerable potential to develop renewable energy from sunlight, wind, water, geothermal heat, biomass, and ocean resources. According to figures cited in the article, the country’s total potential for new and renewable energy reaches approximately 3,687 gigawatts (GW). Solar energy accounts for the largest share, with an estimated potential of 3,294 GW.
Despite this resource abundance, the amount of renewable energy capacity already installed remains far below the country’s estimated potential. The article reports that installed renewable energy capacity reached approximately 16,236 megawatts (MW) as of March 2026.
This gap illustrates a major challenge for Indonesia’s energy transition. Having natural resources does not automatically translate into cleaner energy production. Renewable energy projects require investment, supporting infrastructure, suitable technology, consistent regulations, and effective government coordination.
Continued reliance on fossil fuels also presents environmental challenges. Coal, oil, and natural gas are associated with greenhouse gas emissions that contribute to climate change. As industrial activity and energy demand grow, the choice of energy sources becomes increasingly important for balancing economic development with environmental protection.
Researchers Analyze Energy and Investment Across Indonesian Provinces
Feinnudin, Wahono, and Nikensari examined the relationships between renewable energy, fossil energy, foreign investment, domestic investment, and greenhouse gas emissions. Their approach draws on the Resource-Based View (RBV), a framework that explains how resources can contribute to better performance when they are managed and utilized effectively.
The researchers applied quantitative analysis using secondary data from official government sources, including Statistics Indonesia (BPS), the Ministry of Energy and Mineral Resources, the Ministry of Investment/BKPM, and the Ministry of Environment and Forestry.
The article describes a panel dataset covering provincial observations from 2017 to 2024. Its main statistical results report 264 observations across 33 provinces. The researchers used a Fixed Effect Model to account for differences between provinces that could influence the relationship between energy use, investment, and emissions.
The analysis was conducted through two separate models. The first examined the relationship between renewable and fossil energy use and greenhouse gas emissions. The second assessed the relationship between foreign direct investment and domestic investment and emissions.
This approach allowed the researchers to examine whether energy resources and investment were associated with environmental outcomes during the eight-year observation period.
Renewable Energy Is Associated With Lower Emissions
One of the study’s main findings is that renewable energy utilization has a statistically significant negative relationship with greenhouse gas emissions. In practical terms, greater renewable energy use was associated with lower emissions in the provincial data analyzed.
The estimated coefficient for renewable energy was −0.355381, with a probability value of 0.0199. Because this probability value is below the conventional 0.05 significance threshold, the relationship was statistically significant within the model.
Fossil energy showed the opposite pattern. Its estimated coefficient was 0.912226, with a probability value below 0.001. This result indicates a statistically significant positive relationship between fossil energy consumption and greenhouse gas emissions.
The findings support the importance of shifting toward cleaner energy sources. Expanding renewable energy can help reduce dependence on carbon-intensive fuels, although the actual environmental benefits will depend on how renewable energy replaces existing energy sources and how effectively new facilities operate.
The results do not mean that every renewable energy project automatically reduces emissions by the same amount. The coefficients describe relationships within the researchers’ statistical model, rather than universal effects applicable to every project or location.
Nevertheless, the direction of the findings reinforces the need to make better use of Indonesia’s substantial renewable energy resources.
Investment Does Not Automatically Improve Environmental Performance
The study also examined foreign direct investment (FDI) and domestic investment, known in Indonesia as Penanaman Modal Dalam Negeri (PMDN). The results reveal an important distinction between the two investment variables.
Foreign direct investment had a positive but statistically insignificant relationship with greenhouse gas emissions. Its estimated coefficient was 0.084903, with a probability value of 0.4939. The analysis therefore did not establish a statistically significant relationship between foreign investment and emissions during the period studied.
Domestic investment, however, showed a positive and statistically significant relationship with emissions. Its estimated coefficient was 0.022218, with a probability value of 0.0078.
This result suggests that higher domestic investment was associated with higher emissions in the provincial dataset. However, the statistical analysis does not establish that all domestic investment causes environmental damage. The environmental consequences of investment depend on the industries receiving funding, the technologies being used, and the environmental standards applied to projects.
Investment in renewable energy facilities, energy-efficient manufacturing, public transportation, and low-carbon infrastructure may support environmental improvement. Conversely, investment concentrated in activities with high energy consumption and carbon emissions can increase environmental pressures if cleaner technologies and effective safeguards are not implemented.
The researchers’ findings therefore emphasize the importance of investment quality and direction, rather than investment volume alone.
Government Policy Is Essential to the Energy Transition
The study extends the Resource-Based View framework from businesses and organizations to national and regional development. Under this perspective, renewable energy resources and investment can become strategic assets, but their value depends on the capacity to manage them effectively.
For Indonesia, this means that renewable energy potential must be supported by consistent policies, reliable infrastructure, investment incentives, technological innovation, and effective environmental monitoring.
The researchers emphasize several policy priorities: accelerating renewable energy deployment, strengthening incentives for green investment, redirecting domestic investment toward low-carbon activities, improving coordination between government institutions, and integrating energy transition policies into regional development plans.
These measures could help provincial governments identify energy resources that are suitable for local conditions and encourage investment in projects that support both economic activity and environmental sustainability.
The findings also have implications for businesses. Companies making investment decisions can consider energy efficiency, emissions reduction, and cleaner technologies as part of their long-term strategies. Financial institutions and policymakers can strengthen environmental criteria when evaluating projects, helping direct capital toward activities that support the transition to a lower-carbon economy.
For communities, a more effective energy transition could contribute to improved environmental quality and more sustainable use of natural resources. However, achieving these benefits will require practical implementation, appropriate safeguards, and continued evaluation of energy and investment policies.
Turning Renewable Energy Potential Into Sustainable Development
The study by A. Agung Feinnudin, Puji Wahono, and Sri Indah Nikensari highlights a central issue in Indonesia’s sustainable development agenda: natural resources and investment deliver environmental benefits only when they are managed effectively.
Renewable energy utilization was associated with lower greenhouse gas emissions, while fossil energy consumption was associated with higher emissions. Domestic investment was also associated with higher emissions, whereas foreign direct investment did not show a statistically significant relationship with emissions in the model.
These findings point toward a clear policy direction. Indonesia needs to expand renewable energy utilization while ensuring that investment supports cleaner technologies and environmentally responsible economic activities.
The research does have limitations. It uses provincial-level secondary data and statistical relationships from 2017–2024, so its findings should not be interpreted as proof of direct causation in every province or industry. Further research could examine individual sectors, the quality of green investment, and the effectiveness of specific government policies.
Even with these limitations, the study provides evidence for treating renewable energy as a strategic resource in Indonesia’s transition toward sustainable development. The challenge is not simply to possess abundant renewable energy, but to develop the institutional capacity, infrastructure, and investment policies needed to turn that potential into measurable environmental benefits.
Author Profiles
Note: The source article does not provide complete academic degrees or individual faculty profiles for all three authors. Additional qualifications and specialized expertise should be verified through official university profiles before publication.
Research Source
Article title: “Resource-Based View Model in Sustainable Development: The Role of New Renewable Energy Potential and Green Investment on Environmental Performance in Indonesia”
Authors: A. Agung Feinnudin, Puji Wahono, and Sri Indah Nikensari
Institution: Universitas Negeri Jakarta (UNJ)
Journal: Asian Journal of Applied Education (AJAE)
Publication year: 2026
Volume and issue: Volume 5, Number 4, pages 793–812
DOI: https://doi.org/10.55927/ajae.v5i4.17336
Official journal website: https://journal.formosapublisher.org/index.php/ajae
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