p-ISSN: 1979-3650, e-ISSN: 2548-2149 http s:/ / e - jo urna l.una ir.a c .id / JMTT ©2020 Ahm a d Fa ra b i, Azra i Ab d ulla h. Pub lishe d in Jurna l Ma na je m e n Te o ri d a n Te ra p a n. Pub lishe d b y Unive rsita s Airla ng g a , De p a rtm e nt o f Ma na g e m e nt. This a rtic le is p ub lishe d und e r the C re a tive C o m m o ns Attrib utio n (C C BY 4.0) lic e nc e . 160 ENVIRO NMENTA L DEG RA DA TIO N IN INDO NESIA A ND MA LA YSIA : THE EFFEC T O F ENERG Y C O NSUMPTIO N, EC O NO MIC G RO WTH, PO PULA TIO N, A ND FO REIG N DIREC T INVESTMENT (FDI) A hm a d Fa ra b i 1* , A zra i A b d ulla h 1 1 De p a rtme nt o f Ma na g e me nt a nd Huma n Sc ie nc e s, Unive rsiti Te kno lo g i Pe tro na s Ad d re ss : 1 36210 Se ri Iska nd a r, Pe ra k Da rul Rid zua n, Ma la ysia *E-ma i : a hma d .fa ra b i_g 03541@ utp .e d u.my A BSTRA C T The ma in o b je c tive o f this stud y is to e xa mine ho w e ne rg y c o nsump tio n, e c o no mic g ro wth, p o p ula tio n, a nd fo re ig n d ire c t inve stm e nt (FDI) a ffe c ts C O 2 e m issio ns in Ind o ne sia a nd Ma la ysia . This stud y use s the lo ng e st a nd mo st up d a te d a nnua l d a ta d uring the p e rio d 1960- 2018. To g e t a d e e p e r a na lysis, this stud y e m p lo ys d isa g g re g a te o f C O 2 e m issio ns a nd e ne rg y c o nsum p tio n d a ta na m e ly, o il, c o a l a nd na tura l g a s. The o rd ina ry le a st sq ua re w hic h p re c e d e d b y unit ro o t te st a nd c la ssic a l a ssum p tio n te st a re e m p lo ye d . The re sults sho w tha t a ll typ e o f e ne rg y c o nsum p tio n a ffe c t p o sitive ly to C O 2 e m issio n. Ec o no m ic g ro w th is id e ntifie d a s the va ria b le w ith g re a te st influe nc e s o n C O 2 e m issio ns in o il a nd na tura l g a s model, while CO 2 e m issio ns fro m c o a l c o nsum p tio n a re m a inly a ffe c te d b y p o p ula tio ns. The stud y c o nc lud e s tha t e c o no m ic g ro w th o f b o th c o untrie s re lie s he a vily o n fo ssil fue l. C O 2 emission sourced from coal mostly affected by population due to the high demand of e le c tric ity fro m ho use ho ld fulfille d b y p o w e r g e ne ra tio n w hic h use c o a l a s the fue l. The EKC hyp o the sis is c o nfirm e d in the m o d e l o f g a s, ind ic a te tha t na tura l g a s is the m o st a p p ro p ria te so urc e o f e ne rg y to b e use d a t the c e rta in le ve l. Using na tura l g a s is e ffe c tive ly d e c re a se the CO 2 e missio n while in the sa me time inc re a se the e c o no mic g ro wth. Na tura l g a s is a lso fo und a s the m o st e nviro nm e nta lly frie nd ly fo ssil fue l d ue a s it p ro d uc e s le ss C O 2 e m issio n c o m p a re d to o il a nd c o a l. The find ing s ha ve im p o rta nt im p lic a tio ns fo r p o lic y m a ke rs in d e te rm ining p o lic y a nd b usine ss d e c isio ns e sp e c ia lly to e nha nc e e nviro nm e nta lly frie nd ly e ne rg y use s fo r the b e ne fit o f the e c o no my. Keywords : e ne rg y c o nsum p tio n, o il, c o a l, g a s, e c o no m ic g ro w th, p o p ula tio n, urb a niza tio n, tra d e o p e nne ss JEL C la ssific a tio n : C32, O52, Q43, Q50 A rtic le Histo ry: Re c e ive d: Ma y 29, 2020; Re vise d: July 18, 2020; Ac c e pte d: July 23, 2020; Ava ila ble Online : Aug ust 28, 2020 DO I : 10.20473/jmtt.v13i2.19483 INTRO DUC TIO N Carbon dioxide (CO 2) e m issio ns is a m a jo r fa c to r c a using so m e w o rld w id e e nviro nm e nta l d a m a g e . The inc re a sing o f C O 2 e m issio ns in the e a rth's a tm o sp he re c a use g lo b a l w a rm ing whic h the n inc re a se s the te mp e ra ture o f the e a rth, me lting the p o la r ic e whic h tha n ra ise the le ve l o f se a w a te r, a nd c lim a te c ha ng e . The ra ise o f C O 2 e m issio ns m a inly c a use d b y the b urning o f fo ssil fue l c o nsum p tio n in va rio us se c to rs inc lud ing ind ustry, tra nsp o rta tio n, a nd ho use ho ld . In 2018, the Inte rna tio na l Ene rg y Ag e nc y (IEA) re c o rd e d 33.4 G t o f C O 2 e m issio ns in the world, where 65% of CO 2 e m issio n is so urc e d fro m fo ssil fue ls a nd ind ustria l p ro c e ss (EPA, 2018).This is ve ry w o rrying le ve l b e c a use it c o uld e nd a ng e r the surviva l o f living thing s in the w o rld .