The electricity sector has played an important role in causing the increase of carbon emissions and environmental damage in Indonesia. As a developing country, the demand of electricity rises year by year. This increase is directly proportional to both carbon emissions and environmental damages. The purposes of this research are to evaluate the electricity sector that has caused both carbon emissions and environmental impacts, and to analyze how the electricity sector is related to energy efficiency, increased GDP, and the environmental impacts of Indonesia.
This study uses multiple methods to collect and process related data. The data collection were obtained from several official sources. Data processing in this research involves decoupling analysis, divisia index decomposition, input-output analysis, and input-output life cycle assessment. Decoupling analysis compares the results between OECD and Tapio method. Divisia index decomposition has been used for looking at the key sectors that caused high CO2 emissions in Indonesia. This method was divided
into the CO2 emissions coefficient, fossil fuel structure, heat rate of electricity, electricity intensity and economic growth which it counts by the period wise and time series analysis. Input output analysis has been used in the linkage analysis, to determine the top 10 sectors from backward and forward analysis, as well as the sensibility of dispersion and power index of dispersion. IO-LCA is the last method that was used for calculating the environmental impact in Indonesia. Traci 2 and Impact 2002+ were applied as the methods to both measure and analyze the environmental impacts.
This research found that the Indonesia’s and Asia’s financial crisis had big effects to the Indonesia’s economic and policies related to energy. The consumption of fossil fuels such as natural gas, coal, oil and electricity are the key sectors that need to be managed. Consumption of the electricity was found as the top primary sector, which should be addressed. From the Traci method it was determined that because of the electricity sector, the sector with highest environment impact in Indonesia is the eutrophication sector. From Impact 2002+ it was found that ionizing radiation and mineral extraction are the highest environmental impact caused from the electricity sector.

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