Energy Intensity in the Iranian Economy: Components and Determinants

Zakaria Farajzadeh
2015 Pizhūhishnāmah-i Iqtiṣād-i Inirzhī-i Īrān  
In spite the global efforts to reduce energy intensity; Iran's energy intensity has been increasing during the recent decades. To get a more detailed investigation of energy intensity, this study aims at decomposing energy intensity into its components including efficiency and structural change as well as at examining driving forces behind Iran's energy intensity components during 1973-2011. Energy intensity decomposition showed that efficiency changes accounts for the most of increased energy
more » ... f increased energy intensity. It is found in this study that income (GDP), capital- labor ratio and urbanization are the most determinants of energy intensity and its components. Regarding the non-linear relationship between energy intensity and driving forces of income and capital-labor ratio as well as the estimated turning points, income plays a significant role in increase of energy intensity while capital-labor ratio tends to induce a reduction in energy intensity. Although urbanization has a positive contribution to energy intensity via structural changes component, its dominant effect on improved energy efficiency leads to an overall effect of reduced energy intensity by more than 1.8% as 1% increase in urbanization. The results showed a limited effect for price and share of industry in GDP and left no significant role for economic integration and foreign direct investment. The corresponding value for these variables remain less than 0.05%.
doi:10.22054/jiee.2016.1880 doaj:0db2eb452f2b47b2a4f4deed300b6481 fatcat:osbqq6sa7rbatjaz25w7lc3e3a