Evaluation of Energy Intensity and the Effect of Technology on the Efficiency of Industrial Energy Demand: A Case Study of Iran

Abstract

This study aims at analyzing the energy intensity and also the effect of changes in the production technology on the efficiency of energy consumption in Iranian manufacturing sector. To this end, a regression method entitled the Translog Cost Equation Function is used to evaluate the energy consumption. The period of investigation is 1999- 2011. The results show that the energy intensity in the period of investigation is equal to 0.08 percent which indicates the effectiveness of this variable in the industrial sector. Findings also demonstrate that the technology had the lowest effect, while the small change in the price of energy (i.e. substitution and budgetary effects) had the highest effect on the energy intensity. This means that due to the structure of the industrial sector of the Iranian economy and the low price for energy as well as its adequate supply has led to the utilization of energy intensive components.

Keywords

• energy intensity
• technology change
• translog cost equation function