Driving factors of energy related CO2 emissions at a regional level in the residential sector of Iran

Abstract

Abstract Iran has increased its CO2 emissions significantly during the past few decades. The household sector in Iran contributes one of the largest sectors of CO2 emissions. Despite this significant contribution, the existing policies have predominantly concentrated on large-scale initiatives while overlooking the regional role in shaping and implementing these plans. Therefore, this study investigates the relationship between CO2 emissions and the efficient factors in three major groups including energy, climate, and household socio-economic factors. This study aims to address regional carbon emissions and develop CO2 reduction policies tailored to each region's specific circumstances. It focuses on planning strategies at the regional level to effectively tackle CO2 emissions. Household panel data of 28 provinces of Iran are employed by using both static and dynamic panel models for the years 2001 to 2019. Static estimation includes Fixed Effect (FE), Random Effect (RE) and pooled Partial least squares (PLS), Dynamic estimation includes difference Generalized Method of Moments (GMM) and system Generalized Method of Moments (GMM). The empirical result of the static method showed positive dependence of household CO2 emissions on Heating Degree Days (HDD), Cooling Degree Days (CDD), precipitation level, oil consumption, gas consumption, household income, size of household, and also building stocks. In more detail, educational rate, dummy variable (removal of energy subsidy), and oil price reveal the greatest negative impact on the emissions with elasticities of − 0.428, − 0.31, and − 0.15; It represents 1% increase causes − 0.428, − 0.31, − 0.15, decrease CO2 emissions, respectively. however, household size, gas consumption, and oil consumption show the most significant positive effects on CO2 emissions with 1 percent increase causes CO2 emissions increases by 0.1, 0.044, and 0.026, respectively. Regarding the impact of climate factors, a 1% increase in Heating Degree Days, Cooling Degree Days, and precipitation level causes CO2 emissions increase by 0.024%, 0.004%, and 0.011% respectively, due to an increase in fossil energy demand. Results of the dynamic method of the system Generalized Method of Moments are similar to the static estimation results, except for that household size and urbanization are not significant. Also, removing the energy subsidy for fossil fuels due to substantial subsidy in fossil fuels in Iran or implementing a re-pricing energy policy can be a beneficial way to control carbon emissions from households within the provinces of the country. However, it is important to consider that this shift could potentially transfer subsidies to investments in the private sector for renewable energies.