Estimation of Net Export of Embodied Energy Subsidy in Iranian Economic Sectors

Abstract

The law of Targeted Subsidies on energy carriers has been implemented for seven years. There are still many uncertainties about the effectiveness of this law, which has raised many questions for energy economists. One of the main questions in this regard is the estimation of embodied energy subsidy for net export of goods and services at the level of the economic sectors that has not been taken into consideration by Iranian researchers. To answer this fundamental question, we measure the net exports of embodied energy subsidy for goods and services with using the price-gap approach and applying Iranian Input-Output table for year 2011. In addition, for assuming the differences of embodied energy in unit of Iran’s imported and exported commodities, it is measured according to the ratio of the world average energy intensity to Iran’s energy intensity. The results of this study show that while some sectors of the economy such as basic metals are faced net exports of embodied energy, the net value of the embodied energy subsidy in the content of exporting goods and services is not consistent with the net export of embodied energy, and policy makers cannot employ pricing policies, such as increasing the price of energy carriers, to manage and control the implicit energy subsidy. Accordingly, the government has recommended adjusting the prices of energy carriers in line with international prices as well as improving technology by creating an efficient financing market.

Keywords

• energy embodied subsidy
• net export
• input-output