Analysis of Electricity Efficiency in Iranian Manufacturing Industries with Regard to Subsidies Reform

Abstract

Importance of renewable-energy resources because of scarcity, greenhouse-gas emissions, and their fundamental roles in production and sustainable development, has made governments to reduce energy consumption and improving energy efficiency. In this regard, targeting subsidies rule was running in Iran since 2010. Since energy additionaly to labor and capital is one of the important inputs in production, running this rule with increasing energy price, affects manufacturing industries due to the type of energy and industry. In this research, the impacts of price liberalization on electricity efficiency have evaluated. Partial adjustment model, generalized method of moment and energy intensity measure are applied to this purpose. Data are collected from Statistical Center of Iran during 1995-2013. The research innovations are: using a partial adjustment model in evaluating efficiency, assessment whole industrial groups, and the period of research. The results show that in 95 percent level of confidence, the Iranian manufacturing industries are significantly flexible for changing the use of electricity. But the electricity efficiency has gotten worse after running the rule. In general, apposite of expectations, targeting subsidies rule has failed to improve electricity efficiency at least in short run.

Keywords

• energy efficiency
• targeting subsidies
• decomposition analyses