Measuring Energy Consumption Efficiency Using Data Envelopment Analysis (DEA) with Undesirable Factors

Iran’s vision statement 1404, maintains that the nation needs to uphold its productivity and innovative spirit in order to enhance the economy’s competitiveness. Having considered the implications of the vision statement 1404 for the country’s sustainable development, in this paper, an attempt is made to measure Iran’s energy efficiency compared to the neighboring countries and some other nations, in the time period 2007-i2012. Using the well-known Data-Envelope Analysis methodology (DEA), we investigate whether the country has succeeded in closing the gap pertaining to the energy efficiency goals determined at the Vision Statement 1404. The study shows, however, in the time period under consideration, energy efficiency in Iran and some neighboring countries, have in fact deteriorated, due to some policy deficiency, particularly universal energy subsidies. The result clearly implies the need for a set of consistent and pro-efficiency energy policies in Iran, endured in the medium and long-run, in order to establish a reasonable path to energy efficiency level envisaged in vision statement 1404.