Energy Intensity Decomposition in Iranian Economic Sectors: A Combination of Index Decomposition Analysis and Production-Theoretical Decomposition Analysis

In this study, with employing a combination of Index Decomposition Analysis and Production-Theoretical Decomposition Analysis approach, based on multiplicative approach analysis and period-wise and chain-link analysis, we evaluate the influential factors on energy intensity in the period 2006-2012. In this regards, we calculate the indexes of structural effect, activity effect, intensity effect, technological changes, changes in technical performance, and the substitution rate of the labor force and capital with energy for the Iranian economic sectors included industry, transportation, and agriculture. Furthermore, we consider these indices for consumption of the different type of energy like crude oil, petroleum products, natural gas, and electricity. The results of this study show that energy intensity in all three economic sectors increased during the period. Based on economic sector's data, substitution of the labor force with energy is the most important determinant of total change in energy intensity. However, if in addition to economic sector's data, we use energy consumption data, production effect is the most important factor. The substitution of the labor force with energy is the most important factor affecting the sectoral energy intensity. Changes in technical efficiency during this period show that total energy consumption decreased and has the lowest share in total consumption growth and energy intensity. Also, the results show that comparing based on chain-link analysis has more realistic and reliable results for policymakers.