Decomposition of Iranian Energy Consumption-Related CO2 Emissions in Economic Sectors; An Index Decomposition Analysis

The main purpose of this paper is to analyze the factors that affect the extent and intensity of CO2 emissions due to energy consumption. To this end, the index decomposition analysis (IDA) is applied to analyze the factors that influence CO2 emissions, namely: economic activity, structural changes, coefficient of CO2 emissions and energy intensity. Due to the differentiated nature of this relationship across economic sectors, energy consumers are divided into five aggregated units: (1)domestic-public-commercial, (2)industrial, (3)transportation, (4) agriculture, and (5)other sectors. The study covers the period of 1995 to 2005. The results indicate that economic activity has the largest positive effect on CO2 emissions in the economy as a whole and all sectors except industry and transportation. Structural changes in industry and transport have a dominant impact on CO2 emissions increase. Energy intensity has a relatively large effect on changes in domestic-public-commercial CO2 emissions, while it has a negligible and at time negative impact in other sectors. Changes in the coefficient of CO2 emissions has negligible effect in all economic sectors except for the “other sectors (including power plants, refineries). Analysis of CO2 emission intensity shows that about 82 percent of changes in the intensity of CO2 emissions are due to structural changes.