Effect of fuel real prices on technology improvement and greenhouse gas emissions in the Iran road transportation sector

With the implementation of targeted subsidies and increasing energy carrier’s prices, is expected to reduce energy consumption in the transportion sector. Subject of fuel price change and energy carriers and thus increase the fuel real price compared to other factors of production; theoretically could lead to changing the behavior of fuels consumers towards the use of alternative technologies with higher efficiency and lower costs. It can be expected that by increase in the gasoline and diesel fuel real price, is taken pay more attention to motor fleet renewal and alternative fuels. For this purpose, in the present study, will be examined effects of the relative price changes of fuel (Gasoline and Diesel Fuel) on technology improving in sector Iran road transport during period 1991-2014 using Robust Least Squares method (RLS). Improving technology in road transport is divided into two groups; fuel technology (CNG consumption indicator) and engine technology (average age of the fleet). Since that technology advances should be aligned with economic and environmental conditions to be formed sustainable development. Therefore in this study, first measured effect of fuel prices on each of technology indicators, then effect of these indicators will be calculated on amount of greenhouse gas emissions. The obtained results of model estimate indicates confirmation of hypotheses proposed in this study. So that in fuel technology indicator, increasing fuel prices led to increasing CNG consumption and consequently increasing CNG consumption reduces greenhouse gas emissions. In engine technology indicator, increasing fuel prices in cars and buses sub-sectors led of decreased fleet longevity and this relationship in minibuses and trucks sub-sectors is inverse. Finally, increasing fleet longevity have positive and significant effect on greenhouse gas emissions per capita in each road sub-sectors.