Modeling Energy Intensity in Iranian Manufacturing Industries

The main purpose of this paper is to model the types of energy intensity in Iranian manufacturing industries. For this, by using the very last micro data, we have decomposed the energy intensity into its types at the 3 and 4 digit aggregate level of ISIC classification. After that, we have modeled the energy intensity types by employing a panel data model. Based on the results obtained from the different methods of measuring the numerical index of decomposition, the factors influencing energy intensity are more fitted when employing non-Divisian indices (Laspeyres, Paasche, and Fisher). Among non Divisian indices, the model with the multiplicative Divisia index has the most explanation power. The results from the model estimated also indicate the intensity of labor has a significant and positive effect on energy intensity in the manufacturing industries. In contrast, capital intensity, profit intensity, energy consumption ratio, energy substitution ratio and technology have a significant and negative effect on energy intensity. Furthermore, R&D intensity and firm size influence on energy intensity non-linearly and significantly.