Rebound Effects of Improved Electricity, Fossil Fuels and Energy Efficiency in Energy Intensive Industries: Computational General Equilibrium Model

Energy-intensive industries in Iran are responsible for a significant share of energy consumption, especially oil products. Therefore, there is a major focus on promoting energy efficiency in such industries. Energy efficiency improvement results in rebound and backfire effects. In this paper we estimate the effects of fuels, electricity and energy efficiency improvement in energy intensive industries based on computational general equilibrium model. Simulation is done for six scenarios, including 3. 1% efficiency improvement of electricity, fuels and energy for energy intensive industries and all sectors of economy. Results show that the rebound effects in chemical and basic metal industries are considerable (For instance, there are rebound effects of 79%, 94% and 92% in the last third scenarios in chemical industry). In addition, efficiency improvement will result in production cost decrease. Chemical and non- metallic mineral industries experiencing the most decreases of production cost around 0. 9% and 0. 6%, respectively.
JEL Classification: C68، Q41، Q43