Decomposition of Rebound Effect in Iran by Computable General Equilibrium

Iran is one of the countries with high energy consumption per capita in the world. One solution to reduce energy consumption while increasing economic growth is to improve energy efficiency in various economic activities because increasing in energy savings is one of the eligible effects of the policy of efficiency increase. Improving energy efficiency in the economic activity is a way to reduce energy consumption and enhance economic growth, but the desired effects of the policy are limited due to rebound effects. One of the challenges is decomposition direct and indirect rebound effect and economy-wide rebound effect. The purpose of this article is to provide a theoretical model for the analysis of rebound effects and its calculation in various activities using a general equilibrium model. Based on the results of the modeling, which uses the data of the Social Accounting Matrix of 1390 in Islamic Parliament Research Center , the total direct and indirect rebound effect of increasing one percent of efficiency of electricity and fossil fuels are 90.1% and 72.8%, respectively. The economy-wide rebound effect are also not significantly different from the direct and indirect rebound effects, as households do not respond very well because of the low contribution of energy costs from household expenditures, and so economy-wide rebound effect are 89.9 and 72.5. The high rebound effects observed in the Iranian economy will limit the effectiveness of the efficiency-enhancing policy on reducing energy consumption, so pricing policies along with the efficiency-enhancing policy are recommended.