Estimating the Rebound Effect of Heavy and Light Industries in Iran with Increasing Endogenous Energy Efficiency

One of the biggest challenges of Iran's economy is high-energy consumption along with high-energy intensity. Improving energy efficiency as a non-price tool is one of the most important ways to deal with above phenomenon, but rebound effect is an economic event whose presence causes a complete or incomplete reduction of expected reserves due to improved energy efficiency. Estimating rebound effect, in addition to having economic justifications, can also help economic policymakers to make informed decisions. In the present paper, by endogenous modeling of energy efficiency improvement, rebound effect of the Iran's industrial (manufacturing) activities by heavy and light industries for period 1374-1398 was estimated. The results show that average rebound effect of heavy industries in period under study is equal to 3.127 percent and the same figure in same period for light industries is equal to 1.711 percent. It is noteworthy that the share of output component of rebound effect for both heavy and light industries is higher than the share of substitution component and is equal to 79.6% and 93.4%, respectively.