Sources of Change in Energy Consumption in Iran: A Structural Decomposition Analysis

Energy consumption has increased significantly in Iran during the recent decades. In this study, an inter-industrial model has been improved to investigate the sources of the changes in the energy consumption of the country. The input-output tables of Iran for the years 1988 and 2001 have been employed as the database of the model. The innovation of this research allows the researchers to study the sources of changes in energy consumption more specifically. It concerns decomposing the effect of changes in economic structure into input substitution, and backward linkage effects. The results show that the level of final demand, input substitution, and backward linkage effects lead to an increase in energy consumption in the country. In contrast, the energy intensity of products, the structural composition of the final demand, and the categorical composition of the final demand have reducing effects on energy consumption.