The Relationship between Urbanization and Energy Consumption in the Provinces of Iran; Applying the Generalized STIRPAT Model

Urbanization is a structural transition from rural to urban areas which have been influenced by energy consumption of various channels. Explaining the relationship between energy consumption and urbanization and specifying the amount and how it can influence policies in the energy sector and policies of the population is helpful. This study uses the generalized STIRPAT model to examine the role of various channels which are affect the energy consumption. These effects are estimated at the short and long-run through the Panel Auto Regressive Distributed Lag with data of 30 provinces during 2004-2015. Moreover, the vector error correction model of energy consumption and other explanatory variables are investigated. Our results show that there is a two-way relationship of positive and significant between energy consumption and urbanization in the short and long-run. Also in this study, Kuznets hypothesis regarding in the U inverse relationship between urbanization and energy consumption is not rejected and it can be said the relationship between these two variables is a positive relationship but decreasing. Also, the effect of other variables such as income per capita, technology index and the number of vehicles on energy consumption are positive and significant.