The driving forces of energy consumption and carbon dioxide emissions in Iran's electricity sector: A decomposition analysis based on types of ownership

Abstract

As the most active industry, the electricity generation sector contributes 22% of Iran's total energy consumption and 31% of Carbon dioxide (CO2) emissions. While power plants' high pollution and increasing power demand have prioritized determining energy consumption and emissions' underlying factors, there is no comprehensive study to analyze these factors in Iran's power sector yet. To identify driving factors of energy consumption and CO2 emissions, we utilize the Logarithmic Mean Divisia Index (LMDI) to investigate the effects of activity, generation structure, energy intensity, fuel-mix, and fuel emission coefficient on both variables between 1990 and 2017. While Decomposition studies are mostly analyses economic sectors based on the type of infrastructure, with a novel approach, we decomposed the driving factors based on the power plants' ownership to investigate how privatization affects them. This research confirmed that the activity factor was mainly responsible for both variables' growth, with a contribution ratio of more than 110% over their total amount. In contrast, the energy intensity factor reduced them by almost 12%, mainly due to the private sector's greater efficiency. It has also been stated that the private sector had a lower pollution rate, and the privatization policy has helped to reduce energy intensity and pollution.