CO2 EMISSIONS IN IRAN FOR 1990-2010: A DECOMPOSITION ANALYSIS

For over a decade now, decomposition analysis has become popular in energy and environment studies. This paper therefore identifies the factors that have influenced changes in CO2 emissions in Iran for the period 1990-2010. The Refined Laspeyres Index method has been utilized in order to decompose the CO2 emissions while four main factors of the observed changes have been identified: economic activity, energy intensity (energy use per unit of economic output), carbon intensity (CO2 emission per unit of energy use), and population effect. The study period has been divided into two decades, the first one encompassing the period from 1990 to 2000 and the second one from 2000 to 2010. Our empirical findings have revealed that the main factor which is accelerating CO2 emissions in Iran is the economic activity for the entire study period. Also within the first decade of the study, economic activity has been followed by energy intensity while in the second decade; it has been followed by population effect. Furthermore, the carbon intensity has made minor contributions to CO2 emissions in Iran throughout the study period. Given that Iran is an energy intensive and largely oil dependent country; we therefore suggest it would be better off in terms of reduced CO2 emissions by pushing down current energy intensity as its main environmental and economic policy objective. For the future studies, a sectoral CO2 emissions analysis could be conducted for Iran in order to examine the carbon emissions increasing and decreasing factors and provide some sectoral policy implications.