Energy Efficiency of Energy-Intensive Industries in Iran: Application of Data Envelopment Analysis and Gamma Test

Excessive consumption of energy in Iran and, consequently, environmental pollution are serious challenges facing the country. Therefore, promoting energy efficiency in different sectors, especially in the industrial sector can be considered. Then the effective factors on energy efficiency should be considered carefully to make the necessary policies. Due to the importance of the industrial sector as the main driver of growth and value added, the best combination of factors affecting energy efficiency in the five energy-intensive industries for the firms of 10 employees and more during 1995-2015 was selected. The Gamma test results show that the best combination of variables affecting the energy efficiency of industries include environmental variables of technology, good governance, size of government, trade openness and real energy price as well as micro variables such as technical structure of production, capital price and energy consumption. According to the Data Envelopment Analysis, the average efficiency of all energy industries in the study period was about 68% and the food industry had a higher efficiency than the other industries.