Factor Analysis of Energy Demand in Iran's Manufacturing Industries with Emphasis on Energy Intensive Sectors

Examining the factors affecting changes in energy demand can help economic policymakers to adopt energy saving approaches. One method of examining these factors is factor analysis of energy demand. Given the high share of industry, especially energy-intensive industries in Iran's energy consumption, the purpose of this article is to analyse the factors affecting changes in energy consumption in all industrial industries and energy-intensive industries. For this purpose, the methods of analysis of Laspers, Division and Fisher index in the period 1397-1385 have been used. The results of factor analysis show that the energy consumption of all industries increased in the period under review and these findings are confirmed by real energy consumption statistics. The results also show that the main effective factor in increasing energy consumption of industries (year-on-year or in the whole period) is related to the effect of activity and other factors sometimes have an increasing effect and mainly a decreasing effect on energy consumption. Findings indicate the maximum role of energy intensity in reducing energy consumption of industries (including energy-intensive industries) and the positive role of structural effect in increasing energy consumption compared to the effect of activity is very small. JEL Classification: K32, O13 and Q43 Keywords: Factor Analysis, Energy demand , Industries and Energy Intensity Industries.