Energy Consumption in Economic Sectors and Environmental Pollution in Iran with Emphasis on Electricity and Non-Electricity

In this study, an attempt is made to investigate the effect of energy consumption on environmental pollution in Iran. For this purpose, a basic model (the whole economy) and three sectoral models (household, commercial and public; industry and transportation) has been estimated with an autoregressive distributed lag approach in the period 1971-2017. The results of the model estimation show the long-run total consumption at the whole economy and in the household, commercial and public, industry and transportation sectors, total energy consumption has a positive effect on carbon dioxide emissions. Investigating the effect of electricity energy and non-electricity on carbon dioxide emissions over the whole economy in the long run shows that electricity energy consumption has no significant effect on carbon dioxide emissions; while non-electricity energy consumption has a positive effect on emissions during this period. Also in the household, commercial and public sectors, electricity energy and non-electricity have a positive effect on carbon dioxide emissions. Another result is that electricity energy consumption in industry and transportation sectors has no significant effect on carbon dioxide emissions from these two sectors, while non-electricity energy consumption has a positive effect on emissions from industry and transportation sectors. Also, in terms of the long-run effect size, carbon dioxide emissions respect to energy consumption (total, electricity and non-electricity) across the whole economy and the industry sector is inelastic, in the household, commercial and public sectors is almost unit elasticity; and in the transportation sector is elastic. In terms of electricity energy consumption, the elasticity size was only significant and negative in the household, commercial and public sectors. In terms of non-electricity energy consumption, carbon dioxide emissions are inelastic in the whole economy level and sectors, however, in the transportation sector, the elasticity size is more than the other two sectors. For this reason, it is suggested to pay particular attention to the use of renewable energy with less pollution as a suitable alternative to fossil fuels in different economic sectors of the country. JEL Classification: C22, Q43, Q53 Keywords: Energy Consumption, Economic Sectors, Environmental Pollution, Electricity and Non-Electricity, Iran