Estimating the Direct Rebound Effect of Natural Gas Consumption in the Iranian Residential Sector with the Asymmetry of Gas Price Changes

Considering that the improvement of energy efficiency and the resulting rebound effect in the literature of energy economics is very important, hence the present paper uses the ARDL approach to estimate the direct rebound effect of the natural gas consumption in the residential sector in Iran. For this purpose, data from the period of 1986-2016 and the methodology based on the estimation of natural gas demand elasticity according to decomposed prices have been used. The results show that, firstly, the direct rebound effect of the natural gas consumption in the residential sector exists and, as a result, energy savings due to improved energy efficiency will be less than expected. Secondly, the direct rebound effect of natural gas demand in the short run is 69% and in the long run is 78%. Also, the findings indicate that there is no backfire effect of residential consumption of natural gas. Therefore, it is recommended to apply policies to improve the efficiency of natural gas consumption in Iran's domestic sector.