Economic sanctions and energy efficiency: Evidence from Iranian industrial sub-sectors

Leyla Jabari, Ali Asghar Salem, Omid Zamani and Mohammad Reza Farzanegan ()

Energy Economics, 2024, vol. 139, issue C

Abstract: Improving energy efficiency is vital for reducing energy consumption and can have substantial impacts on reducing carbon emissions. This study investigates the impact of sanctions on Iran's energy efficiency across different industrial sub-sectors from 2015 to 2019. We compute a sanction intensity index for each industrial sub-sector using principal component analysis. This index measures how much each sub-sector has been affected by sanctions. Additionally, energy efficiency is measured using the directional distance function method, considering the emission impacts as undesirable outputs. We use fixed effects regression analysis, adjusting for various manifestations of cross-sectional (spatial) and temporal dependence and controlling for other sectoral drivers of energy efficiency. We find a significant negative effect of sanction intensity on energy efficiency at the industrial sub-sector level in Iran. The negative effect of sanctions on energy efficiency is significantly larger for industrial units with higher import dependency.

Keywords: Energy efficiency; Directional distance function; Sanctions; Sectoral effects; Fixed effects regression; Iran (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:139:y:2024:i:c:s0140988324006285

DOI: 10.1016/j.eneco.2024.107920

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