@article { author = {Arbab, Hamidreza and Asgari, Manoochehr and Amadeh, Hamid and Rafiei, Fatemeh}, title = {Comparison of the policies for energy efficiency increase and price increase in Iran using computable general equilibrium}, journal = {The Journal of Economic Policy}, volume = {12}, number = {24}, pages = {73-106}, year = {2021}, publisher = {Yazd University}, issn = {2645-3967}, eissn = {2645-3975}, doi = {10.22034/epj.2021.13849.2073}, abstract = {Introduction: Among energy carriers, electricity has been focused on more closely than the other energy carriers because of its ease of conversion, ease of use, low risk, as well as environmental considerations. In 2017, 11% of the final energy consumption belonged to electricity. Electricity is also an indicator of social welfare; however, electricity consumption has grown in recent years for such reasons as population growth, urban development, increasing living standards and welfare, realizing tariffs, climate change and industrial and commercial development. Even in some years when Iran has had low or even negative economic growth, the upward trend in electricity consumption has not stopped, and the implementation of the subsidy reform plan has not been able to stop this trend. Therefore, in the absence of structural reforms, widespread socio-economic costs will be imposed on the Iranian economy. This is because the high speed of energy consumption in Iran raises serious concerns about the country's ability to export energy in the coming decades.  Electricity reduction policies can be divided into two categories: price and non-price policies. Pricing policies in Iran have brought the price of electricity closer to the cost of production and reduced subsidies. Non-pricing policies to reduce electricity consumption can also be referred to as efficiency improvement policies. Increase of efficiency depends on the increase of the useful output of each process per unit of energy received. It is commonly thought that improving energy efficiency reduces energy consumption, but there is widespread debate in both economics and energy policymaking about the real impact of such improvements on energy efficiency. Methodology: In order to study the relationship between the increase of efficiency and the reduction of electricity subsidies, this paper creates a CGE model based on the latest Social Accounting Matrix published in 2011. The final SAM is aggregated into 11 economic sectors, namely agriculture, electricity, fossil fuels, textile production, production of chemical materials, other non-metallic mineral products, production of basic metals, production of motor vehicles and trailers, other industries, transportation and other services, two factors of production, labor and capital, two groups of urban and rural households, enterprises, government, saving-investment and the rest of the world. To calculate the effect of price increase on the efficiency, the structure of the production layers is formed in such a way that the energy-producing parts are separated from other non-energy parts. Results and Discussion: By implementing the policy of increasing electricity efficiency, electricity consumption has increased by 4.17, and there are rebound effects above 100% as well as backfire for electricity and total energy in the economy. The policy of increasing electricity prices by 10% will reduce electricity consumption by 0.02%. With the increasing electricity efficiency, the amount of energy consumption will increase by 1.20%. Taking into account the price drop for electricity due to increased efficiency, the cost of fossil fuel production will decrease and, therefore, fossil fuel consumption will increase. Consumption of energy commodities increases too. The main reason for the increase in energy consumption is that the application of the energy efficiency policy makes the level of activity rise in all sectors and, therefore, energy consumption is needed to increase production. Due to the reaction of various economic entities, including households and production sectors, energy consumption increases and may offset a part or all of the reduction in primary energy consumption. With the reduction of implicit energy prices, the energy consumer faces a situation similar to the reduction of prices, so the consumer is driven to increase energy consumption. Also, as stated in the microeconomic literature, with implicit price reduction, real energy consumption (whether in households or in the production sector) will increase and, as a result, the consumer will face a wider range of goods and services. An increase in real income will increase energy consumption. As a result, part of the reduction in the initial consumption due to increased energy efficiency is offset. Contrary to the engineering approach, a 10% increase in electrical efficiency results in a reduction of less than 10% of energy. This difference is called the rebound effect. Therefore, the increase in energy efficiency is in line with the ultimate goal of protecting the environment as well as boosting the economic growth. In contrast, the policy of increasing electricity prices reduces electricity consumption by 0.02%. Rising electricity prices will also reduce the consumption of energy-efficient commodities. A rise in fossil fuel prices will raise the electricity price. Therefore, the relative price of energy increases and is replaced by other inputs based on the effect of energy substitution. Also, price increase has caused a decrease of 0.54% in the production of the total economic activities. If the goal is to reduce energy consumption and emissions, the policy of increasing electricity prices is better than the policy of increasing efficiency. Conclusion: The results show that the policy of increasing electricity prices by 10% reduces energy consumption by 4.91%, but the policy of increasing electricity efficiency by 10% does not reduce energy consumption due to rebound effects; it just increases energy consumption by 1.2%. Therefore, as realized by Khoshkalam and Mahdavi (1397), it is recommended that policy makers avoid overestimating the power savings resulting from the efficiency increase policy and not expect consumption to decrease as efficiency increases. It is important to note that the policy of efficiency compared to increasing energy prices raises the production of economic sectors, but increasing the price of production reduces it. Therefore, if the increase of the price of electricity is implemented, it is better to apply complementary policies to prevent the reduction of production.}, keywords = {electricity consumption,improving efficiency,rebound effect,electricity price,Computable General Equilibrium}, title_fa = {مقایسه سیاست‌ افزایش کارایی با سیاست افزایش قیمت برق در ایران با استفاده از مدل تعادل عمومی محاسبه‌پذیر}, abstract_fa = {یکی از هدف‌های سیاست‌گذاری در ایران، مصرف بهینه انرژی از جمله انرژی الکتریکی است که برای نیل به این هدف دو دسته سیاست افزایش کارایی و افزایش قیمت برق مطرح می‌شود. در این مقاله تلاش شده است دو سیاست فوق در غالب یک مدل تعادل عمومی محاسبه پذیر با یکدیگر مقایسه شده و اثر هر سیاست بر متغیرهای کلیدی نظیر مصرف برق و انرژی، سطح فعالیت‌های تولیدی، نرخ ارز، صادرات و واردات بررسی ‌شود. اگرچه انتظار می‌رود سیاست افزایش کارایی همانند سیاست افزایش قیمت برق سبب کاهش مصرف شود اما سیاست افزایش ده درصدی کارایی به دلیل وجود اثرات بازگشتی نه تنها سبب کاهش مصرف نشده بلکه باعث افزایش 7/4 درصدی مصرف برق شده این در حالی است که سیاست افزایش ده درصدی قیمت برق سبب کاهش 02/0 درصدی مصرف برق می‌شود. افزایش مصرف برق پس از افزایش کارایی این حامل به دلیل افزایش سطح فعالیت تولیدی بخش‌های اقتصاد و افزایش صادرات است. همچنین اثر این دو سیاست بر مصرف بخش‌های مختلف اقتصادی متفاوت است اما مصرف بخش‌های تولید برق، تولید فلزات اساسی و کشاورزی با اعمال هر دو سیاست، کاهش می‌یابد.}, keywords_fa = {مصرف برق,افزایش کارایی,اثرات بازگشتی,قیمت برق,تعادل عمومی محاسبه‌پذیر}, url = {https://ep.yazd.ac.ir/article_2080.html}, eprint = {https://ep.yazd.ac.ir/article_2080_76b2be4108a5f634c402d3df60dc776b.pdf} }